UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, S.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number: 1-9734
ONEITA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 57-0351045
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4130 FABER PLACE DRIVE, SUITE 200, CHARLESTON, SC 29405
(Address of principal executive offices) (Zip Code)
(803) 529 - 5225
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing for
the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. 6,878,506 shares of Common
Stock as of February 12, 1996.
<PAGE>
FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited)
Condensed Consolidated Balance Sheets at
December 30, 1995 and September 30, 1995 ............... 1
Condensed Consolidated Statements of Income for the
Three Months Ended December 30, 1995 and
December 31, 1994 ...................................... 3
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended December 30, 1995
and December 31, 1994 .................................. 4
Notes to Condensed Consolidated Financial Statements ... 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations .................... 6
PART II - OTHER INFORMATION
Item 1: Legal Proceedings ............................ 8
Item 2: Changes in Securities ........................ 8
Item 3: Defaults upon Senior Securities .............. 8
Item 4: Submission of Matters to a Vote of Security
Holders ...................................... 8
Item 5: Other Information ............................ 8
Item 6: Exhibits and Reports on Form 8-K ............. 8
Signature .............................................. 9
<PAGE>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 30, September 30,
1995 1995
(Unaudited) (Note 1)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash $ 45 $ 2,749
Refundable income tax --- 2,485
Accounts receivable, less
allowance for doubtful accounts 28,267 29,438
Inventories (Note 2) 83,725 79,968
Prepaid expenses and other
current assets 5,221 4,765
-------- ---------
Total current assets 117,258 119,405
PROPERTY, PLANT AND EQUIPMENT,
at cost, less accumulated
depreciation and amortization 43,596 43,760
NET ASSETS OF PLANTS HELD FOR SALE 1,234 ---
OTHER ASSETS 1,646 1,852
-------- ---------
$163,734 $165,017
-------- ---------
<FN>
See notes to condensed consolidated financial statements
</FN>
</TABLE>
<PAGE>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 30, September 30,
1995 1995
(Unaudited) (Note 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Notes payable $ 25,000 $ 23,000
Current portion of long term debt
and capital leases 5,266 4,729
Accounts payable 15,002 11,699
Accrued liabilities 5,173 7,073
-------- --------
Total current liabilities 50,441 46,501
LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS 35,453 37,404
DEFERRED INCOME TAXES 3,374 3,272
SHAREHOLDERS' EQUITY:
Preferred Stock, Series I, par
value $1.00 per share, 2,000,000
shares authorized, none issued --- ---
Common Stock, $.25 par value,
15,000,000 shares authorized,
6,960,821 shares issued and
outstanding at December 30, 1995
and September 30, 1995 1,750 1,750
Other shareholders' equity 72,716 76,090
-------- --------
$163,734 $165,017
-------- --------
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
December 30, December 31,
1995 1994
<S> <C> <C>
Net sales $ 35,187 $ 40,106
Cost of sales 34,633 32,242
-------- --------
Gross profit 554 7,864
Selling, general and administrative
expenses 4,693 5,049
Income(loss) from operations (4,139) 2,815
Interest expense, net of interest
income of $64 in 1995 and $118
in 1994 (1,300) (519)
Income (loss) before provision for
income taxes (5,439) 2,296
Provision (benefit)for income taxes (2,065) 918
--------- ---------
Net income (loss) $(3,374) $ 1,378
--------- ---------
Net income (loss) per share $(.49) $.20
(Note 3) --------- ---------
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
December 30, December 31,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $(3,374) $1,378
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities:
Depreciation and amortization 1,588 1,359
Provision for losses on accounts receivable --- 150
Increase (decrease) in deferred income taxes 388 (898)
Change in assets and liabilities 30 (1,225)
--------- ---------
Net cash (used in) provided by
operating activities (1,368) 764
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (2,516) (2,215)
Decrease (increase) in equipment
lease deposits 642 (472)
Proceeds from sale of property, plant
and equipment 2 ---
--------- ---------
Net cash used in investing activities (1,872) (2,687)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings 2,000 5,000
Purchase of treasury shares --- (198)
Proceed from issuance of long-term debt 219 ---
Increase in funds restricted
for capital projects --- (74)
Payment of long-term debt and capital
lease obligations (1,633) (1,940)
Other (50) ---
--------- ---------
Net cash provided by
financing activities 536 2,788
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (2,704) 865
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 2,749 967
--------- ---------
CASH AT END OF PERIOD $ 45 1,832
--------- ---------
<FN>
See notes to condensed consolidated financial statements.
</FN>
</TABLE>
<PAGE>
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation -
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The balance sheet at September 30, 1995 has been derived
from the audited financial statements at that date. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended December 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended September 28, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report to shareholders for the year
ended September 30, 1995.
(2) Inventories -
Inventories, stated at the lower of cost (primarily last-in, first-out) or
market, are comprised of the following:
<TABLE>
<CAPTION>
December 30, September 30,
1995 1995
<S> <C> <C>
Finished goods ................. $61,829 $58,537
Work in process ................. 16,866 17,495
Raw materials and supplies ...... 5,030 3,936
------- -------
$83,725 $79,968
</TABLE>
(3) Net Income Per Share -
Earnings per share are calculated using the weighted average number of
shares of common stock, and where dilutive, common stock equivalents outstanding
during each period. Shares used in computing per share results were 6,883,598
and 7,026,002 for the three months ended December 30, 1995 and December 31,
1994, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the three months ended December 30, 1995 were $35.2 million
as compared to $40.1 million in the comparable period of the prior year, a
decrease of $4.9 million or 12.2%. The decrease was due to a reduction of
customer orders for T-shirts as well as reduced prices resulting from activewear
promotional pricing.
Net sales of activewear were $27.5 million for the three months ended
December 30, 1995 as compared to $33.0 million in the comparable period of the
prior year, a decrease of $5.5 million or 16.7%. Net sales of T-shirts decreased
by $6.0 million and sweatshirts increased $0.5 million. The T-shirt decrease was
principally due to lower unit sales of T-shirts of $2.7 million as well as $3.3
million of reduced revenues attributable to promotional pricing. Sales of
sweatshirts increased due to increased unit sales.
Net sales of infantswear was $7.7 million for the three months ended
December 30, 1995 compared to $7.1 million last year. The increase was due to
sales of new products.
Gross profit for the quarter ended December 30, 1995 of $0.6 million
decreased $7.3 million from the comparable period of the prior year due to
promotional pricing mentioned above as well as increased operating costs. Gross
profit, as a percentage of net sales, decreased to 1.6% compared to 19.6% in the
comparable period of the prior year due to the price decreases mentioned above
(10.7%), costs associated with reduced production schedules (4.7%) and increased
per unit operating costs (2.6%).
Selling, general and administrative expenses for the three months ended
December 30, 1995 decreased $0.4 million from the comparable period of the prior
year due to lower sales related costs.
Interest expense, net of interest income, for the first quarter of 1995 was
$1.3 million compared to $0.5 million for the corresponding period last year.
The increase was due primarily to higher average borrowings as well as higher
borrowing rates.
<PAGE>
Liquidity and Capital Resources
Working capital was $66.8 million at December 30, 1995 compared to $72.9
million at September 30, 1995. The decrease was due primarily to current
maturities of long-term debt and losses from operations.
In order to improve liquidity and strengthen the Company's balance sheet,
the Board of Directors has approved a $75 million refinancing of existing debt,
which includes an $11.25 million equity infusion into the Company through a
rights offering to stockholders. Existing stockholders will be given the
opportunity to maintain their current ownership percentage by receiving the
right to subscribe to shares at $7.00 per share on the basis of one share of
Oneita common stock for each four shares of stock presently held. Avondale
Mills, Inc., the Company's largest raw material supplier and Robert M. Gintel,
the Company's Chairman of the Board, have agreed to subscribe to all shares not
purchased by existing shareholders. In no event will Oneita issue more than
1,607,143 shares of stock in connection with the rights offering, which will
represent 18.9 percent of the then 8,485,649 shares outstanding. The rights
offered to shareholders will be non-transferable and non-tradeable. The $11.25
million proceeds from the rights offering will be used to prepay certain of the
subordinated notes described below.
In January 1996, the Company issued 10% subordinated notes to Avondale
Mills, Inc. and Robert Gintel in the aggregate principal amount of $15 million
maturing February 26, 1999, concurrently with the funding of the Company's new
bank credit facility. The notes are subordinate to the Company's bank debt and
certain other senior debt. Subordinated notes in the amount of $7.5 million to
Avondale and $3.75 million to Gintel will be prepaid from the proceeds of the
rights offering. In the event the rights offering is not consummated by May 31,
1996, Avondale and Gintel will have the right to convert these $11.25 million of
notes into shares of Oneita Common Stock at $7.00 per share. In connection with
the $3,750 subordinated note to Gintel which will remain outstanding after the
rights offering, subject to stockholder approval, the Company will also issue to
Gintel warrants to purchase 125,000 shares of Oneita Common Stock at $7.00 per
share. The proceeds from issuance of the notes will be used for working capital
and capital expenditures.
In January 1996, the Company entered into a new agreement with its banks to
borrow $60 million under a new revolving line of credit. The proceeds of the new
debt were used to pay off an existing bank credit facility and existing
short-term bank lines totaling $50 million. The additional $10 million of the
proceeds will be used for working capital and capital expenditures. The new
<PAGE>
revolving line of credit will be collateralized by inventories and accounts
receivable and will mature on January 26, 1999.
The Company believes that its working capital and bank lines are sufficient
to meet its liquidity needs for at least the next twelve months.
Effects of Inflation
The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its sales and profitability.
ONEITA INDUSTRIES, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Item 3 Defaults upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
10.24 10% Initial Subordinated Note dated January 26, 1996 in
the principal amount of $3,750,000 issued to Robert M.
Gintel
10.25 10% Subordinated Note dated January 26, 1996 in the
principal amount of $3,750,000 issued to Robert M. Gintel
<PAGE>
10.26 10% Subordinated Note dated January 26, 1996 in the principal amount of
$7,500,000 issued to Avondale Mills, Inc.
10.27 Registration Rights Agreement dated January 26, 1996
among the Company, Robert M. Gintel and Avondale Mills,
Inc.
10.28 $60,000,000 Revolving Credit Agreement dated January 26,
1996 among the Company, SunTrust Bank, Atlanta, First
Union National Bank of South Carolina and NatWest Bank
N.A.
10.29 $25,000,000 Promissory Note dated January 26, 1996 issued
to SunTrust Bank, Atlanta
10.30 $25,000,000 Promissory Note dated January 26, 1996 issued
to First Union Bank of South Carolina
10.31 $10,000,000 Promissory Note dated January 26, 1996 issued
to NatWest bank N.A.
10.32 Security Agreement dated January 26, 1996 among the
Company, SunTrust Bank, Atlanta, First Union National
Bank of South Carolina and NatWest Bank N.A. and the
Prudential Insurance Company of America
27 Financial Data Schedule
(b) No Reports on Form 8-K were filed during this quarterly period.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONEITA INDUSTRIES, INC.
By: /s/ Herbert J. Fleming
Herbert J. Fleming
President
By: /s/ James L. Ford
James L. Ford
Executive Vice-President
of Finance and
Chief Financial Officer
Date: February 12, 1996
ONEITA INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$3,750,000.00 Charleston, South Carolina
January 26, 1996
ONEITA INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at 4130 Faber Place, Suite 200, Ashley
Corporate Center, Charleston, South Carolina 29405, for value received hereby
promises to pay to ROBERT M. GINTEL or his registered assigns (the "Holder"),
the sum of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100
($3,750,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) February 26, 1999 or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the
Initial Gintel Note referred to in the Purchase Agreement and is issued to the
Holder in addition to the Gintel Subordinated Note (as such term is defined in
the Purchase Agreement) in like principal amount on the date hereof. As set
forth in the Purchase Agreement, the Company anticipates effecting a Rights
Offering to, among other things, raise the funds necessary to repay this Note.
Moreover, the Holder of this Note has agreed, subject to the prior receipt by
the Company of all requisite consents, including, if necessary, that of the New
York Stock Exchange (the "NYSE") and/or the Company's stockholders, to serve as
a standby purchaser of the Company in the Rights Offering. Notwithstanding
anything to the contrary set forth herein, the Holder of this Note may apply the
then outstanding amount of all principal and accrued and unpaid interest under
this Note to satisfy his obligations as a standby purchaser in the Rights
Offering. In the event that the Rights Offering is not consummated prior to May
31, 1996, or upon the occurrence of any of the other events referred to in
Section 4.1 of the Purchase Agreement, then the Holder may, commencing at the
Conversion Date (as such term is defined in the Purchase Agreement) and subject
to the prior receipt by the Company of all requisite consents, including, if
necessary, that of the NYSE and/or the Company's stockholders, exchange this
Note for the Gintel Replacement Note (as such term is defined in the Purchase
Agreement) on the terms set forth in the Purchase Agreement (a "Note Exchange").
The following is a statement of the rights of the Holder of this Note
and the conditions to which this Note is subject, and to which the Holder
hereof, by the acceptance of this Note, agrees:
<PAGE>
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of this Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in the sole discretion of the Holder, so long as such
condition exists, (a) declare the entire principal and unpaid accrued interest
hereon immediately due and payable and (b) subject to the prior receipt by the
Company of all requisite consents, including, if necessary, that of the NYSE
and/or the Company's stockholders, effect a Note Exchange, by notice in writing
to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Gintel Subordinated Note or the Avondale Note, and (b) default in the
payment of the unpaid accrued interest under this Note, the Gintel Subordinated
Note or the Avondale Note when due and payable if such default in the payment of
accrued interest is not cured by the Company within ten (10) days after the
Holder or Avondale, as the case may be, has given the Company written notice of
such default; or
(ii) The institution by the Company or any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
<PAGE>
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the Gintel
Subordinated Note, the Avondale Note, the Registration Rights Agreement, the
Standby Agreement or any other agreement, instrument or documents entered into
in connection therewith, which failure continues for a period of 30 days after
written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
of more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity)
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all of substantially all of the Company's assets;
or
(vii) the Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
<PAGE>
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such event of default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
<PAGE>
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment.
5.1 Optional Prepayment. The Company may not prepay this Note, in whole or
in part, without the prior consent of the Holder hereof and the holders of the
Avondale Note and the Gintel Subordinated Note. If the Company shall prepay this
Note pursuant to this Section 5, it shall cause notice thereof, specifying the
date and amount of prepayment, to be given by registered or certified mail to
the holders of the Avondale Note and the Gintel Subordinated Note at their
last-known post office addresses of which the Company shall have received
written notice, at least 10 days prior to the date fixed for such prepayment.
Notice of prepayment having been given as aforesaid, this Note, the Avondale
Note and the Gintel Subordinated Note, or the portions thereof so to be prepaid
shall, on the date designated in such notice, become due and payable in the
principal amounts thereof to be prepaid. In the event that this Note, the
Avondale Note and/or the Gintel Subordinated Note are outstanding and a partial
prepayment is made, each of this Note, the Avondale Note and the Gintel
Subordinated Note shall be prepaid pro rata to the then outstanding principal
amounts thereof.
5.2 Mandatory Prepayment. The Company shall immediately use any proceeds
received by it from any stockholder of the Company upon the exercise by such
stockholder of rights issued in the Rights Offering, to repay, pro rata with the
Avondale Note, based upon the then outstanding principal amount in relation to
the then outstanding principal amount of the Avondale Note, the outstanding
principal amount and any unpaid and accrued interest hereunder and the Holder
hereof shall accept such prepayment.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the Company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
<PAGE>
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
and copies of all notices to Robert M. Gintel shall be given to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited, to reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
<PAGE>
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this 26th
day of January, 1996.
ONEITA INDUSTRIES, INC.
By/s/ James L. Ford
-------------------------------
ONEITA INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$3,750,000.00 Charleston, South Carolina
January 26, 1995
ONEITA INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at 4130 Faber Place, Suite 200, Ashley
Corporate Center, Charleston, South Carolina 29405, for value received hereby
promises to pay to ROBERT M. GINTEL or his registered assigns (the "Holder"),
the sum of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100
($3,750,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) February 26, 1999, or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the Gintel
Subordinated Note referred to in the Purchase Agreement and is issued to the
Holder in addition to the Initial Gintel Note (as such term is defined in the
Purchase Agreement) in like principal amount issued on the date hereof.
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1. Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of this Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
<PAGE>
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in his sole discretion, so long as such condition
exists, declare the entire principal and unpaid accrued interest hereon
immediately due and payable, by notice in writing to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Initial Gintel Note, the Gintel Replacement Note, the Avondale Note or the
Avondale Replacement Note, and (b) default in the payment of the unpaid accrued
interest under this Note, the Initial Gintel Note, the Gintel Replacement Note,
the Avondale Note or the Avondale Replacement Note, when due and payable if such
default in the payment of accrued interest is not cured by the Company within
ten (10) days after the Holder or Avondale, as the case may be, has given the
Company written notice of such default; or
(ii) The institution by the Company of any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the
Initial Gintel Note, the Gintel Replacement Note, the Avondale Note, the
<PAGE>
Avondale Replacement Note, the Registration Rights Agreement, the Standby
Agreement or any other agreement, instrument or documents entered into in
connection therewith, which failure continues for a period of 30 days after
written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
or more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity)
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(vii) The Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
<PAGE>
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an event of
default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such event of default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
<PAGE>
5. Prepayment. The Company may not, without the prior written consent of
Avondale, prepay this Note, in whole or in part. If the Company shall, with
Avondale's consent, prepay this Note pursuant to this Section 5, it shall cause
notice thereof, specifying the date and amount of prepayment, to be given by
registered or certified mail to the holders of the Initial Gintel Note and the
Avondale Note at their last-known post office addresses of which the Company
shall have received written notice, at least 10 days prior to the date fixed for
such prepayment. Notice of prepayment having been given as aforesaid, this Note,
the Initial Gintel Note and the Avondale Note, or the portions thereof so to be
prepaid shall, on the date designated in such notice, become due and payable in
the principal amounts thereof to be prepaid. In the event that this Note, the
Initial Gintel Note and/or the Avondale Note are outstanding and a partial
prepayment is made, each of this Note, the Initial Gintel Note and the Avondale
Note shall be prepaid pro rata to the then outstanding principal amounts
thereof.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
<PAGE>
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
and copies of all notices to Robert M. Gintel shall be given to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attention: Leonard Gubar
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited to, reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be issued this 26th
day of January, 1996.
ONEITA INDUSTRIES, INC.
By/s/ James L. Ford
-------------------------------
ONEITA INDUSTRIES, INC.
10% SUBORDINATED PROMISSORY NOTE
$7,500,000.00 Charleston, South Carolina
January 26, 1996
ONEITA INDUSTRIES, INC., a Delaware corporation (the "Company"), the
principal office of which is located at 4130 Faber Place, Suite 200, Ashley
Corporate Center, Charleston, South Carolina 29405, for value received hereby
promises to pay to AVONDALE MILLS, INC., or its registered assigns (the
"Holder"), the sum of SEVEN MILLION FIVE HUNDRED THOUSAND AND 00/100
($7,500,000.00), or such lesser amount as shall then equal the outstanding
principal amount hereof on the terms and conditions set forth hereinafter.
Interest on the unpaid principal amount hereof shall be payable as herein set
forth. The entire principal amount hereof and any unpaid accrued interest
hereon, as set forth below, shall be due and payable on the earlier to occur of
(i) February 26, 1999, or (ii) when declared due and payable by the Holder upon
the occurrence of an Event of Default (as defined below). Payment for all
amounts due hereunder shall be made by wire transfer of immediately available
funds to such account of the Holder as shall have been designated to the
Company. This Note is issued in connection with the transactions described in
Section 1.1 of that certain Note Purchase Agreement between the Company and the
Holders described therein, dated as of December 28, 1995 (the "Purchase
Agreement"). Capitalized terms used and not otherwise defined herein shall have
the meanings ascribed to them in the Purchase Agreement. This Note is the
Avondale Note referred to in the Purchase Agreement. As set forth in the
Purchase Agreement, the Company anticipates effecting a Rights Offering to,
among other things, raise the funds necessary to repay this Note. Moreover, the
holder of this Note has agreed, subject to the prior receipt by the Company of
all requisite consents, including, if necessary, that of the New York Stock
Exchange (the "NYSE") and/or the Company's stockholders, to serve as a standby
purchaser of the Company in the Rights Offering. Notwithstanding anything to the
contrary set forth herein, the Holder of this Note may apply the then
outstanding amount of all principal and accrued and unpaid interest under this
Note to satisfy its obligations as a standby purchaser in the Rights Offering.
In the event that the Rights Offering is not consummated prior to May 31, 1996,
or upon the occurrence of any of the other events referred to in Section 4.1 of
the Purchase Agreement, then the Holder may, commencing at the Conversion Date
(as such term is defined in the Purchase Agreement), exchange this Note for the
Avondale Replacement Note (as such term is defined in the Purchase Agreement) on
the terms set forth in the Purchase Agreement (a "Note Exchange").
The following is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:
1 Definitions. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
<PAGE>
(i) "Company" includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.
(ii) "Holder," when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.
2. Interest. The unpaid principal balance of the Note shall bear interest
compounded annually, from the date hereof until paid in like money, at a rate
(based on a 360-day year) equal to ten percent (10%) per annum, such interest to
be payable on June 30 and December 31 in each year. Any accrued but unpaid
interest shall be payable in full upon maturity or prior prepayment of this
Note. In the event that the principal amount of this Note is not paid in full
upon maturity, interest shall continue to accrue at the rate provided in the
previous sentence plus five percent (5%) on the balance of any unpaid principal
and unpaid interest until such balance is paid.
3. Events of Default. If any of the events specified in this Section 3
shall occur (herein individually referred to as an "Event of Default"), the
Holder of this Note may, in the sole discretion of the Holder, so long as such
condition exists, (a) declare the entire principal and unpaid accrued interest
hereon immediately due and payable, and (b) effect a Note Exchange, by notice in
writing to the Company:
(i) (a) Default in the payment of the principal when due under this Note,
the Initial Gintel Note or the Gintel Subordinated Note, and (b) default in the
payment of the unpaid accrued interest under this Note, the Initial Gintel Note
or the Gintel Subordinated Note, when due and payable if such default in the
payment of accrued interest is not cured by the Company within ten (10) days
after the Holder or Robert Gintel, as the case may be, has given the Company
written notice of such default; or
(ii) The institution by the Company or any material Subsidiary of
proceedings to be adjudicated as bankrupt or insolvent, or the consent by it to
institution of bankruptcy or insolvency proceedings against it or the filing by
it of a petition or answer or consent seeking reorganization or release under
the federal Bankruptcy Act, or any other applicable federal or state law, or the
consent by it to the filing of any such petition or the appointment of a
receiver, liquidator, assignee, trustee or other similar official of the Company
or any material Subsidiary, or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or the taking of
corporate action by the Company or any material Subsidiary in furtherance of any
such action; or
(iii) If, within sixty (60) days after the commencement of an action
against the Company or any material Subsidiary (and service of process in
connection therewith on the Company or any material Subsidiary) seeking any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, such action shall
not have been resolved in favor of the Company or any material Subsidiary or all
orders or proceedings thereunder affecting the operations or the business of the
Company or any material Subsidiary stayed, or if the stay of any such order or
proceeding shall thereafter be set aside, or if, within sixty (60) days after
<PAGE>
the appointment without the consent or acquiescence of the Company or any
material Subsidiary of any trustee, receiver or liquidator of the Company or any
material Subsidiary or of all or any substantial part of the properties of the
Company or any material Subsidiary, such appointment shall not have been
vacated; or
(iv) Any event of default or default of the Company under any Senior
Indebtedness (as defined below) that gives the holder thereof the right to
accelerate such Senior Indebtedness, even if such Senior Indebtedness is not, in
fact, accelerated by the holder; or
(v) Any failure by the Company to comply with, perform or observe any term,
covenant or agreement contained in the Purchase Agreement, this Note, the
Initial Gintel Note, the Gintel Subordinated Note, the Registration Rights
Agreement, the Standby Agreement or any other agreement, instrument or documents
entered into in connection therewith, which failure continues for a period of 30
days after written notice thereof by the Holder to the Company; or
(vi) Any change of control of the Company which, for purposes of this
Section 3(vi), shall be deemed to have occurred if (i) any person, other than
any person who, as of the date of the Purchase Agreement, beneficially owns 5%
or more of the outstanding capital stock of the Company, whether alone or as
part of a group (including any individual, firm, partnership or other entity),
together with all Affiliates and Associates (as defined under Rule 12b-2 of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended) of such person, but excluding (A) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, (B) a corporation owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
ownership of the Company or (C) the Company or any subsidiary of the Company is
or becomes the Beneficial Owner (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
securities, (ii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iii) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or
(vii) the Company or any material Subsidiary shall be subject to a final
judgment by a court of competent jurisdiction (which is no longer being
appealed) in an amount in excess of $1,000,000.
4. Subordination. The indebtedness evidenced by this Note is hereby
expressly subordinated, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of all the Company's Senior
Indebtedness, as hereinafter defined.
4.1 Senior Indebtedness. As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on: (i)
all indebtedness of the Company concurrently being incurred by the Company with
<PAGE>
SunTrust Bank, Atlanta, First Union Bank of South Carolina and NatWest Bank,
N.A., (ii) all indebtedness of the Company to banks, insurance companies or
other financial institutions regularly engaged in the business of lending money
(collectively, "Bank Debt"), which is outstanding on the date hereof and which
is for money borrowed by the Company (whether or not secured), (iii) up to $6
million of additional Bank Debt provided that such additional Bank Debt is
advanced to the Company prior to such time as the conversion privileges set
forth in the Avondale Replacement Note and the Gintel Replacement Note have
either been exercised in their entirety, canceled or terminated and (iv) any
refinancings of the indebtedness described in clauses (i) through (iii) above.
4.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization
or arrangements with creditors (whether or not pursuant to bankruptcy or other
insolvency laws), sale of all or substantially all of the assets, dissolution,
liquidation or any other marshalling of the assets and liabilities of the
Company, then (i) no amount shall be paid by the Company in respect of the
principal of or interest on this Note at the time outstanding, unless and until
the principal of and interest on the Senior Indebtedness then outstanding shall
be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right
to receive any payments in respect of the principal of and interest on this
Note, except subject to the payment in full of the principal of and interest on
all of the Senior Indebtedness then outstanding. If there occurs an Event of
Default that has been declared in writing with respect to a payment obligation
under any Senior Indebtedness, or in the instrument under which any Senior
Indebtedness is outstanding, permitting the holder of such Senior Indebtedness
to accelerate the maturity thereof, then, unless and until such Event of Default
shall have been cured or waived or shall have ceased to exist, or all Senior
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of or interest on this Note, unless within three (3) months
after the happening of such Event of Default, the maturity of such Senior
Indebtedness shall not have been accelerated.
4.3 Effect of Subordination. Subject to the rights, if any, of the holders
of Senior Indebtedness under this Section 4 to receive cash, securities or other
properties otherwise payable or deliverable to the Holder of this Note, nothing
contained in this Section 4 shall impair, as between the Company and the Holder,
the obligation of the Company, subject to the terms and conditions hereof, to
pay to the Holder the principal hereof and interest hereon as and when the same
become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers and remedies otherwise provided
herein or by applicable law.
4.4 Subrogation. Subject to the payment in full of all Senior Indebtedness
and until this Note shall be paid in full, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness (to the extent of payments or
distributions previously made to such holders of Senior Indebtedness pursuant to
the provisions of Section 4.2 above) to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the
Company and its creditors, other than the holders of Senior Indebtedness and the
Holder, be deemed to be a payment by the Company to or on account of this Note;
and for the purposes of such subrogation, no payments or distributions to the
<PAGE>
holders of Senior Indebtedness to which the Holder would be entitled except for
the provisions of this Section 4 shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be
deemed to be a payment by the Company to or on account of the Senior
Indebtedness.
4.5 Undertaking. By its acceptance of this Note, the Holder agrees to
execute and deliver such documents as may be reasonably requested from time to
time by the Company or the lender of any Senior Indebtedness in order to
implement the foregoing provisions of this Section 4.
5. Prepayment.
5.1 Optional Prepayment. The Company may not prepay this Note, in whole or
in part, without the prior consent of the Holder hereof and the holders of the
Initial Gintel Note and the Gintel Subordinated Note. If the Company shall
prepay this Note pursuant to this Section 5, it shall cause notice thereof,
specifying the date and amount of prepayment, to be given by registered or
certified mail to the holders of the Initial Gintel Note and the Gintel
Subordinated Note at their last-known post office addresses of which the Company
shall have received written notice, at least 10 days prior to the date fixed for
such prepayment. Notice of prepayment having been given as aforesaid, this Note,
the Initial Gintel Note and the Gintel Subordinated Note, or the portions
thereof so to be prepaid shall, on the date designated in such notice, become
due and payable in the principal amounts thereof to be prepaid. In the event
that this Note, the Initial Gintel Note and/or the Gintel Subordinated Note are
outstanding and a partial prepayment is made, each of this Note, the Initial
Gintel Note and the Gintel Subordinated Note shall be prepaid pro rata to the
then outstanding principal amounts thereof.
5.2 Mandatory Prepayment. The Company shall immediately use any proceeds
received by it from any stockholder of the Company upon the exercise by such
stockholder of rights issued in the Rights Offering, to repay, pro rata with the
Initial Gintel Note, based upon the then outstanding principal amount in
relation to the then outstanding principal amount of the Initial Gintel Note,
the outstanding principal amount and any unpaid and accrued interest hereunder
and the Holder hereof shall accept such prepayment.
6. Notifications by the Company. In case at any time:
(1) there shall be any capital reorganization, reclassification of the
capital stock of the Company, consolidation or merger of the Company with, or
sale of all or substantially all of the assets of the Company to, another
corporation; or
(2) there shall be a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written
notice to the registered Holder of this Note of the date on which such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up shall take place, as the case may be. Such written
notice shall be given not less than 30 days and not more than 60 days prior to
the action in question and not less than 30 days and not more than 80 days prior
<PAGE>
to the record date or the date on which the Company's transfer books are closed
in respect thereto and such notice may state that the record date is subject to
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or to a favorable vote of stockholders, if either is required.
7. Assignment. The rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
8. Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail or
overnight courier, postage prepaid, at the respective addresses of the parties
as set forth herein. Any party hereto may by notice so given change its address
for future notice hereunder. Notice shall conclusively be deemed to have been
given when delivered in the manner set forth above and shall be deemed to have
been received when delivered. Copies of all notices to the Company shall be
given to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: Edward I. Kramer
and copies of all notices to Avondale Mills, Inc. shall be given to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: Michael J. Egan III
9. No Stockholder Rights. Nothing contained in this Note shall be construed
as conferring upon the Holder or any other person the right to vote or to
consent or to receive notice as a stockholder in respect of meetings of
stockholders for the election of directors of the Company or any other matters
or any rights whatsoever as a stockholder of the Company.
10. Collection. If the Holder shall institute any action to enforce
collection of this Note, there shall become due and payable from the Company, in
addition to the unpaid principal amount and interest under this Note, all costs
and expenses of that action (including, but not limited to, reasonable
attorneys' fees) and the Holder shall be entitled to judgment for all such
additional amounts.
11. Governing Law. This Note is executed and delivered in, and shall be
construed in accordance with, and governed by, the laws of the State of New
York, without giving effect to the conflicts of law principles thereof.
12. Headings; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note. Except where
otherwise indicated, all references herein to Sections refer to Sections hereof.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be issued this 26th
day of January, 1996.
ONEITA INDUSTRIES, INC.
By /s/ James L. Ford
--------------------------------
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of January 26, 1996, by and among ONEITA INDUSTRIES,
INC., a Delaware corporation (the "Company"), and each of the persons listed on
Schedule I annexed hereto (collectively, the "Holders" and individually, the
"Holder").
W I T N E S S E T H:
WHEREAS, pursuant to a Note Purchase Agreement dated as of December 28,
1995 (the "Purchase Agreement"), by and among the Company and the Holders, the
Company is selling certain subordinated promissory notes of the Company (the
"Notes") in the aggregate principal amount of $15,000,000, one of which Notes is
in the principal amount of $7,500,000 and is exchangeable as herein provided
(the "Avondale Note") and another of which Notes is in the principal amount of
$3,750,000 and may be exchangeable as herein provided (the "Initial Gintel
Note");
WHEREAS, the Company intends to make a common stock rights offering (the
"Rights Offering") to the holders of shares of the Company's common stock, $.25
par value per share (the "Common Stock"), and the Holders are willing to act as
standby purchasers with respect to the Rights Offering pursuant to a standby
agreement among the Company and the Holders (the "Standby Agreement");
WHEREAS, as set forth in the Purchase Agreement, if, (a) by May 31, 1996,
the Rights Offering is not consummated, or (b) an "Event of Default occurs (as
defined in the Avondale Note or the Initial Gintel Note) or, if prior to May 31,
1996, (c) the stockholders of the Company vote to not approve the Rights
Offering and the transactions contemplated thereby and in the Purchase
Agreement, (d) the Company publicly announces that it will not proceed with the
Rights Offering or (e) any other event takes place which effectively prohibits
<PAGE>
the Company from lawfully consummating the Rights Offering by May 31, 1996
(the date of occurrence of any of the events described in clauses (a) through
(e) above being referred to as the "Conversion Date"), then the Holders shall
have the right (subject, in the case of Robert Gintel, to the Company's receipt
of any requisite consents) to exchange the Avondale Note and the Initial Gintel
Note for certain convertible 10% subordinated notes of the Company in like
principal amounts (the "Replacement Notes"), such Replacement Notes to be
convertible into shares of Common Stock of the Company at the rate of $7.00 per
share;
WHEREAS, in connection with the sale by the Company of the Notes, the
Company is agreeing, subject to its prior receipt of all requisite approvals and
consents, including, without limitation, those of the New York Stock Exchange
and/or the Company's stockholders, to issue and sell to one of the Holders,
five-year warrants (the "Warrants") to purchase up to 125,000 shares of the
Company's Common Stock at $7.00 per share; and
WHEREAS, the Company and the Holders agree that the Holders shall have the
registration rights set forth herein with respect to any shares of Common Stock
acquired by the Holders pursuant to the Standby Agreement, upon the conversion
of the Replacement Notes and/or upon the exercise of the Warrants or any shares
issued or issuable in respect of such Common Stock upon any stock dividend,
recapitalization or similar event (collectively, the "Registrable Shares").
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the parties hereby agree as follows:
1. Restrictive Legend. Each certificate representing the Registrable Shares
shall (unless otherwise permitted or unless the securities evidenced by such
certificate shall have been registered under the Securities Act of 1933, as
amended (the "Securities Act")) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
1.0.1 In addition, the Company may place, or instruct its transfer agent
and registrar to place, stop transfer orders against certificates which have the
aforementioned restrictive legend thereon. For purposes of this Agreement,
"Restricted Securities" shall mean securities of the Company which are required
to bear the aforementioned legend thereon.
1.1 Upon request of a Holder holding Registrable Shares which are
Restricted Securities, the Company shall remove the foregoing legend from the
certificate or issue to such Holder a new certificate therefor free of any
transfer legend and without any stop transfer against such Registrable Shares,
if, with such request, the Company shall have received either an opinion of
counsel or a "no-action" letter referred to in Section 2 hereof to the effect
that any transfer by such Holder of the Registrable Shares evidenced by such
certificate will not violate the Securities Act and applicable state securities
laws or the Shares have been sold pursuant to an effective registration
statement under the Securities Act. The Company shall promptly reimburse the
transferring holder for all reasonable legal fees and expenses incurred by such
Holder in obtaining the legal opinion or "no action" letter referenced in this
Section 1(b).
2. Notice of Proposed Transfers. Prior to any proposed transfer of any
Restricted Securities (other than under circumstances described in Sections 3
and 4 hereof), the Holder thereof shall give written notice (the "Notice") to
the Company of such Holder's intention to effect such transfer. Each Notice
shall describe the manner and circumstances of the proposed transfer in
sufficient detail, and shall be accompanied (except in transactions in
compliance with Rule 144) by either (i) a written opinion of legal counsel, who
shall be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company's counsel, to the
effect that the proposed transfer of the Restricted Securities may be effected
without registration under the Securities Act, or (ii) a "no action" letter from
the staff of the Securities and Exchange Commission (the "Commission") to the
effect that the distribution of such Securities without registration will not
result in a recommendation by the staff of the Commission that action be taken
with respect thereto, whereupon the Holder of such Restricted Securities shall
be entitled to transfer such Restricted Securities in accordance with the terms
of the Notice. The Company shall promptly reimburse the transferring Holder for
all reasonable legal fees and expenses incurred by such Holder in obtaining the
legal opinion or "no action" letter referenced in this Section 2(a).
2.1 Prior to any proposed transfer requested in the Notice and as a
condition thereto, each Holder will, if requested by the Company, and if
required because any of the Restricted Securities are not to be sold pursuant to
an effective registration statement under the Securities Act or a "no action"
letter or an opinion of counsel described in the foregoing subsection, deliver
to the Company (i) an investment covenant signed by the proposed transferee,
(ii) an agreement by such transferee to the impression of the restrictive legend
set forth in Section 1(a) on the certificates representing the Registrable
Shares to be transferred to such transferee, (iii) an agreement by such
transferee that the Company may place a "stop transfer order" with its transfer
agent and registrar, if any, with respect to the Shares proposed to be
transferred, (iv) an agreement by the transferee to assume the transferor's
obligations under this Agreement, and (v) an agreement by the transferee to
indemnify the Company to the same extent as set forth in Subsection (c) below.
Any transferee complying with this Subsection (b) shall also be deemed a
"Holder" for purposes of the registration rights under Sections 3 and 4 herein.
2.2 Each Holder agrees to indemnify the Company against any and all losses,
claims, damages, expenses or liabilities to which the Company may become subject
under any federal or state securities law, at common law, or otherwise, insofar
as such losses, claims, damages, expenses or liabilities arise out of or are
based upon (i) any transfer by such Holder of such Registrable Shares in
violation of the Securities Act, or the rules and regulations promulgated
thereunder, (ii) any transfer by such Holder of Shares in violation of the
provisions of this Section 2 or (iii) any untrue statement or omission to state
any material fact in connection with such Holder's investment representations or
with respect to the facts and representations supplied to counsel to the Company
upon which its opinion as to a proposed transfer by such Holder was given.
3. Demand Registration. At any time after receipt by any Holder of
Registrable Shares that the Company receives a written request executed by one
or more of the Holders (the "Initiating Holder") requesting registration of a
number of shares of Common Stock at least equal to (i) thirty percent (30%) or
more of the Registrable Shares then held by the Holders or (ii) the entire
remaining number of Registrable Shares owned by the Initiating Holder, the
Company will give notice of such request to each other Holder (the "Other
Holders") and give them the right to participate therein in accordance with this
Section 3.
3.1 As soon as practicable after receipt of the request given pursuant to
Subsection (a) above, the Company shall prepare and file a registration
statement (the "Registration Statement") under the Securities Act covering the
<PAGE>
Registrable Shares requested to be sold under a Registration Statement (the
"Registered Shares") and shall otherwise comply with its obligations under
Section 5.
3.2 The Company's obligations under this Section 3 shall be limited to six
(6) effective Registration Statements under the Securities Act, three of which
may be initiated by each of Robert M. Gintel and Avondale Mills, Inc. or their
respective transferees in accordance with Section 8(b) hereof.
3.3 If a registration pursuant to this Section 3 is for a registered public
offering involving an underwriting, the Company shall so advise the Holders. In
such event, the right of any Holder to registration shall be conditioned upon
such Holder's participation in the underwriting arrangements required by this
Section 3(d), and the inclusion of such Holder's Registrable Shares in the
underwriting to the extent requested shall be limited to the extent provided
herein.
The Company shall (together with the Initiating Holder and Other Holders
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company, but subject to the reasonable
approval of the Initiating Holder. Notwithstanding any other provision of this
Section 3, if the managing underwriter advises the Company in writing that
market factors require a limitation of the number of shares to be underwritten,
then the Company shall so advise the Initiating Holder and the Other Holders,
and the number of shares that may be included in the registration and
underwriting shall be allocated, first, to the Initiating Holder, and second,
among the Other Holders in proportion to the number of shares proposed to be
included in such registration by such Other Holders. No Registrable Shares
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. To facilitate the allocation
<PAGE>
of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any holder to the
nearest one hundred (100) shares. If any such limitation results in the
Initiating Holder being able to sell less than 75% of the Registrable Shares
requested to be included by the Initiating Holder in such offering, the offering
shall not be counted as a demand registration by the Initiating Holder for the
purposes of Section 3(c).
If any Holder disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holder. The Registrable Securities and/or other
securities withdrawn from such underwriting shall also be withdrawn from such
registration.
4. Piggy Back Registration Rights. At any time after the receipt by the
Holders of any Registrable Shares, the Company will send written notice to the
Holders then owning Restricted Securities as defined in Section 1(a)(ii), at
least twenty (20) days prior to the filing of each and every Registration
Statement filed by the Company, whether or not pursuant to this Agreement (other
than a Registration Statement covering exclusively securities under an employee
option or stock purchase plan, a merger, acquisition or similar transaction) and
give to such Holders the right to have included therein any Registrable Shares
then held by the Holders. Such notice must specify the proposed offering price
and the plan of distribution. The Company must receive written notice from such
Holders within fifteen days after the date of the Company's written notice,
indicating the full name and address of each Holder desiring to have Registrable
Shares included for sale in such Registration Statement and the number of
Registrable Shares requested to be covered.
4.1 If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
4(a). In such event the right of any Holder to registration pursuant to Section
<PAGE>
4 shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of Registrable Securities in the underwriting to the extent
provided in this Section 4(b).
All Holders proposing to distribute their securities through such
underwriting shall, together with the Company, enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company. The Company shall use its reasonable best efforts
to cause the managing underwriter of such proposed underwritten offering to
permit the Registrable Shares proposed to be included in such registration to be
included in the registration statement for such offering on the same terms and
conditions as any similar securities of the Company included therein.
Notwithstanding any other provision of this Section 4, the Company shall be
entitled to include in the registration all of the shares which the Company
desires to sell for its own account, and if the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Shares to be
included in such registration. The Company shall so advise all Holders
requesting to participate in such registration, and the number of shares that
may be included in the registration and underwriting by all Holders shall be
allocated among them, as nearly as practicable, first, to Avondale Mills, Inc.
and, second, to Robert M. Gintel, or his or its respective transferees. To
facilitate the allocation of shares in accordance with the above provisions, the
Company may round the number of shares allocated to any Holder to the nearest
one hundred (100) shares.
If any Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
<PAGE>
underwriting also shall be withdrawn from such registration, and shall not be
transferred prior to one hundred eighty (180) days after the effective date of
the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
5. Miscellaneous Registration Provisions.
5.1 In connection with any Registration Statement filed pursuant to
Sections 3 or 4 hereof:
5.1.1 The Company's obligation under this Agreement to include Registrable
Shares in a Registration Statement shall mean shares of Common Stock or any
security received by a Holder in exchange or upon reclassification of the
present Common Stock;
5.1.2 the Holders of Registered Shares (herein "Registering Holders") shall
furnish to the Company in writing such appropriate information (relating to the
intention of such Holders as to proposed methods of sale or other disposition of
the Registered Shares) and the identity of and compensation to be paid to any
proposed underwriters to be employed in connection therewith as the Company, any
underwriter, or the Commission or any other regulatory authority may request;
5.1.3 the Registering Holders and the Company shall enter into the usual
and customary form of underwriting agreement agreed to by the Company and any
underwriter with respect to any such offering, if required, and such
underwriting agreement shall contain the customary reciprocal rights of
indemnity and contribution between the Company, the underwriters, and the
selling shareholder, including the Registering Holders, to the extent set forth
in Subsections (g) and (h) herein;
5.1.4 the Registering Holders shall agree that they shall execute, deliver
and/or file with or supply to the Company, any underwriters, the Commission
and/or any state or other regulatory authority such information, documents,
representations, undertakings and/or agreements necessary to carry out the
provisions of the registration covenants contained in this Agreement and/or to
effect the registration or qualification of their Registrable Shares under the
Securities Act and/or any of the laws and regulations of any state or
governmental instrumentality;
<PAGE>
5.1.5 the Registering Holders shall furnish the Company with such
questionnaires and other documents regarding their identity and background as
the Company may reasonably request; and
5.1.6 the Company's obligation to include the Registering Holders'
Registrable Shares in a Registration Statement shall be subject to the written
agreement of the Holders to offer the Registrable Shares in the same manner and
on the same terms and conditions as the other securities of the same class are
being offered pursuant to the Registration Statement, if such shares are being
underwritten.
5.2 if and whenever the Company is required to effect the registration of
any Registrable Shares pursuant to Section 3 or 4, the Company will use its best
efforts to effect such registration to permit the sale of such Registrable
Shares in accordance with the intended method or methods of disposition thereof,
and pursuant thereto it will, as promptly as is practicable:
5.2.1 before filing a Registration Statement or prospectus or any
amendments or supplements thereto, furnish to the counsel of the Holders of the
Registrable Shares covered by such Registration Statement copies of all
documents proposed to be filed, which documents will be made available on a
timely basis, for review by such counsel to the Holders;
5.2.2 prepare and file with the Commission, as soon as practicable, and use
its best efforts to cause to become effective, a Registration Statement to be
offered on such form under the Securities Act as the Initiating Holder and the
Company or, if not filed pursuant to Section 3 hereof, the Company, determines
and for which the Company then qualifies;
<PAGE>
5.2.3 prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Shares covered
by such Registration Statement until the earlier of such time as all of such
Registrable Shares have been disposed of in accordance with the intended methods
of disposition set forth in such Registration Statement or the expiration of one
hundred eighty (180) days after such Registration Statement becomes effective;
provided that such one hundred eighty (180) day period shall be extended in the
case of a registration pursuant to Section 3 hereof for such number of days that
equals the number of days elapsing from (A) the date the written notice
contemplated by Section 5(b)(vii) hereof is given by the Company to (B) the date
on which the Company delivers to the Selling Holders the supplement or amendment
contemplated by Section 5(b)(vii) hereof;
5.2.4 furnish to the Holders and to any underwriter of Registrable Shares
such number of conformed copies of such Registration Statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any summary prospectus) and any
amendment or supplement thereto, in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such Registration
Statement or prospectus, and such other documents, as the Holders or such
underwriter may reasonably request, and, if requested, a copy of any and all
transmittal letters or other correspondence to, or received from, the Commission
or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering;
<PAGE>
5.2.5 make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of such Registration Statement at the earliest
possible moment;
5.2.6 if required by a Holder, (A) furnish to each Holder and to any
underwriter an opinion of counsel for the Company addressed to each Holder and
underwriter and dated the date of the closing under the underwriting agreement
(if any) (or if such offering is not underwritten, dated the effective date of
the Registration Statement), (B) use its best efforts to furnish to each Holder
a "cold comfort" or "special procedures" letter addressed to each Holder and
signed by the independent public accountants who have audited the Company's
financial statements included in such Registration Statement and (C) make such
representations and warranties to the Holders and, in connection with any
underwritten offering, to the underwriters, in each such case covering
substantially the same matters with respect to such Registration Statement (and
the prospectus included therein) as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters and in
underwriting agreements in underwritten public offerings of securities and such
other matters as the Holders may reasonably request, and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, provided, however, that the Company shall not be obligated
to cause the legal counsel and accountants' letters contemplated by this
Subsection (b)(vi) to be delivered to the Holders if the Company would be
required to incur unreasonable expenses to cause such letters to be delivered.
5.2.7 immediately notify the Holders in writing (A) at anytime when a
prospectus relating to a registration hereunder is required to be delivered
under the Securities Act, of the happening of any event as a result of which the
<PAGE>
prospectus included in such Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, and
(B) of any request by the Commission or any other regulatory body or other body
having jurisdiction for any amendment of or supplement to any Registration
Statement or other document relating to such offering, and in either such case,
at the request of a Holder, prepare and furnish to such Holders a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such Registrable
Shares, such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading;
5.2.8 use its best efforts to list all such Registrable Shares covered by
such Registration Statement on the principal securities exchange and
inter-dealer quotation system on which a class of common equity securities of
the Company is then listed, and to pay all fees and expenses in connection
therewith;
5.2.9 upon the transfer of shares by a Holder in connection with a
registration hereunder (other than to an "affiliate" of the Company as such term
is defined in Rule 144(a)), furnish unlegended certificates representing
ownership of the Registrable Shares in such denominations as shall be requested
by the Holders or the underwriters;
5.2.10 promptly notify the Holders and the managing underwriter, if any,
and if requested by any such Person, confirm such advice in writing,
(A) of the issuance by the Commission of any stop order suspending the
effectiveness of such Registration Statement or the initiation of any
proceedings for that purpose,
<PAGE>
(B) of the Company's becoming aware at any time that the representations
and warranties of the Company contemplated by Section 5(b)(vii)
(C) above have ceased to be true and correct, and (C) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Registrable Shares for sale in any jurisdiction or the initiation or
threat of any proceeding for such purpose;
5.2.11 if reasonably requested by the managing underwriter, if any, or a
majority in interest of the Registrable Shares being sold in connection with an
underwritten offering, immediately include in a prospectus supplement or
post-effective amendment to such Registration Statement such information as the
managing underwriter or such majority in interest of the Registrable Shares
being sold reasonably request to have included therein relating to the plan of
distribution with respect to such Registrable Shares, including, without
limitation, information with respect to the amount of Registrable Shares being
sold to such underwriters and any other terms of the underwritten (or
best-efforts underwritten) offering of the Registrable Shares to be sold in such
of offering; and make all required filings of such prospectus supplement or
post-effective amendment to such Registration Statement as soon as notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment to such Registration Statement;
5.2.12 prior to any public offering of Registrable Shares, register or
qualify or reasonably cooperate with the Holders, the managing underwriter, if
any, and their respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any Holder or managing
<PAGE>
underwriter reasonably requests and do any and all other facts or things
necessary to enable the disposition in such jurisdictions of the Registrable
Shares covered by such Registration Statement;
5.2.13 cooperate and assist in any filings required to be made with the
NASD and any performance of any due diligence investigation by any underwriter
(including any "qualified independent underwriter" as required to be retained in
accordance with the rules and regulations of the NASD); and
5.2.14 otherwise use its best efforts to comply with the Securities Act,
the Exchange Act, all applicable rules and regulations of the Commission and all
applicable state blue sky and other securities laws, rules and regulations.
5.3 The Company shall pay all out-of-pocket expenses and disbursements
incurred by the Company and the Holders in connection with the Registration
Statements filed by it pursuant to Sections 3 or 4, including, without
limitation, all legal and accounting fees, Commission filing fees, National
Association of Securities Dealers ("NASD") filing fees, printing costs,
registration or qualification fees and expenses to comply with Blue Sky or other
state securities laws, the fees of other experts, and any expenses or other
compensation paid to the underwriters; provided, however, that such registration
expenses shall not include underwriting commissions and discounts and transfer
taxes, if any.
5.4 The Company shall be obligated to keep any Registration Statement filed
by it under Sections 3 and 4 effective under the Securities Act for a period of
180 days after the actual effective date of such Registration Statement and to
prepare and file such supplements and amendments necessary to maintain an
effective Registration Statement for such period. As a condition to the
Company's obligation under this Subsection (d), the Registering Holders will
execute and deliver to the Company such written undertakings as the Company and
its counsel may reasonably require in order to assure full compliance with
relevant provisions of the Securities Act.
<PAGE>
5.5 The Company shall use its best efforts to register or qualify the
Registered Shares under such securities or blue sky laws in such jurisdictions
within the United States as the Registering Holders may reasonably request;
provided, however, that the Company reserves the right, in its sole discretion,
not to register or qualify such Registered Shares in any jurisdiction where such
Registered Shares do not meet with the requirements of such jurisdiction after
having taken reasonable steps to meet such requirements or where the Company is
required to qualify as a foreign corporation to do business in such jurisdiction
and is not so qualified therein or is required to file any general consent to
service of process.
5.6 In the event all the Registered Shares have not been sold on or prior
to the expiration of the period specified in Subsection (d) above, the
Registering Holders hereby agree that the Company may deregister by
post-effective amendment any shares covered by the Registration Statement, but
not sold on or prior to such date. The Company agrees that it will notify the
Registering Holders of the filing and effective date of such post-effective
amendment.
5.7 The Registering Holders agree that upon notification by the Company
that the prospectus in respect to any public offering covered by the provisions
hereof is in need of revision, they shall immediately upon receipt of such
notification (i) cease to offer or sell any securities of the Company which must
be accompanied by such prospectus; (ii) return all such prospectuses in their
hands to the Company; and (iii) shall not offer or sell any securities of the
Company until they have been provided with a current prospectus and the Company
has given them notification permitting them to resume offers and sales.
5.8 As a condition to the filing of a Registration Statement pursuant to
this Agreement, the Company shall indemnify and hold harmless the Registering
Holders and the underwriter(s) and controlling person(s) of such underwriter(s)
<PAGE>
who may purchase from or sell for the Registered Holders, any Registrable
Shares, from and against any and all losses, claims, damages, expenses or
liabilities caused by any failure of the Company to comply with the Securities
Act or any rule or regulation promulgated thereunder in connection with the
registration of the Registrable Securities or any untrue statement of a material
fact contained in the Registration Statement, any post-effective amendment to
such registration statements, or any prospectus included therein required to be
filed or furnished by reason of this Agreement or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statements or alleged untrue statements or omissions based upon information
furnished or required to be furnished in writing to the Company by the party
seeking indemnification expressly for use therein; which indemnification shall
include each person, if any, who controls any such underwriter within the
meaning of the Securities Act and each officer, director, employee and agent of
such underwriter; provided, however, that the Company shall not be obligated to
so indemnify the Registering Holders or any such underwriter or other person
referred to above unless the Registering Holders or underwriter or other person,
as the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any registration statement or any prospectus required to
be filed or furnished by reason of this Agreement or caused by any omission to
state therein a material fact required to be stated therein or necessary to make
<PAGE>
the statements therein not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement or
omission based upon information furnished in writing to the Company by the
Holder or underwriter expressly for use therein.
5.9 Each party entitled to indemnification under paragraph (h) above (the
"Indemnified Party") shall, promptly after receipt of notice of any claim or the
commencement of any action against such Indemnified Party in respect of which
indemnity may be sought, notify the party required to provide indemnification
(the "Indemnifying Party") in writing of the claim or the commencement thereof;
provided that the failure of the Indemnified Party to notify the Indemnifying
Party shall not relieve the Indemnifying Party from any liability which it may
have to an Indemnified Party pursuant to the provisions of paragraph (h), unless
the Indemnifying Party was materially prejudiced by such failure, and in no
event shall such failure relieve the Indemnifying Party from any other liability
which it may have to such Indemnified Party. If any such claim or action shall
be brought against an Indemnified Party, it shall notify the Indemnifying Party
thereof and the Indemnifying Party shall be entitled to participate therein,
and, to the extent that it wishes, jointly with any other similarly notified
Indemnifying Party, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Party. After notice from the Indemnifying Party
to the Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable (except to the extent the
proviso to this sentence is applicable, in which event it will be so liable) to
the Indemnified Party under paragraph (h) for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation: provided that each
Indemnified Party shall have the right to employ separate counsel to represent
it and assume its defense (in which case, counsel to the Indemnifying Party
shall not represent it) if (i) upon the advice of counsel, the representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them (in which case, if such Indemnified
<PAGE>
Party notifies the Indemnifying Party in writing that it elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnifying
Party will not have the right to assume the defense of such claim or action on
behalf of such Indemnified Party), or (ii) in the event the Indemnifying Party
has not assumed the defense thereof within ten (10) days of receipt of notice of
such claim or commencement of action, in which case the fees and expenses of one
such separate counsel shall be paid by the Indemnifying Party. If any
Indemnified Party employs such separate counsel it will not enter into any
settlement agreement which is not approved by the Indemnifying Party, such
approval not to be unreasonably withheld. If the Indemnifying Party so assumes
the defense thereof (and by so assuming shall be solely responsible for
liabilities relating to such claim or action, and shall release the Indemnified
Party from such liabilities to the extent permitted by law, except to the extent
the Indemnified Party is not entitled to be indemnified pursuant to paragraph
(h), it may not agree to any settlement of any such claim or action as the
result of which any remedy or relief, other than monetary damages for which the
Indemnifying Party shall be responsible hereunder, shall be applied to or
against the Indemnified Party, without the prior written consent of the
Indemnified Party. No Indemnified Party will consent to entry of any judgment or
enter into any settlement that does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect of such claim or action. In any action hereunder
as to which the Indemnifying Party has assumed the defense thereof with counsel
satisfactory to the Indemnified Party, the Indemnified Party shall continue to
be entitled to participate in the defense thereof, with counsel of its own
choice, but, except as set forth above, the Indemnifying Party shall not be
obligated hereunder to reimburse the Indemnified Party for the costs thereof.
5.10 If for any reason the indemnification provided for above is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, claim, damage, liability or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by the indemnified
party as a result of such loss, claim, damage or liability in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.
6. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may permit the sale of the
Restricted Securities to the public without registration, the Company agrees to:
6.1 Make and keep public information available at all times, as those terms
are understood and defined in Rule 144 under the Securities Act (as such Rule
may be amended from time to time) or any similar rule hereinafter adopted by the
Commission;
6.2 File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); and
6.3 Take such further action as any Holder may reasonably request, all to
the extent required from time to time, to enable such Holder to sell Registrable
Shares without registration under the Securities Act, including, without
limitation, issuing appropriate instructions to the Company's transfer agent and
registrar and exchanging legended certificates for certificates without legend
and processing in requisite time frames counsel opinions, if any.
7. No Other Registration Rights. The Company represents and warrants to the
Holders that except as set forth in this Agreement and the Purchase Agreement,
there are no other registration rights with respect to the Company's securities
currently outstanding or other rights currently outstanding which could require
the Company to register for sale pursuant to the Securities Act any securities
of the Company (collectively, "Registration Rights"). In addition, the Company
covenants and warrants to the Holders that at all times while the Holders have
the right to request the registration of Registrable Shares hereunder, the
Company will not, without the prior written consent of the Holders, grant to any
person Registration Rights, the effect of which could (a) limit, in any
registration statement subsequently filed by the Company, the number of
Registrable Shares that the Purchasers may include in such registration
statement or (b) otherwise adversely affect the priority of the Registration
Rights being granted to the Holders hereunder.
8. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and the successors and assigns of the Company and
the permitted transferees of the Holders.
8.1 Upon acquisition of any Registrable Shares, the Holders agree that the
Registrable Shares shall not be transferable except upon the conditions set
forth in this Agreement, which conditions are intended to insure compliance with
the provisions of the Securities Act. Each Holder in any transfer subject to
Section 2 herein shall cause any proposed transferee of Registrable Shares held
by that Holder to agree to take and hold those securities subject to the rights
and obligations and upon the conditions specified in this Agreement.
8.2 This Agreement contains the entire agreement among the parties hereto
with respect to the subject matter herein, and cannot be modified, changed,
discharged or terminated except by an instrument in writing signed by the party
against whom the enforcement of any modification, change, discharge or
termination is sought.
<PAGE>
8.3 References to the Holders or some of them by use of masculine pronoun
is for convenience only and shall, where appropriate, be deemed to be reference
by feminine or neuter pronouns. 8.4 Any notice, request, instruction or other
document to be given hereunder shall be in writing and shall be delivered
personally or sent by registered or certified mail as follows: (i) If to the
Company: 4130 Faber Place Suite 200, Ashley Corporate Center Charleston, South
Carolina 29405 Attn: President
With a copy to:
Blau, Kramer, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attn: Edward I. Kramer
(ii) If to the Holders, at the address specified next to their respective
names on Schedule I hereto or to such other address as any party hereto
hereinafter designates in writing to any other party hereto, and
in the case of Robert M. Gintel, to:
Reid & Priest LLP
40 West 57th Street
New York, New York 10019
Attn: Leonard Gubar
<PAGE>
and, in the case of Avondale Mills, Inc., to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attn: Michael J. Egan, III
Upon receiving notice from a Holder (or any permitted transferee of an
Holder) that Registrable Shares have been transferred and if the transferee is
entitled to any rights under this Agreement, the Company shall give notices to
such transferee as contemplated by this Agreement.
8.5 The captions herein are inserted for convenience only and shall not
affect the construction of this Agreement.
8.6 This Agreement is executed and delivered in, and shall be construed in
accordance with, and governed by, the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
8.7 This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
ONEITA INDUSTRIES, INC.
By: /s/ James L. Ford
Name: James L. Ford
Title: Executive vice President and
Chief Financial Officer
HOLDERS:
/s/ Robert M. Gintel
Robert M. Gintel
AVONDALE MILLS, INC.
By: /s/ Jack R. Altherr, Jr.
Name: Jack R. Altherr, Jr.
Title: Vice President and
Chief Financial Officer
<PAGE>
SCHEDULE I
Holders
Robert M. Gintel
Address: 6 Greenwich Office Park
Greenwich, Connecticut 06831
Avondale Mills, Inc.
Address: 506 South Broad Street
Monroe, Georgia 30655
REVOLVING CREDIT AGREEMENT
Dated as of January 26, 1996
By And Among
ONEITA INDUSTRIES, INC.
AND
SUNTRUST BANK, ATLANTA individually, as Agent,
and as Administrative Agent,
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA,
individually and as Agent, and
NATWEST BANK N.A.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS; CONSTRUCTION. . . . . . . . . . . . . . 2
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . 2
Section 1.02. Accounting Terms and
Determination. . . . . . . . . . . . . . . . . 26
Section 1.03. Other Definitional Terms . . . . . . . . . . . 26
Section 1.04. Exhibits and Schedules . . . . . . . . . . . . 26
ARTICLE II REVOLVING CREDIT COMMITMENTS . . . . . . . . . . . . 26
Section 2.01. Commitment; Use of Proceeds. . . . . . . . . . 26
Section 2.02. Notes; Repayment of Principal. . . . . . . . . 27
Section 2.03. Voluntary Reduction of Commitments . . . . . . 27
ARTICLE III GENERAL LOAN TERMS . . . . . . . . . . . . . . . . . 28
Section 3.01. Funding Notices. . . . . . . . . . . . . . . . 28
Section 3.02. Disbursement of Funds. . . . . . . . . . . . . 29
Section 3.03. Interest . . . . . . . . . . . . . . . . . . . 30
Section 3.04. Interest Periods . . . . . . . . . . . . . . . 31
Section 3.05. Fees . . . . . . . . . . . . . . . . . . . . . 33
Section 3.06. Prepayments of Borrowings. . . . . . . . . . . 33
Section 3.07. Payments, etc. . . . . . . . . . . . . . . . . 34
Section 3.08. Interest Rate Not Ascertainable,
etc. . . . . . . . . . . . . . . . . . . . . . 36
Section 3.09. Illegality . . . . . . . . . . . . . . . . . . 36
Section 3.10. Increased Costs. . . . . . . . . . . . . . . . 37
Section 3.11. Lending Offices. . . . . . . . . . . . . . . . 38
Section 3.12. Funding Losses . . . . . . . . . . . . . . . . 39
Section 3.13. Assumptions Concerning Funding of
Eurodollar Advances. . . . . . . . . . . . . . 39
Section 3.14 Apportionment of Payments. . . . . . . . . . . 40
Section 3.15. Sharing of Payments, Etc.. . . . . . . . . . . 40
Section 3.16. Capital Adequacy . . . . . . . . . . . . . . . 40
Section 3.17. Benefits to Guarantors . . . . . . . . . . . . 41
<PAGE>
ARTICLE IV CONDITIONS TO BORROWINGS . . . . . . . . . . . . . . 41
Section 4.01. Conditions Precedent to
Initial Loans. . . . . . . . . . . . . . . . . 41
Section 4.02. Conditions to All Loans. . . . . . . . . . . . 45
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 46
Section 5.01. Organization and Qualification . . . . . . . . 46
Section 5.02. Corporate Authority. . . . . . . . . . . . . . 46
Section 5.03. Financial Statements . . . . . . . . . . . . . 47
Section 5.04. Tax Returns. . . . . . . . . . . . . . . . . . 48
Section 5.05. Judgments, Actions, Proceedings. . . . . . . . 48
Section 5.06. Title to Properties. . . . . . . . . . . . . . 48
Section 5.07. Enforceability of Agreement. . . . . . . . . . 49
Section 5.08. Consent. . . . . . . . . . . . . . . . . . . . 49
Section 5.09. Use of Proceeds; Federal Reserve
Regulations. . . . . . . . . . . . . . . . . . 49
Section 5.10. ERISA. . . . . . . . . . . . . . . . . . . . . 49
Section 5.11. Ownership Structure. . . . . . . . . . . . . . 52
Section 5.12. Outstanding Debt . . . . . . . . . . . . . . . 52
Section 5.13. Burdensome Documents . . . . . . . . . . . . . 52
Section 5.14. No Defaults. . . . . . . . . . . . . . . . . . 52
Section 5.15. Compliance with Laws . . . . . . . . . . . . . 53
Section 5.16. Pollution and Other Regulations. . . . . . . . 53
Section 5.17. Possession of Franchises, Licenses,
Etc. . . . . . . . . . . . . . . . . . . . . . 54
Section 5.18 Intangibles. . . . . . . . . . . . . . . . . . 54
Section 5.19. Governmental Consent . . . . . . . . . . . . . 54
Section 5.20. Disclosure . . . . . . . . . . . . . . . . . . 55
Section 5.21. Insurance Coverage . . . . . . . . . . . . . . 55
Section 5.22. Labor Matters. . . . . . . . . . . . . . . . . 55
Section 5.23. Name Changes, Mergers,
Acquisitions . . . . . . . . . . . . . . . . . 56
Section 5.24 Condition of Assets. . . . . . . . . . . . . . 56
ARTICLE VI AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . 56
Section 6.01. Corporate Existence, Etc.. . . . . . . . . . . 56
Section 6.02. Compliance with Laws, Etc. . . . . . . . . . . 56
Section 6.03. Payment of Taxes and Claims, Etc.. . . . . . . 57
Section 6.04. Books and Records. . . . . . . . . . . . . . . 57
Section 6.05. Inspections and Audits . . . . . . . . . . . . 57
Section 6.06. Maintenance and Repairs. . . . . . . . . . . . 58
<PAGE>
Section 6.07. Reporting Covenants. . . . . . . . . . . . . . 58
Section 6.08. Financial Covenants. . . . . . . . . . . . . . 62
Section 6.09. Notices Under Certain Other
Indebtedness . . . . . . . . . . . . . . . . . 63
Section 6.10. Additional Significant Subsidiaries. . . . . . 64
Section 6.11. Ownership of Significant4
Subsidiaries . . . . . . . . . . . . . . . . . 64
Section 6.12. Insurance. . . . . . . . . . . . . . . . . . . 64
Section 6.13. Copies of Corporate Documents. . . . . . . . . 64
ARTICLE VII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . 65
Section 7.01. Reserved . . . . . . . . . . . . . . . . . . . 65
Section 7.02. Liens. . . . . . . . . . . . . . . . . . . . . 65
Section 7.03. Mergers, Acquisitions. . . . . . . . . . . . . 66
Section 7.04. Investments, Loans, Etc. . . . . . . . . . . . 66
Section 7.05. Capital Expenditures . . . . . . . . . . . . . 67
Section 7.06. Minimum Tangible Net Worth . . . . . . . . . . 67
Section 7.07. Sale and Leaseback Transactions. . . . . . . . 67
Section 7.08. Transactions with Affiliates . . . . . . . . . 67
Section 7.09. Optional Prepayments . . . . . . . . . . . . . 68
Section 7.10. Changes in Business. . . . . . . . . . . . . . 69
Section 7.11. ERISA Obligations. . . . . . . . . . . . . . . 69
Section 7.12. Additional Negative Pledges. . . . . . . . . . 69
Section 7.13. Limitation on Payment Restrictions
Affecting Consolidated Companies . . . . . . . 70
Section 7.14. Actions Under Certain Documents. . . . . . . . 70
Section 7.15. Redemptions, Distributions . . . . . . . . . . 70
Section 7.16. Stock Issuance . . . . . . . . . . . . . . . . 70
Section 7.17. Fiscal Year. . . . . . . . . . . . . . . . . . 70
Section 7.18. Hazardous Material . . . . . . . . . . . . . . 71
ARTICLE VIII EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . 71
Section 8.01. Payments . . . . . . . . . . . . . . . . . . . 71
Section 8.02. Covenants Without Notice . . . . . . . . . . . 71
Section 8.03. Other Covenants. . . . . . . . . . . . . . . . 71
Section 8.04. Representations. . . . . . . . . . . . . . . . 71
Section 8.05. Non-Payments of Other Indebtedness . . . . . . 71
Section 8.06. Defaults Under Other Agreements. . . . . . . . 72
Section 8.07. Bankruptcy . . . . . . . . . . . . . . . . . . 72
Section 8.08. Judgment . . . . . . . . . . . . . . . . . . . 73
<PAGE>
Section 8.09. Attachments. . . . . . . . . . . . . . . . . . 73
Section 8.10. ERISA. . . . . . . . . . . . . . . . . . . . . 73
Section 8.11. Ownership of Credit Parties
and Pledged Entities . . . . . . . . . . . . . 73
Section 8.12. Change in Control of Borrower. . . . . . . . . 74
Section 8.13. Credit Documents . . . . . . . . . . . . . . . 74
ARTICLE IX THE AGENT. . . . . . . . . . . . . . . . . . . . . . 74
Section 9.01. Appointment of Agent and the
Administrative Agent . . . . . . . . . . . . . 74
Section 9.02. Nature of Duties of Agent and
the Administrative Agent . . . . . . . . . . . 75
Section 9.03. Lack of Reliance on Agent and
the Administrative Agent . . . . . . . . . . . 75
Section 9.04. Certain Rights of the Agent and
the Administrative Agent . . . . . . . . . . . 76
Section 9.05. Reliance by Agent and Administrative
Agent. . . . . . . . . . . . . . . . . . . . . 76
Section 9.06. Indemnification of the Agent and
the Administrative Agent . . . . . . . . . . . 77
Section 9.07. The Agent and Administrative Agent
in their Individual Capacities . . . . . . . . 77
Section 9.08. Holders of Notes . . . . . . . . . . . . . . . 77
Section 9.09. Successor Agent; Successor
Administrative Agent . . . . . . . . . . . . . 78
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . 78
Section 10.01. Notices. . . . . . . . . . . . . . . . . . . . 78
Section 10.02. Amendments, Etc. . . . . . . . . . . . . . . . 79
Section 10.03. No Waiver; Remedies Cumulative . . . . . . . . 79
Section 10.04. Payment of Expenses,Indemnity, Etc.. . . . . . 80
Section 10.05. Right of Setoff. . . . . . . . . . . . . . . . 82
Section 10.06. Benefit of Agreement . . . . . . . . . . . . . 82
Section 10.07. Governing Law; Submission to
Jurisdiction . . . . . . . . . . . . . . . . . 85
Section 10.08. Independent Nature of Lenders'
Rights . . . . . . . . . . . . . . . . . . . . 86
Section 10.09. Counterparts . . . . . . . . . . . . . . . . . 86
Section 10.10. Effectiveness; Survival. . . . . . . . . . . . 86
Section 10.11. Severability . . . . . . . . . . . . . . . . . 86
Section 10.12. Independence of Covenants. . . . . . . . . . . 86
<PAGE>
Section 10.13. Change in Accounting Principles,
Fiscal Year or Tax Laws. . . . . . . . . . . . 86
Section 10.14. Headings Descriptive; Entire
Agreement. . . . . . . . . . . . . . . . . . . 87
Section 10.15. Time is of the Essence . . . . . . . . . . . . 87
Section 10.16. Usury. . . . . . . . . . . . . . . . . . . . . 87
Section 10.17. Construction . . . . . . . . . . . . . . . . . 87
Section 10.18. Release of Collateral. . . . . . . . . . . . . 88
Section 10.19. Confidentiality. . . . . . . . . . . . . . . . 88
Section 10.20 Provisions Relating to the
Refinanced Indebtedness. . . . . . . . . . . . 88
<PAGE>
SCHEDULES
Schedule 1.01 Applicable Margin Percentages
Schedule 5.01 Organization and Ownership of
Subsidiaries
Schedule 5.03 Material Changes since 9/30/95
Schedule 5.05 Certain Pending and Threatened
Litigation
Schedule 5.08 Governmental Approvals and Consents
Schedule 5.10 Employee Benefit Plans
Schedule 5.12 Existing Indebtedness
Schedule 5.16 Environmental Matters
Schedule 5.18 Patent, Trademark, License, and
Other Intellectual Property
Matters
Schedule 5.22 Labor and Employment Matters
Schedule 5.23 Name Change, etc.
Schedule 6.10 Additional Significant Subsidiaries
Documentation
Schedule 7.02 Existing Liens
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Borrower Security Agreement
Exhibit C Form of Guarantor Security Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Promissory Note
Exhibit F Form of Closing Certificate of Borrower
Exhibit G-1 Form of Opinion of Counsel to the
Borrower
Exhibit G-2 Form of Opinion of Counsel to the
Guarantor
Exhibit G-3 Form of Opinion of Local Counsel to the
Credit Parties in Alabama, Georgia,
South Carolina North Carolina
Exhibit H Form of Borrowing Base Certificate
Exhibit I Form of Standby Agreement
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of January 26, 1996 (the
"Agreement") by and among ONEITA INDUSTRIES, INC. ("Borrower"), a Delaware
corporation, SUNTRUST BANK, ATLANTA ("SunTrust"), a Georgia banking corporation,
FIRST UNION NATIONAL BANK OF SOUTH CAROLINA, a national banking association
("First Union"), and NATWEST BANK N.A., a national banking association
("NatWest") (SunTrust, First Union and NatWest are hereinafter referred to
collectively, as the "Lenders" and, individually, as a "Lender"), SUNTRUST and
FIRST UNION as Agent for the Lenders, and SUNTRUST as Administrative Agent for
Lenders.
W I T N E S S E T H :
WHEREAS, SunTrust and NatWest have each made a $12,500,000 revolving credit
facility available to the Borrower pursuant to that certain Loan Agreement,
dated as of March 26, 1993, among the Borrower, SunTrust and NatWest, as
heretofore amended or modified, and SunTrust and NatWest have independently made
guidance lines of credit available to the Borrower in the principal amounts of
$10,000,000 and $5,000,000, respectively;
WHEREAS, First Union has made a guidance line of credit available to the
Borrower in the principal amount of $10,000,000;
WHEREAS the Borrower has requested that SunTrust, NatWest and First Union
amend and restate their existing facilities and increase the total principal
amount of such facilities to $60,000,000, and the Lenders are willing to do so
subject to the terms and conditions hereof, including without limitation, the
guarantees of the Borrower's significant subsidiaries and a lien upon certain
assets of the Borrower and its significant subsidiaries;
NOW, THEREFORE, for and in consideration of the mutual covenants made
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. As used in this Agreement, and in any
instrument, certificate, document or report delivered pursuant hereto, the
following terms shall have the following meanings (to be equally applicable to
both the singular and plural forms of the term defined):
"Adjusted LIBO Rate" shall mean, with respect to each Interest Period for a
Eurodollar Advance, the rate obtained by dividing (A) LIBOR for such Interest
Period by (B) a percentage equal to 1 minus the then stated maximum rate (stated
as a decimal) of all reserves requirements (including, without limitation, any
marginal, emergency, supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of Eurodollar liabilities
as defined in Regulation D (or against any successor category of liabilities as
defined in Regulation D).
"Administrative Agent" shall mean SunTrust Bank, Atlanta, a Georgia banking
corporation, and each successor Administrative Agent.
"Advance" shall mean any principal amount advanced and remaining
outstanding at any time under the Loans, which Advance shall be made or
outstanding as a Base Rate Advance or Eurodollar Advance, as the case may be.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person, provided that, in any event: (i) any Person that owns directly or
indirect thirty percent (30%) or more of the securities have the ordinary voting
power for the election of directors or other governing body of a corporation or
thirty percent (30%) or more of the partnership or other ownership interests of
any other Person (other than a limited partner of such other Person) will be
<PAGE>
deemed to control such corporation or other Person; and (ii) each director and
officer of the Borrower shall be deemed to be an Affiliate of the Borrower.
"Agent" shall mean SunTrust and First Union, jointly and severally, as
agent for the Lenders hereunder and under the other Credit Documents, and each
successor Agent.
"Agreement" shall mean this Revolving Credit Agreement, either as
originally executed or as it may be from time to time supplemented, amended,
restated, renewed or extended and in effect.
"Applicable Law" shall mean (i) all applicable common law and principles of
equity and (ii) all applicable provisions of all (a) constitutions, statutes,
rules, regulations and orders of Governmental Agencies, (b) Governmental
Approvals and (c) orders, decisions, judgments and decrees of all courts and
arbitrators.
"Applicable Margin" shall mean, (i) with respect to all Eurodollar Advances
outstanding under the Commitments through March 31, 1996, two and three-quarters
of one percent (2.75%) per annum, (ii) with respect to all Base Rate Advances
outstanding under the Commitments through March 31, 1996, three-quarters of one
percent (0.75%) per annum, and (iii) with respect to all Advances outstanding
under to the Commitments commencing on April 1, 1996 and thereafter, the
relevant percentage indicated on Schedule 1.01 hereto for the Consolidated
Companies' Funded Debt to EBITDA Ratio and Leverage Ratio, based upon the
financial statements delivered to the Lenders pursuant to Section 6.07(a) or
Section 6.07(b) hereof, as the case may be, with such Applicable Margin to be
effective with respect to calculations based upon the financial statements
delivered pursuant to Section 6.07(b) as of the first day of the second fiscal
quarter immediately following the fiscal quarter for which such financial
statements are delivered and with such Applicable Margin to be effective with
respect to calculations based upon the financial statements delivered pursuant
to Section 6.07(a) on the earlier of (y) delivery of such financial statements
(but in no event earlier than 90 days after the end of any fiscal year), and (z)
the date which is 120 days after the end of each fiscal year of the Borrower.
"Asbestos Laws" shall mean the common law in all federal, state and local
and foreign jurisdictions and other laws in such jurisdictions, and regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
<PAGE>
or entered thereunder, now or hereafter in effect relating to or concerning
asbestos or asbestos-containing material, including without limitation, exposure
to asbestos or asbestos-containing material.
"Asset Sale" shall mean the conveyance, sale, lease, assignment, transfer
or other disposition by the Borrower or any of its Subsidiaries of any of their
respective properties, assets or business.
"Asset Value" shall mean, with respect to any property or asset of any
Consolidated Company as of any particular date, an amount equal to the greater
of (i) the then book value of such property or asset as established in
accordance with GAAP, and (ii) the then fair market value of such property or
asset as determined in good faith by the board of directors of such Consolidated
Company.
"Assignment and Acceptance" shall mean an assignment and acceptance entered
into by a Lender and an Eligible Assignee in accordance with the terms of this
Agreement and substantially in the form of Exhibit A.
"Avondale" shall mean Avondale Mills, Inc., an Alabama corporation.
"Avondale Debt" shall mean all Indebtedness and other obligations owed by
the Borrower to Avondale (including, without limitation, principal, interest,
premiums, make-whole and yield maintenance amounts, fees, costs and expenses and
all other amounts owing by the Borrower to Avondale) arising under or evidenced
by the Avondale Note, the Convertible Note to Avondale and the Subordinated Debt
Documents.
"Avondale Note" shall mean that certain Subordinated 10% Promissory Note,
dated as of the date hereof, executed by the Borrower in favor of Avondale in
the principal amount of $7,500,000, as any of the foregoing may hereafter
amended, restated, replaced, supplemented or otherwise modified from time to
time with the prior written consent of the Lenders.
"Avondale/Gintel Documents" shall mean, collectively, (i) that certain
Registration Rights Agreement, dated as of the date hereof, among the Borrower,
Gintel and Avondale, (ii) the Standby Agreement, (iii) that certain Note
<PAGE>
Purchase Agreement, dated as of December 28, 1995, among the Borrower, Gintel
and Avondale and (iv) all other documents and agreements executed in connection
therewith, as any of the foregoing may be hereafter amended, restated, replaced,
supplemented or otherwise modified with the prior written consent of the
Lenders.
"Bankruptcy Code" shall mean The Bankruptcy Code of 1978, as amended and in
effect from time to time (11 U.S.C. 101 et seq.).
"Base Rate" shall mean (with any change in the Base Rate to be effective as
of the date of change of either of the following rates) the higher of (a) the
rate which the Administrative Agent designates from time to time to be its prime
lending rate, as in effect from time to time, and (b) the Federal Funds Rate, as
in effect from time to time, plus one-half of one percent (0.50%) per annum. The
Administrative Agent's prime lending rate is a reference rate and does not
necessarily represent the lowest or best rate charged to customers; the
Administrative Agent may make commercial loans or other loans at rates of
interest at, above or below the Administrative Agent's prime lending rate.
"Base Rate Advance" shall mean an Advance bearing interest based on the
Base Rate.
"Base Rate Loan" shall mean any Loan hereunder which bears interest based
on the Base Rate.
"Borrower Security Agreement" shall mean that certain Security Agreement
(Borrower), dated as of the date hereof, executed by the Borrower in favor of
the Collateral Agent, substantially in the form of Exhibit B, as the same may
hereafter be amended, restated, supplemented or otherwise modified from time to
time.
"Borrowing" shall mean the incurrence by Borrower of Advances of one Type
concurrently having the same Interest Period or the continuation or conversion
of an existing Borrowing or Borrowings in whole or in part.
"Borrowing Base" shall mean, at any time, an amount equal to the sum of:
<PAGE>
(i) eighty percent (80%) of Eligible Accounts Receivable,
plus
(ii) the lesser of (A) fifty percent (50%) of Eligible Finished Goods
Inventory and (B) (1) $35,000,000 at any time on or prior to April 30, 1996
and (2) $30,000,000 thereafter, plus
(iii) (A) thirty percent (30%) of Eligible Work-In-Process Inventory
during the period commencing January 1, 1996 and ending on March 31, 1996,
(B) twenty-five percent (25%) of Eligible Work-In-Process Inventory during
the period commencing on April 1, 1996 and ending on May 31, 1996 and (C)
none of Eligible Work-In-Process Inventory after May 31, 1996, plus
(iv) $5,000,000 during the period commencing on November 1 and ending
on May 31 during each year, including, without limitation the period
commencing as of the Closing Date and ending on May 31, 1996.
"Business Day" shall mean, with respect to Eurodollar Loans, any day other
than a day on which commercial banks are closed or required to be closed for
domestic and international business, including dealings in Dollar deposits on
the London Interbank Market, and with respect to all other Loans and matters,
any day other than Saturday, Sunday and a day on which commercial banks are
closed or required to be closed for business in Atlanta, Georgia, Greenville,
South Carolina or New York, New York.
"Capital Expenditures" shall mean, for any fiscal period of the Borrower,
the total capital expenditures of the Consolidated Companies on a consolidated
basis made during such period, as determined in accordance with GAAP.
"Capitalized Lease Obligations" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real or personal property which
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
<PAGE>
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act as amended by the Super Fund Amendments and Reauthorization Act,
42 U.S.C. 9601 et seq., and as amended from time to time.
"Closing Date" shall mean the date on or before January 26, 1996, on which
the initial Loans are made and the conditions set forth in Section 4.01 are
satisfied or waived in accordance with Section 10.02.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Collateral Agent" shall mean SunTrust Bank, Atlanta, in its capacity as
collateral agent for the Lenders and Prudential, and its successors and assigns.
"Commitment" shall mean, for any Lender at any time, the amount of such
commitment set forth opposite such Lender's name on the signature pages hereof
under the caption "Commitment", as the same may be increased or decreased from
time to time as a result of any reduction thereof pursuant to Section 2.03, any
assignment thereof pursuant to Section 10.06, or any amendment thereof pursuant
to Section 10.02.
"Consolidated Companies" shall mean, collectively, Borrower and all of its
Subsidiaries.
"Consolidated EBITDA" shall mean, for any fiscal period of the Borrower, an
amount equal to the sum of (A) Consolidated Net Income (Loss), plus (B) to the
extent deducted in determining Consolidated Net Income (Loss), (i) Consolidated
Interest Expense, (ii) provisions for taxes based on income for the Consolidated
Companies, and (iii) depreciation expense and amortization expense of the
Consolidated Companies.
"Consolidated EBITR" shall mean, for any fiscal period of the Borrower, an
amount equal to the sum of (A) Consolidated Net Income (Loss), plus (B) to the
extent deducted in determining Consolidated Net Income (Loss), (i) provisions
for taxes based on income for the Consolidated Companies for such period, (ii)
Consolidated Interest Expense, and (iii) Consolidated Rental Expense.
<PAGE>
"Consolidated Interest Expense" shall mean, for any fiscal period of
Borrower, total interest expense (including without limitation, interest expense
attributable to capitalized leases) of the Consolidated Companies for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income (Loss)" shall mean, for any fiscal period of
Borrower, the net income (or loss) of the Consolidated Companies for such
period, determined on a consolidated basis in accordance with GAAP;
"Consolidated Rental Expense" shall mean, for any fiscal period of
Borrower, total operating lease expense of the Consolidated Companies for such
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" shall mean, as at any particular time, any
corporation included as a consolidated Subsidiary of Borrower in Borrower's most
recent financial statements furnished to its stockholders and certified by
Borrower's independent public accountants, provided that under then generally
accepted accounting principles approved by such independent public accountants,
such corporation may continue to be so included as a consolidated Subsidiary of
Borrower in any financial statements thereafter certified by such accountants.
"Contractual Obligation" of any Person shall mean any provision of any
security issued by such Person or of any agreement, instrument or undertaking
under which such Person is obligated or by which it or any of the property owned
by it is bound.
"Controlled Group" shall mean all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b), 414(c) or 414(m) of the Code and Section
4001(a)(14) of ERISA.
"Convertible Notes" shall have the meaning set forth in Section 7.09
hereof.
"Credit Documents" shall mean, collectively, this Agreement, the Notes, the
Guaranty Agreement, the Security Agreements, the Intercreditor Agreement, the
Subordination Agreement, all UCC-1 financing statements and other instruments of
<PAGE>
perfection executed in connection therewith and all other documents and
instruments relating to, guaranteeing or securing the Loans, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Credit Parties" shall mean, collectively, each of Borrower, the
Guarantors, and each other Person who from time to time executes a Credit
Document with respect to all or any portion of the Obligations.
"Current Assets" shall mean, for any fiscal period of the Borrower, the
current assets of the Consolidated Companies determined on a consolidated basis
in accordance with GAAP.
"Current Liabilities" shall mean, for any fiscal period of the Borrower,
the current liabilities of the Consolidated Companies determined on a
consolidated basis in accordance with GAAP, and shall include, without
limitation, as of the date of any determination thereof: (i) all Indebtedness
payable on demand or maturing within one year after such date without any option
on the part of the obligor to extend or renew beyond such year, (ii) final
maturities, installments and prepayments of Indebtedness required to be made
within one year after such date, (iii) the unpaid principal balance of the Notes
due within one year after such date, and (iv) all other items (including taxes
accrued as estimated and reserves for deferred income taxes) that would be
included on a balance sheet as current liabilities in accordance with GAAP.
"Current Ratio" shall mean the ratio of (A) Current Assets to (B) Current
Liabilities, but excluding all Loans then outstanding to the extent included in
Current Liabilities.
"Debt Instrument" shall mean, as to any Person, any bond, note, debenture,
credit or loan agreement, indenture, guaranty, trust agreement, security
agreement, pledge agreement, deed of trust, capital lease, mortgage or similar
agreement or instrument to which such Person is a party, by which it is bound or
by which any of its properties or assets may be affected.
"Debt Service Coverage Ratio" shall mean, as at the end of any fiscal
period of Borrower, the ratio of (A) the sum of Consolidated Net Income (Loss),
plus to the extent deducted in determining such Consolidated Net Income,
<PAGE>
depreciation expense and amortization expense of the Consolidated Companies,
plus Consolidated Interest Expense to (B) an amount equal to the current
maturities of Long-term Indebtedness of the Consolidated Companies, minus to the
extent deducted in determining current maturities of Long-term Indebtedness, the
principal amount of the Loans then outstanding, plus Consolidated Interest
Expense, in each case determined on a consolidated basis in accordance with
GAAP.
"December 1995 Factoring Agreement" shall have the meaning assigned to such
term in Section 10.20 hereof.
"Default" shall mean any condition or event which, with notice or lapse of
time or both, would constitute an Event of Default.
"Defined Contribution Plan" shall mean a plan which is not covered by Title
IV of ERISA or subject to the minimum funding standards of Section 412 of the
Code and which provides for an individual account for each participant and for
benefits based solely on the amount contributed to the participant's account,
and any income, expenses, gains and losses, and any forfeitures of accounts of
other participants which may be allocated to such participant's account.
"Dollar" and "U.S. Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"Eligible Accounts Receivable" shall mean any Receivable of the Borrower or
a Guarantor which the Administrative Agent, in the reasonable exercise of its
credit judgment consistent with industry practice, deems eligible, provided,
that once a Receivable has been deemed eligible by the Administrative Agent and
therefore admitted to the Borrowing Base, the Administrative Agent cannot at any
later time (provided that the Receivable satisfies the requirements of clauses
(i) through and including (xi) below) deem such Receivable to be ineligible and
therefore remove such Receivable from the Borrowing Base (such Receivable to
remain in the Borrowing Base until the earlier of (i) such time as the
Receivable fails to meet the requirements of clauses (i) through and including
(xi) below or (ii) the account debtor owing such Receivable pays such
Receivable), provided, further, that the Administrative Agent shall have the
right to deem other Receivables from the same account debtor as ineligible as
and when they are presented to the Administrative Agent to be admitted to the
<PAGE>
Borrowing Base, but must first give the Borrower or such Guarantor thirty days'
prior notice of the ineligibility of Receivables from such account debtor; and,
in any event, is a Receivable: (i) which is denominated and payable only in
Dollars in the United States; (ii) which constitutes the legal, valid and
binding obligation of the obligor of such Receivable enforceable against such
obligor in accordance with its terms, (iii) which is not subject to any dispute
or setoff, counterclaim or defense whatsoever; (iv) as to which the Borrower or
such Guarantor, as applicable, has good and marketable title thereto free and
clear of all adverse claims or other claims of any kind, any setoff,
counterclaim or defense of any kind; (v) which together with any contract
related thereto, does not contravene in any material respect any federal or
state law, statute, rule, regulation, ordinance, code, order and judgment (a
"Law") applicable thereto and with respect to which no party to any contract
related thereto is in violation of any such Law in any material respect; (vi)
which satisfies all applicable requirements of the credit and collection
policies and practices of the Borrower or such Guarantor (which are subject to
approval by the Administrative Agent, which approval shall not be unreasonably
withheld and which approval shall be consistent with industry practice); (vii)
payments which may not be avoided as a preferential transfer under the
Bankruptcy Code and all other applicable dissolution, liquidation,
conservatorship, bankruptcy, moratorium, readjustment of debt, compromise,
rearrangement, receivership, insolvency, reorganization or similar debtor relief
laws affecting creditors' rights generally; (viii) that is no more than 60 days
delinquent past the date due as stated on the invoice relating thereto; (ix) not
representing customer deductions from previous payments; (x) for an amount
which, when combined with the aggregate amount of all other Receivables owed by
the same account debtor or affiliate thereof, does not equal or exceed
$5,000,000, unless the Administrative Agent has been given its prior consent
thereto and (xi) the obligor of which is not bankrupt or insolvent.
"Eligible Assignee" means any of the following (i) a commercial bank
organized under the laws of the United States, or any State thereof, and having
total assets in excess of $100,000,000; (ii) a savings and loan association or
savings bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $100,000,000; (iii) a commercial
bank organized under the laws of any other country having total assets in excess
of $100,000,000, provided that such bank is acting through a branch or agency
located in the United States; (iv) a finance company, insurance company or other
<PAGE>
financial institution, lender or fund (whether a corporation, partnership or
other entity) which is engaged in making, purchasing or otherwise investing in
commercial loans in the ordinary course of its business, and having total assets
in excess of at least $100,000,000; (v) any Lender or any Affiliate of any
Lender; or (vi) any other Person consented to by the Borrower and the Agent,
such consent not unreasonably to be withheld.
"Eligible Finished Goods Inventory" shall mean Eligible Inventory of the
Borrower or any Guarantor that consists of finished goods.
"Eligible Inventory" shall mean the lower of FIFO cost or market value of
Inventory of the Borrower or any Guarantor which the Administrative Agent, in
the reasonable exercise of its credit judgment consistent with industry
practice, shall deem eligible, provided that any changes in credit judgment of
the Administrative Agent shall effective on the thirtieth (30th) day after the
Administrative Agent gives the Borrower or such Guarantor notice of such change
in credit judgment; and, in any event, such Inventory must meet the following
criteria:
(a) the Inventory must be subject to a perfected first-priority Lien in
favor of the Collateral Agent, other than Inventory located outside the
United States for which a Permitted Bailee has executed in favor of, and
delivered to, the Collateral Agent a bailee letter in substantially the form
of Exhibit A to the Company Security Agreement, provided that the value of
Inventory as measured as set forth above at locations outside the United
States which are not owned or leased by the Borrower or any of its
Subsidiaries may not at any time exceed $5,000,000;
(b) except for the Lien in favor of the Collateral Agent, the Borrower
or the Guarantors must otherwise have clear title to all Inventory,
regardless of where located, free and clear of all other Liens;
(c) the Inventory must be (i) located at one of the places of business
of the Borrower listed on Schedule 1 of the Borrower Security Agreement or
of the Guarantors listed on Schedule 1 of the Guarantor Security Agreement,
or (ii) in transit from one such location to another;
<PAGE>
(d) the Inventory may not be located at any third-party finishing or
processing location or public warehouse, other than with a Permitted Bailee,
and the Inventory may not be in the possession of a bailee other than a
Permitted Bailee;
(e) the Inventory consists of finished goods Inventory or work in
process Inventory, and does not consist of raw materials Inventory used in
the manufacture of finished goods or processing supplies, packaging,
advertising, promotional materials, stores or other non-product related
items;
(f) the Inventory has been inspected and does not consist of returned
goods which are currently unsalable in the ordinary course of the business
of the Borrower or the Guarantor;
(g) the Inventory is not under consignment to or from
any Person or under any bill and hold or like arrangement;
(h) the Inventory is of good and merchantable quality, has been
accurately graded as first quality, second quality or third quality, and has
been accurately valued to reflect its status as first quality, second
quality or third quality as the case may be;
(i) the Inventory meets all standards imposed by any
Governmental Agency having regulatory authority over such
Inventory; and
(j) with respect to such Inventory, any representation or warranty
contained herein or in any other Credit Documents applicable to Inventory
has not been breached;
the Administrative Agent hereby acknowledges that as of the Closing Date the
amount and mix of the Inventory is acceptable in the reasonable exercise of the
Administrative Agent's credit judgment; provided, that the Administrative Agent
may, in the exercise of its reasonable credit judgment at any time after the
Closing Date, find the amount and mix of the Inventory unacceptable, even if the
amount and mix of the Inventory is the same as the amount and mix of the
Inventory as of the Closing Date, and therefore deem some or all of such
Inventory ineligible based upon such factors, such change in credit judgment to
be effective on the thirtieth (30th) day after the Administrative Agent gives
the Borrower or such Guarantor notice thereof.
<PAGE>
"Eligible Work-In-Process Inventory" shall mean Eligible Inventory of the
Borrower or any Guarantor that consists of work in process.
"Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of the
Borrower or any of its ERISA Affiliates or (b) has at any time within the
preceding six (6) years been maintained for employees of the Borrower or any
current ERISA Affiliate while an ERISA Affiliate.
"Employee Welfare Benefit Plan" shall mean any employee benefit plan within
the meaning of Section 3(q) of ERISA.
"Environmental Laws" shall mean all federal, state, local and foreign
statutes and codes or regulations, rules or ordinances issued, promulgated, or
approved thereunder, now or hereafter in effect (including, without limitation,
those with respect to asbestos or asbestos containing material or exposure to
asbestos or asbestos containing material), relating to pollution or protection
of the environment and relating to public health and safety, relating to (i)
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial toxic or hazardous constituents,
substances or wastes, including without limitation, any "hazardous substance" as
defined in CERCLA, petroleum including crude oil or any fraction thereof, any
petroleum product or other waste, chemicals or substances regulated by any
Environmental Law, into the environment (including without limitation, ambient
air, surface water, ground water, land surface or subsurface strata), or (ii)
the manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any "hazardous substances" as defined in
CERCLA, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law, and (iii) underground storage tanks and related piping, and emissions,
discharges and releases or threatened releases therefrom, such Environmental
Laws to include, without limitation (A) CERCLA, (B) RCRA, (C) the Federal Clean
Air Act (42 U.S.C. 7401 et seq.), (D) the Clean Water Act (33 U.S.C. 1251 et
seq.), (E) the Toxic Substances Control Act (15 U.S.C. 2601 et seq.) and (F) the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.).
<PAGE>
"Environmental Liability" shall mean any liability under any applicable law
for any release of a hazardous substance caused by the seeping, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, and any liability for the costs
of any clean-up or other remedial action including, without limitation, costs
arising out of security fencing, alternative water supplies, temporary
evacuation and housing and other emergency assistance undertaken by any
environmental regulatory body having jurisdiction over the Borrower or any
Subsidiary to prevent or minimize any actual or threatened release by the
Borrower or any Subsidiary of any Hazardous Materials into the environment that
would endanger the public health or the environment.
"Environmental Matter(s)" shall mean a release of any toxic or hazardous
waste or other Hazardous Materials into the environment or the generation,
treatment, storage or disposal of any toxic or hazardous wastes or other
Hazardous Materials.
"Environmental Proceeding" shall mean any judgment, action, proceeding or
investigation pending before any court or Governmental Agency, including,
without limitation, any environmental regulatory body, with respect to, or to
the best of the Borrower's knowledge threatened against, the Borrower or any
Subsidiary or relating to the assets of liabilities of any of them, including,
without limitation, in respect of any "facility" owned, leased or operated by
any of them under CERCLA or any other Environmental Law in respect thereof, in
connection with any release of any toxic or hazardous waste or other Hazardous
Materials into the environment, or with the generation, storage or disposal of
any toxic or hazardous wastes or other chemical substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time, and the regulations promulgated thereunder.
<PAGE>
"ERISA Affiliate" shall mean, with respect to the Borrower, any
corporation, person or trade or business which is a member of the Borrower's
Controlled Group.
"Eurodollar Advance" shall mean an Advance bearing interest based on the
Adjusted LIBO Rate.
"Eurodollar Loan" shall mean any Loan hereunder which bears interest based
on the Adjusted LIBO Rate.
"Event of Default" shall have the meaning set forth in Article IX.
"Excess Cash Flow" shall mean, as of the end of any fiscal quarter of the
Borrower, an amount equal to the Consolidated Companies' (a) Consolidated Net
Income for such fiscal quarter, plus (b) depreciation expense for such fiscal
quarter determined on a consolidated basis in accordance with GAAP, plus (c)
amortization expense for such fiscal quarter determined on a consolidated basis
in accordance with GAAP, plus (d) increases in deferred taxes (or minus
decreases in deferred taxes) for such fiscal quarter determined on a
consolidated basis in accordance with GAAP, minus (e) increases in Working
Capital (or plus decreases in Working Capital) (but excluding increases or
decreases in Working Capital attributable to the net cash proceeds received by
the Borrower from the issuance of the Subordinated Debt or any other
Indebtedness evidenced by a Debt Instrument (except to the extent required
pursuant to Section 7.02(f) hereof to be used to repay the Obligations), the
exercise of the Gintel Warrant and the consummation of the Rights Offering),
minus (f) Capital Expenditures for such fiscal quarter, minus (g) all payments
of principal applied to current maturities of Long-term Indebtedness for such
fiscal quarter, in each case measured as of the last Business Day of such fiscal
quarter; provided, however, that to the extent that the foregoing amount is
negative, the Excess Cash Flow Payment shall be deemed to be zero.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute thereto.
"Facility" or "Facilities" shall mean the Revolving Loan Commitments and
Loans.
<PAGE>
"Factored Receivables" shall mean all accounts receivable purchased by
SunTrust from the Borrower pursuant to the December 1995 Factoring Agreement
which remain uncollected in whole or in part on the Closing Date.
"Fayette Alabama Plant Expenditures" shall mean all Capital Expenditures
made by the Borrower and its Subsidiaries at their Fayette, Alabama facility.
"Federal Funds Rate" shall mean for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with member banks of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of Atlanta, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by the Administrative Agent.
"Final Maturity Date" shall mean the date on which all commitments have
been terminated and all amounts outstanding under this Agreement have been
declared or have automatically become due and payable pursuant to the provisions
of Article IX.
"Financial Statements" shall mean (i) the consolidated audited Balance
Sheet of the Consolidated Companies as at September 30, 1995, together with the
related audited Income Statement, Statement of Shareholders' Equity and
Statement of Cash Flows for the fiscal year then ended.
"Fixed Charge Coverage Ratio" shall mean, as at the end of any fiscal
period of Borrower, the ratio of (A) Consolidated EBITR to (B) the sum of (i)
Consolidated Interest Expense plus (ii) Consolidated Rental Expense.
"Funded Debt" of any Person shall mean all Indebtedness for money borrowed,
purchase money mortgages, Capitalized Lease Obligations, conditional sales
contracts and similar title retention debt instruments of such Person, including
any current maturities of such indebtedness, which by its terms matures more
than one year from the date of any calculation thereof or which is renewable or
extendable at the option of the obligor to a date beyond one year from such
<PAGE>
date, including, without limitation, Long-term Indebtedness and short-term
Indebtedness. The calculation of Funded Debt of any Person shall include all
Funded Debt of such Person, plus (without duplication) all Funded Debt of other
entities or persons guaranteed by such Person or which is supported by a letter
of credit issued for the account of the such Person.
"Funded Debt Coverage Ratio" shall mean, as of the end of any fiscal period
of the Borrower, the ratio of (A) Funded Debt of the Consolidated Companies to
(B) Consolidated EBITDA of the Consolidated Companies.
"GAAP" shall mean 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 may be approved by a significant segment of the accounting
profession, as from time to time in effect that are consistently applied and,
when used with respect to the Borrower, that are consistent with the accounting
practice of the Borrower, as reflected in the financial statements of the
Borrower.
"Gintel" shall mean Robert M. Gintel, an individual whose principal place
of business is in Connecticut.
"Gintel Debt" shall mean all Indebtedness and other obligations owed by the
Borrower to Gintel (including, without limitation, principal, interest,
premiums, fees and all other amounts) pursuant to or evidenced by the Gintel
Notes, the Convertible Note to Gintel and the Subordinated Debt Documents.
"Gintel Notes" shall mean, collectively, (i) that certain Subordinated 10%
Promissory Note, dated as of the date hereof, executed by the Borrower in favor
of Gintel in the principal amount of $3,750,000, and (ii) that certain
Subordinated 10% Promissory Note, dated as of the date hereof, executed by the
Borrower in favor of Gintel in the principal amount of $3,750,000, as any of the
foregoing may be hereafter amended, restated, replaced, supplemented or
otherwise modified from time to time with the prior written consent of the
Lenders.
"Gintel Warrant" shall mean that certain Warrant, dated as of the date
hereof, issued by the Borrower to Gintel, for the purchase of 125,000 shares of
<PAGE>
the common stock of the Borrower, as it may be hereafter amended, restated,
replaced, supplemented or otherwise modified from time to time with the prior
written consent of the Lenders.
"Governmental Agency" shall mean (a) any international, foreign, federal,
state, county or municipal government or political subdivision thereof, (b) any
governmental agency, authority, board, bureau, commission, department or
instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"Governmental Approval" shall mean any order, permission, authorization,
consent, approval, license, franchise, permit or validation of, exemption by,
registration or filing with, or report or notice to, any Governmental Agency.
"Guaranteed Indebtedness" of any Person shall mean any obligation of such
Person guaranteeing any Indebtedness, lease, dividend, or other obligation
("primary obligation") of any other Person (the "primary obligor") in any manner
including, without limitation, any obligation or arrangement of such Person (a)
to purchase or repurchase any such primary obligation, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii) to
maintain working capital or equity capital of the primary obligor or otherwise
to maintain the net worth or solvency or any balance sheet condition of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (d) to
indemnify the owner of such primary obligation against loss in respect thereof.
"Guarantors" shall mean, collectively, Oneita-Kinston Corp., a North
Carolina corporation, and all Significant Subsidiaries now or hereafter
existing, and their respective successors and permitted assigns.
"Guarantor Security Agreement" shall mean that certain Security Agreement
(Guarantors), dated as of the date hereof, executed by the Guarantors in favor
of the Collateral Agent, substantially in the form of Exhibit C, as the same may
<PAGE>
hereafter be amended, restated, supplemented or otherwise modified from time to
time.
"Guaranty Agreement" shall mean that certain Guaranty Agreement executed by
the Guarantors in favor of the Lenders and the Agent, substantially in the form
of Exhibit D, as the same may be amended, restated, affirmed, supplemented or
otherwise modified from time to time.
"Hazardous Materials" shall mean oil, petroleum or chemical liquids or
solids, liquid or gaseous products, asbestos, or any other hazardous waste or
hazardous substances, including, without limitation, hazardous medical waste or
any other substance described in any Environmental Law.
"Indebtedness" of any Person shall mean, without duplication (i) all
liabilities and obligations, direct or indirect, of such Person which in
accordance with GAAP would be included in determining total liabilities as shown
on the liability side of a balance sheet of such Person as of the date of such
determination, including, without limitation, contingent liabilities that, in
accordance with GAAP, would be set forth in a specific dollar amount on the
liability side of such balance sheet, and Capitalized Lease Obligations of such
Person; (ii) all Guaranteed Indebtedness of such Person; (iii) all liabilities
and obligations secured by Liens on any assets of such Person, whether or not
such liabilities or obligations shall have been assumed by it; and (iv) all
liabilities and obligations of such Person, direct or contingent, with respect
to letters of credit (other than documentary letters of credit used in
connection with the purchase of goods) issued for the account of such Person and
bankers acceptances created for such Person.
"Interest Period" shall mean with respect to Eurodollar Advances, the
period of 1, 2 or 3 months selected by the Borrower, pursuant to the terms of
this Agreement and subject to customary adjustments in duration; provided, that
(a) the first day of an Interest Period must be a Business Day, (b) any Interest
Period that would otherwise end on a day that is not a Business Day for
Eurodollar Loans shall be extended to the next succeeding Business Day for
Eurodollar Loans, unless such Business Day falls in the next calendar month, in
which case the Interest Period shall end on the next preceding Business Day for
Eurodollar Loans, and (c) Borrower may not elect an Interest Period which would
extend beyond the Final Maturity Date.
<PAGE>
"Inventory" shall mean goods held by the Borrower or any Guarantor for sale
or raw materials, work in process or materials used or consumed in the business
of the Borrower or any of the Guarantors.
"Investment" shall mean, with respect to any Person, (a) the amount paid or
committed to be paid, or the value of property and services contributed or
committed to be contributed, by such Person for or in consideration of the
acquisition by such Person of any stock, bonds, notes, debentures, partnership
or other ownership interest or other securities of any other Person; and (b) the
amount of any advance, loan or extension of credit by such Person to any other
Person, or guarantee or other similar obligation of such Person with respect to
any Indebtedness of such other Person, and (without duplication) any amount
committed to be advanced, loaned or extended by such Person to any other Person,
or any amount the payment of which is committed to be assured by guarantee or
similar obligation by such Person for the benefit of, such other Person.
"IRS" shall have the meaning assigned such term in Section 6.07(h) hereof.
"Latest Balance Sheet" shall have the meaning assigned such term in Section
5.03(a) hereof.
"Leases" shall mean all leases and subleases (other than Capitalized
Leases), licenses for the use of real property, easements, grants and other
attachment rights and similar instruments under which the Borrower or any of its
Subsidiaries has the right to use real or personal property or rights of way.
"Lender" or "Lenders" shall mean SunTrust, First Union, NatWest and their
respective successors and assigns.
"Lending Office" shall mean for each Lender the office such Lender may
designate in writing from time to time to Borrower and the Administrative Agent
with respect to each Type of Loan.
"Leverage Ratio" shall mean the ratio of (A) (i) Funded Debt of the
Consolidated Companies, less (ii) the principal amount of Subordinated Debt then
outstanding to (B) Total Capitalization of the Consolidated Companies.
<PAGE>
"LIBOR" shall mean, with respect to any Interest Period for any Eurodollar
Advance, the rate per annum equal to the quotient of (i) the consensus of the
LIBOR settings as of 11:00 a.m. (London time) on the second Business Day
preceding the first day of such Interest Period as shown on page 3750 of
Telerate or as published by a comparable service selected by the Bank for
deposits in immediately available funds in U.S. Dollars on the first day of such
Interest Period in an amount substantially equal to the principal amount of such
Eurodollar Advance and for a period approximately equal to such Interest Period,
divided by (ii) a number equal to 1.00 minus the Reserve Percentage, the rate so
determined to be rounded upward to the nearest whole multiple of 1/100 of 1%.
"Lien" shall mean any mortgage, deed of trust, pledge, security interest,
encumbrance, lien or charge of any kind or description (including any agreement
to give any of the foregoing), any conditional sale or other title retention
agreement, any capitalized lease in the nature thereof including any lease or
similar arrangement with a public authority executed in connection with the
issuance of industrial development revenue bonds or pollution control revenue
bonds, and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Loans" shall mean, collectively, the revolving credit loans made to
Borrower by the Lenders pursuant to Section 2.01.
"Long-term Indebtedness" shall mean (i) any Indebtedness payable more than
one year from the date of creation thereof (including, without limitation and
without duplication, any portion thereof payable on demand or maturing within
one year after such date), which under GAAP is shown on the balance sheets as a
liability (including Capitalized Lease Obligations but excluding reserves for
deferred income taxes and other reserves to the extent that such reserves do not
constitute an obligation), and (ii) Indebtedness payable more than one year from
the date of creation thereof (including, without limitation and without
duplication, any portion thereof payable on demand or maturing within one year
after such date), which is secured by any Lien on property owned by the Borrower
or any Subsidiary, whether or not the indebtedness secured thereby shall have
<PAGE>
been assumed by the Borrower or such Subsidiary. Any obligation shall be treated
as Long-term Indebtedness, regardless of its term, if such obligation is
renewable pursuant to the terms thereof or of a revolving credit or similar
agreement effective for more than one year after the date of the creation of
such obligation, or may be payable out of the proceeds of a similar obligation
pursuant to the terms of such obligation or of any such agreement.
"Materially Adverse Effect" shall mean any event the occurrence of which
would have a material adverse effect on the business, operations, financial
condition or properties of the Borrower and its Subsidiaries on a consolidated
basis or on the ability of the Borrower or the Guarantors to perform their
respective obligations under the Credit Documents.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is a Pension Plan and to which the Borrower or
any ERISA Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions within the
preceding six (6) years while an ERISA Affiliate.
"Non-Notification Factoring Agreement" shall mean that certain
Non-Notification Factoring Agreement, dated as of December 16, 1988, as amended
by that certain First Amendment to Non-Notification Factoring Agreement, dated
as of March 17, 1995, between SunTrust and the Borrower, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Note" shall mean a promissory note evidencing the Loans in the form
attached hereto as Exhibit E, either as originally executed or as the same may
be from time to time supplemented, modified, amended, renewed or extended.
"Notice of Borrowing" shall have the meaning provided in Section 3.01.
"Notice of Continuation/Conversion" shall have the meaning provided in
Section 3.01.
"Obligations" shall mean all amounts owing to the Agent, the Administrative
Agent or any Lender pursuant to the terms of this Agreement or any other Credit
Document, including without limitation, all Loans (including all principal and
<PAGE>
interest payments due thereunder), fees, expenses, indemnification and
reimbursement payments, indebtedness, liabilities, and obligations of the Credit
Parties, direct or indirect, absolute or contingent, liquidated or unliquidated,
now existing or hereafter arising, together with all renewals, extensions,
modifications or refinancings thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" shall mean, at any time, an employee pension benefit plan
that is covered by Title IV of ERISA or subject to the minimum funding standards
under Section 412 of the Code and is either: (i) maintained by the Borrower or
any ERISA Affiliate of any ERISA Affiliate, or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which the obligation to make
contributions or has, while an ERISA Affiliate, within the preceding five plan
years made contributions.
"Permitted Bailee" shall mean all parties that have executed a bailee
letter in favor of the Collateral Agent in substantially the form of Exhibit A
to the Company Security Agreement.
"Permitted Liens" shall mean, with respect to on any property of a
Consolidated Company, (a) Liens for taxes not yet subject to penalties for
non-payment, and Liens for taxes the payment of which is being contested in good
faith by appropriate proceedings and with respect to which adequate reserves are
being maintained; (b) Liens imposed by law, such as carrier's, warehousemen's,
materialmen's and mechanics' liens, or Liens arising out of judgments or awards
against such Person with respect to which such Person at such time shall
currently be prosecuting an appeal or proceedings for review; (c) pledges or
deposits made under workers' compensation laws, unemployment insurance laws,
social security laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness of such Person) or leases, to which such Person is a party, or
deposits to secure public or statutory obligations of such Person or deposits of
cash or United States Government Bonds to secure surety, appeal, performance or
other similar bonds to which such Person is a party, or deposits as security for
<PAGE>
contested taxes or import duties or for the payment of rent; and (d) minor
survey exceptions, minor encumbrances, easements or reservations of, or rights
of, others for rights-of-way, highways and railroad crossings, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real properties, or Liens incidental to the
conduct of the business of such Person or to the ownership of such Person's
property that were not incurred in connection with Indebtedness of such Person,
all of which Liens referred to in the preceding (d) do not in aggregate
materially detract from the value of the properties to which they relate or
materially impair their use in the operation of the business taken as a whole of
such Person and only to the extent arising and continuing in the ordinary course
of business.
"Person" shall mean and shall include an individual, a corporation, a
partnership, a joint venture, a trust or unincorporated organization, a joint
stock organization or other similar organization, a government or any political
subdivision thereof, a court or any other legal entity, whether acting in an
individual, fiduciary or other capacity.
"Plan" shall mean any employee benefit plan, program, arrangement, practice
or contract, maintained by or on behalf of the Borrower or an ERISA Affiliate,
which provides benefits or compensation to or on behalf of employees or former
employees, whether formal or informal, whether or not written.
"Projections" shall mean the Oneita Industries, Inc. Statement of
Operations for the year ended September 30, 1996 dated December 18, 1995.
"Pro Rata Share" shall mean, with respect to each of the Commitments of
each Lender and each Loan to be made by and each payment (including, without
limitation, any payment of principal, interest or fees) to be made to each
Lender, the percentage designated as such Lender's Pro Rata Share of such
Commitments, such Loans or such payments, as applicable, set forth under the
name of such Lender on the respective signature page for such Lender, in each
case as such Pro Rata Share may change from time to time as a result of
assignments or amendments made pursuant to this Agreement.
<PAGE>
"Prudential" shall mean The Prudential Insurance Company of America, a New
Jersey corporation.
"Prudential Agreement" shall mean that certain Note Agreement, dated as of
December 20, 1988, between the Borrower and Prudential, as heretofore amended or
modified, including, without limitation, as amended pursuant to that certain
Amendment No. 6, dated as of the date hereof, between the Borrower and
Prudential.
"Prudential Note" shall mean, collectively, all "Notes" (as defined in the
Prudential Agreement) issued by the Borrower pursuant to the Prudential
Agreement, and each promissory note delivered in substitution or exchange
therefor.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901 et seq., as amended from time to time.
"Receivable" shall mean any "account", as such term is defined in the UCC
as in effect on the Closing Date in the State of Georgia.
"Refinanced Indebtedness" shall mean the outstanding balance under the (i)
the $12,500,000 revolving credit facility and the $10,000,000 guidance line of
credit made by SunTrust to the Borrowers (ii) $10,000,000 guidance line of
credit made by First Union to the Borrower and, (iii) the $12,500,000 revolving
credit facility and the $5,000,000 guidance line of credit made by NatWest to
the Borrower.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"Required Lenders" shall mean, at any time, Lenders holding at least
sixty-six and two-thirds percent (66 2/3%) of the then aggregate amount of the
Commitments and aggregate outstanding Loans.
"Requirement of Law" for any Person shall mean the articles or certificate
of incorporation and bylaws or other organizational or governing documents of
such Person, and any Applicable Law with respect to such Person or any of its
property or to which such Person or any of its property is subject.
<PAGE>
"Reserve Percentage" shall mean, for any day, the stated maximum rate
(expressed as a decimal) of all reserves required to be maintained with respect
to liabilities or assets consisting of or including "Eurocurrency liabilities,"
as prescribed by Regulation D of the Board of Governors of the Federal Reserve
System (or by any other Governmental Agency having jurisdiction with respect
thereto), including, without limitation, any basic, marginal, emergency,
supplemental, special, transitional or other reserves, the rate so determined to
be rounded upward to the nearest whole multiple of 1/100 of 1%.
"Rights Offering" shall mean the offering of rights to purchase shares of
common stock of the Borrower contemplated by the Borrower to be made by June 1,
1996 and as otherwise described to the Lenders prior to the date hereof.
"Security Agreements" shall mean, collectively, the Borrower Security
Agreement and the Guarantor Security Agreement.
"Shareholders' Equity" shall mean, with respect to any Person as at any
date of determination, shareholders' equity of such Person, determined on a
consolidated basis in conformity with GAAP.
"Significant Subsidiary" shall mean each Subsidiary of Borrower, now
existing or hereinafter established or acquired, that (i) is either a
"significant" subsidiary under Rule 210.1-02(w) of the Security and Exchange
Commission's Regulation S-X or (ii) at any time prior to the Termination Date,
has or acquires total assets (A) that are ten percent (10%) or more of the total
assets of the Consolidated Companies determined on a consolidated basis in
accordance with GAAP at such time or (B) that accounted for or produced ten
percent (10%) or more of the Consolidated EBITR of the Consolidated Companies
during any fiscal year of Borrower.
"Standby Agreement" shall mean a Standby Agreement, to be executed after
the date hereof by the Borrower and agreed to by Gintel and Avondale,
substantially in form of Exhibit I hereto.
"Subordinated Debt" shall mean Indebtedness of Borrower and its
Subsidiaries that is subordinated to all obligations of Borrower and its
Subsidiaries or any other Credit Party arising under this Agreement, the Notes
and the Credit Documents upon terms and conditions, and in form and substance,
<PAGE>
satisfactory to the Lenders, including without limitation, with respect to
interest rates, payment terms, maturities, amortization schedules, covenants,
defaults, remedies, and subordination provisions, as evidenced by the Lenders'
written consent thereto given prior to the creation of such Indebtedness; the
Lenders hereby consent to the Avondale Debt and the Gintel Debt in the form set
forth in the Avondale Note and the Gintel Notes as in effect on the Closing
Date.
"Subordinated Debt Documents" shall mean all notes, agreements and other
documents evidencing or governing the terms of the Subordinated Debt, together
with all certificates and opinions delivered in connection therewith, including,
without limitation, the Avondale Note, the Gintel Notes, the Convertible Notes
and all other documents hereafter executed pursuant to which any of the
foregoing may be guaranteed or secured and the Subordination Agreement.
"Subordination Agreement" shall mean that certain Subordination Agreement,
dated as of the date hereof, among the Lenders, Prudential, SunTrust Bank,
Atlanta as Senior Agent, Avondale and Gintel, and acknowledged and agreed to by
the Borrower and the Guarantors, as hereafter amended, restated, supplemented or
otherwise modified from time to time.
"Subsidiary" shall mean, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether now existing or hereafter
organized or acquired, of which a majority of the total combined voting power of
all classes of securities or other ownership interests having ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) are, at the time at which any
determination is made, owned by such Person, either directly or indirectly
through one or more other Subsidiaries.
"Tangible Net Worth" shall mean as of the date of any determination, the
sum of the Consolidated Companies' capital surplus, earned surplus and capital
stock, minus deferred charges, intangibles and treasury stock, in each case
determined on a consolidated basis in accordance with GAAP.
"Taxes" shall mean any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatever nature,
<PAGE>
including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated page and
"LIBOR," the display page so designated on the Dow Jones Telerate Service (or
such other page as may replace that page on that service for the purpose of
displaying rates comparable to "LIBOR").
"Termination Date" shall mean January 26, 1999.
"Termination Event" shall mean (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder for which the 30-day
notice requirement is not waived by the regulations; or (b) the withdrawal of
any Consolidated Company or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA; or (c)
the termination of a Pension Plan subject to Title IV of ERISA, the filing of a
notice of intent to terminate a Pension Plan subject to Title IV of ERISA, or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (d) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (e) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer any Pension Plan subject to such Section 4042(a); or (f) the
partial or complete withdrawal of any Consolidated Company or any ERISA
Affiliate from a Multiemployer Plan; or (g) the imposition of a Lien pursuant to
Section 412 of the IRC or Section 302 of ERISA; or (h) any event or condition
which results in the reorganization or insolvency of a Multiemployer Plan under
Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Capitalization" shall mean, as of any date of determination, the sum
of (A) Funded Debt of the Consolidated Companies and (b) Tangible Net Worth of
the Consolidated Companies.
<PAGE>
"Total Commitment" shall mean the sum of the Lenders' Commitments, as such
Total Commitment may be reduced from time to time as provided herein.
"Type" of Borrowing shall mean a Borrowing consisting of Base Rate Advances
or Eurodollar Advances.
"Wholly Owned Subsidiary" shall mean any Subsidiary, all the stock or
ownership interest of every class of which, except directors' qualifying shares,
shall, at the time as of which any determination is being made, be owned by
Borrower either directly or indirectly.
"Working Capital" shall mean, as of the date of any determination, the
amount by which Current Assets (after excluding cash and cash equivalents)
exceeds Current Liabilities.
Section 1.02. Accounting Terms and Determination. Unless otherwise defined
or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared, and all financial records
shall be maintained in accordance with, GAAP.
Section 1.03. Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule, Exhibit and like references are to
this Agreement unless otherwise specified.
Section 1.04. Exhibits and Schedules. All Exhibits and Schedules attached
hereto are by reference made a part hereof.
ARTICLE II
REVOLVING CREDIT COMMITMENTS
Section 2.01. Commitment; Use of Proceeds.
(a) Subject to and upon the terms and conditions herein set forth, each
Lender severally agrees to make to Borrower from time to time on and after the
Closing Date, but prior to the Termination Date, Loans in an aggregate amount
<PAGE>
outstanding at any time not to exceed such Lender's Commitment. Borrower shall
be entitled to repay and reborrow Loans in accordance with the provisions
hereof.
(b) Each Loan shall, at the option of Borrower, be made or continued as, or
converted into, part of one or more Borrowings that shall consist entirely of
Base Rate Advances or Eurodollar Advances; provided, however, that the aggregate
amount of Eurodollar Advances that may be outstanding at any time shall be
limited to an amount equal to the sum of the amounts specified in clause (i) and
(ii) of the definition of Borrowing Base, and any Advances in excess of such
amount shall be Base Rate Advances. The aggregate principal amount of each
Borrowing of Loans shall be not less than $5,000,000 or a greater integral
multiple of $500,000, provided that each Borrowing of Loans comprised of Base
Rate Advances shall be not less than $1,000,000 or a greater integral multiple
of $100,000. At no time shall the number of Borrowings outstanding under this
Article II exceed eight; provided that, for the purpose of determining the
number of Borrowings outstanding and the minimum amount for Borrowings resulting
from conversions or continuations, all Borrowings of Base Rate Advances under
this Facility shall be considered as one Borrowing. The parties hereto agree
that (i) the aggregate principal balance of the Loans of the Lenders as a group
shall not exceed the Total Commitment, (ii) the aggregate principal balance of
the Loans of the Lenders as a group and the principal amount outstanding with
respect to the Prudential Note shall not exceed the Borrowing Base and (iii) no
Lender shall be obligated to make Loans in excess of the lesser of (A) the
Commitment of such Lender and (B) an amount equal to the Borrowing Base,
multiplied by the principal amount such Lender's Commitment, divided by (the
aggregate principal amount of the Commitments of all Lenders plus the principal
amount of the Prudential Note).
(c) The proceeds of Loans shall be used solely for the following purposes:
(i) To repay Refinanced Indebtedness of the
Consolidated Companies on the Closing Date, and to repurchase
the Factored Receivables; and
<PAGE>
(ii) To fund working capital needs and Capital Expenditures
and to be used for other general corporate purposes.
Section 2.02. Notes; Repayment of Principal.
(a) Borrower's obligations to pay the principal of, and interest on, the
Loans to each Lender shall be evidenced by the records of the Administrative
Agent and such Lender and by the Note payable to such Lender (or the assignor of
such Lender) completed in conformity with this Agreement.
(b) All outstanding principal amounts under the Loans shall be due and
payable in full on the Termination Date.
Section 2.03. Voluntary Reduction of Commitments. Upon at least three (3)
Business Days' prior telephonic notice (promptly confirmed in writing) to the
Administrative Agent, Borrower shall have the right, without premium or penalty,
to terminate the Commitments, in part or in whole, provided that (i) any such
termination shall apply to proportionately and permanently reduce the
Commitments of each of the Lenders, (ii) any partial termination pursuant to
this Section 2.03 shall be in an amount of at least $1,000,000 and integral
multiples of $1,000,000, and (iii) no such reduction shall be permitted without
payment of all costs required to be paid hereunder with respect to a prepayment.
If the aggregate outstanding amount of the Loans exceeds the amount of the
Commitments as so reduced, Borrower shall immediately repay the Loans by an
amount equal to such excess, together with all accrued and unpaid interest on
such excess amount and any amounts due under Section 3.12 hereof.
ARTICLE III
GENERAL LOAN TERMS
Section 3.01. Funding Notices.
(a) Whenever Borrower desires to make a Borrowing with respect to the
Commitments (other than one resulting from a conversion or continuation pursuant
to Section 3.01(b)), it shall give the Administrative Agent prior written notice
(or telephonic notice promptly confirmed in writing) of such Borrowing (a
"Notice of Borrowing"), such Notice of Borrowing to be given prior to 11:00 A.M.
<PAGE>
(local time for the Administrative Agent) at its Payment Office (x) one Business
Day prior to the requested date of such Borrowing in the case of Base Rate
Advances, and (y) two Business Days prior to the requested date of such
Borrowing in the case of Eurodollar Advances. Notices received after 11:00 A.M.
shall be deemed received on the next Business Day. Each Notice of Borrowing
shall be irrevocable and shall specify the aggregate principal amount of the
Borrowing, the date of Borrowing (which shall be a Business Day), and whether
the Borrowing is to consist of Base Rate Advances or Eurodollar Advances and (in
the case of Eurodollar Advances) the Interest Period to be applicable thereto.
(b) Whenever Borrower desires to convert all or a portion of an outstanding
Borrowing under the Commitments, which Borrowing consists of Base Rate Advances
or Eurodollar Advances, into one or more Borrowings consisting of Advances of
another Type, or to continue outstanding a Borrowing consisting of Eurodollar
Advances for a new Interest Period, it shall give the Administrative Agent (x)
at least one Business Day's prior written notice (or telephonic notice promptly
confirmed in writing) of each such Borrowing to be converted into Base Rate
Advances and (y) at least two Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of each such Borrowing to be converted
into or continued as Eurodollar Advances. Such notice (a "Notice of
Conversion/Continuation") shall be given prior to 11:00 A.M. (local time for the
Administrative Agent) on the date specified at the Payment Office of the
Administrative Agent. Each such Notice of Conversion/Continuation shall be
irrevocable and shall specify the aggregate principal amount of the Advances to
be converted or continued, the date of such conversion or continuation and (in
the case of Eurodollar Advances) the Interest Period applicable thereto. If,
upon the expiration of any Interest Period in respect of any Borrowing of
Eurodollar Advances, Borrower shall have failed to deliver the Notice of
Conversion/Continuation, Borrower shall be deemed to have elected to convert
such Borrowing to a Borrowing consisting of Base Rate Advances. So long as any
Default or Event of Default shall have occurred and be continuing, no Borrowing
may be converted into or continued as (upon expiration of the current Interest
Period) Eurodollar Advances unless the Administrative Agent and each of the
Lenders shall have otherwise consented in writing. No conversion of any
Borrowing of Eurodollar Advances shall be permitted except on the last day of
the Interest Period in respect thereof.
<PAGE>
(c) Without in any way limiting Borrower's obligation to confirm in writing
any telephonic notice, the Administrative Agent and the Lenders may act without
liability upon the basis of telephonic notice believed by the Administrative
Agent or the Lender in good faith to be from Borrower prior to receipt of
written confirmation. In each such case, Borrower hereby waives the right to
dispute the Administrative Agent's and the Lender's record of the terms of such
telephonic notice.
(d) The Administrative Agent shall promptly give each Lender notice by
telephone (confirmed in writing) or by telex, telecopy or facsimile transmission
of the matters covered by the notices given to the Administrative Agent pursuant
to this Section 3.01 with respect to the Commitments.
Section 3.02. Disbursement of Funds.
(a) No later than 11:00 A.M. (local time for the Administrative Agent) on
the date of each Borrowing pursuant to the Commitments (other than one resulting
from a conversion or continuation pursuant to Section 4.01(b)), each Lender will
make available its Pro Rata Share of the amount of such Borrowing in immediately
available funds at the Payment Office of the Administrative Agent. The
Administrative Agent will make available to Borrower the aggregate of the
amounts (if any) so made available by the Lenders to the Administrative Agent in
a timely manner by crediting such amounts to Borrower's demand deposit account
maintained with the Administrative Agent. In the event that the Lenders do not
make such amounts available to the Administrative Agent by the time prescribed
above, but such amount is received later that day, such amount may be credited
to Borrower in the manner described in the preceding sentence on the next
Business Day (with interest on such amount to begin accruing hereunder on such
next Business Day).
(b) Unless the Administrative Agent shall have been notified by any Lender
prior to the date of a Borrowing that such Lender does not intend to make
available to the Administrative Agent such Lender's portion of the 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 such date and the
Administrative Agent may make available to Borrower a corresponding amount. If
such corresponding amount is not in fact made available to the Administrative
Agent by such Lender on the date of Borrowing, the Administrative Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest at the Federal Funds Rate. If such Lender does not pay
<PAGE>
such corresponding amount forthwith upon the Administrative Agent's demand
therefor, the Administrative Agent shall promptly notify Borrower, and Borrower
shall immediately pay such corresponding amount to the Administrative Agent
together with interest at the rate specified for the Borrowing. Nothing in this
subsection shall be deemed to relieve any Lender from its obligation to fund its
Commitments hereunder or to prejudice any rights which Borrower may have against
any Lender as a result of any default by such Lender hereunder.
(c) All Borrowings under the Commitments shall be loaned by the Lenders on
the basis of their Pro Rata Share of the Commitments. No Lender shall be
responsible for any default by any other Lender in its obligations hereunder,
and each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fund its Commitment
hereunder.
Section 3.03. Interest.
(a) Borrower agrees to pay interest in respect of all unpaid principal
amounts of the Loans from the respective dates such principal amounts were
advanced to maturity (whether by acceleration, notice of prepayment or
otherwise) at rates per annum (on the basis of a 360-day year) equal to the
applicable rates indicated below:
(i) For Base Rate Advances--The Base Rate in effect from
time to time plus the Applicable Margin for Base Rate Advances; and
(ii) For Eurodollar Advances--The relevant Adjusted
LIBO Rate plus the Applicable Margin for Eurodollar
Advances;
provided, however, that to the extent that the aggregate principal amount of all
Eurodollar Loans outstanding at any one time exceeds the sum of the amounts
specified in clause (i) and (ii) of the definition of Borrowing Base, such
excess shall be deemed to be a Base Rate Loan.
<PAGE>
(b) Overdue principal and, to the extent not prohibited by applicable law,
overdue interest, in respect of the Loans and all other overdue amounts owing
hereunder, shall bear interest from each date that such amounts are overdue at
the higher of (i) the highest rate then in effect for any Eurodollar Advances
plus an additional two percent (2.0%) per annum or (ii) the rate in effect for
Base Rate Advances plus an additional two percent (2.0%) per annum; provided
that no Loan shall bear interest after maturity (whether by non-payment at
scheduled due date, acceleration, notice of prepayment or otherwise) at a rate
per annum less than two percent (2.0%) per annum in excess of the rate of
interest applicable thereto at maturity.
(c) Interest on each Loan shall accrue from and including the date of such
Loan to but excluding the date of any repayment thereof; provided that, if a
Loan is repaid on the same day made, one day's interest shall be paid on such
Loan. Interest on all outstanding Base Rate Advances shall be payable monthly in
arrears on the last calendar day of each calendar month of Borrower in each
year. Interest on all outstanding Eurodollar Advances shall be payable on the
last day of each Interest Period applicable thereto. Interest on all Loans shall
be payable on any conversion of any Advances comprising such Loans into Advances
of another Type, prepayment (on the amount prepaid), at maturity (whether by
acceleration, notice of prepayment or otherwise) and, after maturity, on demand.
(d) The Administrative Agent, upon determining the Adjusted LIBO Rate for
any Interest Period, shall promptly notify by telephone (confirmed in writing)
or in writing Borrower and the other Lenders. Any such determination shall,
absent manifest error, be final, conclusive and binding for all purposes.
Section 3.04. Interest Periods. In connection with the making or
continuation of, or conversion into, each Borrowing of Eurodollar Advances,
Borrower shall select an interest period (each an "Interest Period") to be
applicable to such Eurodollar Advances, which Interest Period shall be either a
1, 2 or 3 month period; provided that:
(a) The initial Interest Period for any Borrowing of
Eurodollar Advances shall commence on the date of such Borrowing (including
the date of any conversion from a Borrowing consisting of Base Rate
Advances) and each Interest Period occurring thereafter in respect of such
<PAGE>
Borrowing shall commence on the day on which the next preceding Interest
Period expires;
(b) If any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest Period in respect of
Eurodollar Advances would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding Business
Day;
(c) Any Interest Period which begins on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period shall, subject to part (iv) below, expire on the last
Business Day of such calendar month;
(d) No Interest Period shall extend beyond any date upon which
any principal payment is due with respect to the Term Loans.
Section 3.05. Fees.
(a) The Borrower shall pay to the Administrative Agent, for the account of
each Lender in accordance with its respective Pro Rata Share, a closing fee in
an amount equal to one percent (1%) of the Total Commitment, which fee shall be
due and payable on the Closing Date, fully earned when paid and nonrefundable.
(b) Borrower shall pay to the Administrative Agent, for the account of each
Lender in accordance with its respective Pro Rata share, a commitment fee for
the period commencing on the Closing Date to and including the Termination Date,
computed at a rate equal to three-eighths of one percent (0.375%) per annum
(calculated on the basis of a 360-day year, payable for the actual number of
days elapsed) on the average daily unused portion of the Total Commitment, such
fee being due and payable quarterly in arrears on the last calendar day of each
calendar quarter and on the Termination Date, provided, however, that such
<PAGE>
commitment fee shall be reduced to a rate equal to one-quarter of one percent
(0.25%) for any calendar quarter ending on or after June 30, 1996 during which
the Applicable Margin for Eurodollar Advances was less than or equal to 1.75.
(c) Borrower shall pay to the Administrative Agent an administrative fee at
closing and thereafter annually in advance in the respective amount and on the
dates previously agreed in writing by Borrower with the Administrative Agent.
(d) Borrower shall pay to the Agent an agent fee at closing in the
respective amount previously agreed in writing by Borrower with the Agent.
Section 3.06. Prepayments of Borrowings.
(a) Borrower may, at its option, prepay Borrowings consisting of Base Rate
Advances at any time in whole, or from time to time in part, in amounts
aggregating $250,000 or any greater integral multiple of $100,000, by paying the
principal amount to be prepaid together with interest accrued and unpaid thereon
to the date of prepayment. Those Borrowings consisting of Eurodollar Advances
may be prepaid, at Borrower's option, in whole, or from time to time in part, in
the respective minimum amounts and multiples set forth in Section 2.01(b), by
paying the principal amount to be prepaid, together with interest accrued and
unpaid thereon to the date of prepayment, and all compensation payments required
pursuant to Section 3.12 if such prepayment is made on a date other than the
last day of an Interest Period applicable thereto. Each such optional prepayment
shall be applied in accordance with Section 3.06(e) below.
(b) Borrower shall immediately make a mandatory prepayment of the Loans if
at any time the aggregate principal amount of the Loans outstanding exceeds the
Borrowing Base, which prepayment shall be in a principal amount equal to such
excess together with accrued and unpaid interest thereon, plus all compensation
payments required pursuant to Section 3.12 if such prepayment is applied to
Eurodollar Loans and is made on a date other than the last day of an Interest
Period applicable thereto. Each such mandatory prepayment shall be applied in
accordance with Section 3.06(e) below.
<PAGE>
(c) Borrower shall make a mandatory prepayment of Loans within fifteen (15)
days after the earlier of (i) the date the Borrower delivers its financial
statements to the Lenders in accordance with Section 6.07(a) and Section 6.07(b)
hereof or (ii) the date such financial statements are required to have been
delivered in accordance with Section 6.07(a) or Section 6.07(b) hereof, in an
amount equal to the Excess Cash Flow for the fiscal quarter to which such
financial statements relate (and the last fiscal quarter covered by the
financial statements delivered pursuant to Section 6.07(a) hereof), less net
reductions in the Obligations for the fiscal quarter for which such financial
statements relate, plus all compensation payments required pursuant to Section
3.12 if such prepayment is applied to Eurodollar Loans and is made on a date
other than the last day of an Interest Period applicable thereto. Each such
mandatory prepayment shall be applied in accordance with Section 3.06(e) below.
(d) Borrower shall give written notice (or telephonic notice confirmed in
writing) to the Administrative Agent of any intended voluntary or mandatory
prepayment of the Loans (i) not less than one Business Day prior to any
prepayment of Base Rate Advances and (ii) not less than two Business Days prior
to any prepayment of Eurodollar Advances. Such notice, once given, shall be
irrevocable; provided, however, that same day notice shall be permitted for
mandatory prepayments required under Section 3.06(b) hereof. Upon receipt of
such notice of prepayment pursuant to the first sentence of this paragraph (d),
the Administrative Agent shall promptly notify each Lender of the contents of
such notice and of such Lender's share of such prepayment.
(e) All amounts voluntarily or mandatorily prepaid pursuant to this Section
3.06 shall be applied first to Borrowings consisting of Eurodollar Loans, in
inverse order based upon the length of the remaining Interest Periods, and
thereafter to Borrowings of Base Rate Loans. All prepayments shall be applied to
the payment of any unpaid interest before application to principal.
Section 3.07. Payments, etc.
(a) Except as otherwise specifically provided herein, all payments under
this Agreement and the other Credit Documents, other than the payments specified
<PAGE>
in clause (ii) below, shall be made without defense, set-off or counterclaim to
the Administrative Agent, not later than 11:00 A.M. (local time for the
Administrative Agent) on the date when due and shall be made in Dollars in
immediately available funds at the respective Payment Office.
(b) (i) All such payments shall be made free and clear of and without
deduction or withholding for any Taxes in respect of this Agreement, the Notes
or other Credit Documents, or any payments of principal, interest, fees or other
amounts payable hereunder or thereunder (but excluding any Taxes imposed on the
overall net income of the Lenders pursuant to the laws of the jurisdiction in
which the principal executive office or appropriate Lending Office of such
Lender is located). If any Taxes are so levied or imposed, Borrower agrees (A)
to pay the full amount of such Taxes, and such additional amounts as may be
necessary so that every net payment of all amounts due hereunder and under the
Notes and other Credit Documents, after withholding or deduction for or on
account of any such Taxes (including additional sums payable under this Section
3.07), will not be less than the full amount provided for herein had no such
deduction or withholding been required, (B) to make such withholding or
deduction and (C) to pay the full amount deducted to the relevant authority in
accordance with applicable law. Borrower will furnish to the Agent and each
Lender, within thirty (30) days after the date the payment of any Taxes is due
pursuant to applicable law, certified copies of tax receipts evidencing such
payment by Borrower. Borrower will indemnify and hold harmless the Agent, the
Administrative Agent and each Lender and reimburse the Agent, the Administrative
Agent and each Lender upon written request for the amount of any Taxes so levied
or imposed and paid by the Agent, the Administrative Agent or any Lender and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or illegally asserted.
A certificate as to the amount of such payment by the Agent, the Administrative
Agent or such Lender, absent manifest error, shall be final, conclusive and
binding for all purposes.
(ii) Each Lender that is organized under the laws of any jurisdiction other
than the United States of America or any State thereof (including the District
<PAGE>
of Columbia) agrees to furnish to Borrower and the Administrative Agent, prior
to the time it becomes a Lender hereunder, two copies of either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form 1001 or any
successor forms thereto (wherein such Lender claims entitlement to complete
exemption from or reduced rate of U.S. Federal withholding tax on interest paid
by Borrower hereunder) and to provide to Borrower and the Administrative Agent a
new Form 4224 or Form 1001 or any successor forms thereto if any previously
delivered form is found to be incomplete or incorrect in any material respect or
upon the obsolescence of any previously delivered form; provided, however, that
no Lender shall be required to furnish a form under this paragraph (ii) if it is
not entitled to claim an exemption from or a reduced rate of withholding under
applicable law. A Lender that is not entitled to claim an exemption from or a
reduced rate of withholding under applicable law, promptly upon written request
of Borrower, shall so inform Borrower in writing.
(c) Subject to Section 3.04(b), whenever any payment to be made hereunder
or under any Note 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
and, with respect to payments of principal, interest thereon shall be payable at
the applicable rate during such extension.
(d) All computations of interest and fees shall be made on the basis of a
year of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable (to the extent computed on the basis of days elapsed). Interest on
Base Rate Advances shall be calculated based on the Base Rate from and including
the date of such Loan to but excluding the date of the repayment or conversion
thereof. Interest on Eurodollar Advances shall be calculated as to each Interest
Period from and including the first day thereof to but excluding the last day
thereof. Each determination by the Administrative Agent of an interest rate or
fee hereunder shall be made in good faith and, except for manifest error, shall
be final, conclusive and binding for all purposes.
(e) Payment by Borrower to the Administrative Agent in accordance with the
terms of this Agreement shall, as to Borrower, constitute payment to the Lenders
under this Agreement.
<PAGE>
Section 3.08. Interest Rate Not Ascertainable, etc. In the event that the
Administrative Agent, in the case of the Adjusted LIBO Rate, shall have
determined (which determination shall be made in good faith and, absent manifest
error, shall be final, conclusive and binding upon all parties) that on any date
for determining the Adjusted LIBO Rate for any Interest Period, by reason of any
changes arising after the date of this Agreement affecting the London interbank
market or the Administrative Agent's position in such market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the basis
provided for in the definition of Adjusted LIBO Rate, then, and in any such
event, the Administrative Agent shall forthwith give notice (by telephone
confirmed in writing) to Borrower and to the Lenders of such determination and a
summary of the basis for such determination. Until the Administrative Agent
notifies Borrower that the circumstances giving rise to the suspension described
herein no longer exist, the obligations of the Lenders to make or permit
portions of the Loans to remain outstanding past the last day of the then
current Interest Periods as Eurodollar Advances shall be suspended, and such
affected Advances shall bear the same interest as Base Rate Advances.
Section 3.09. Illegality.
(a) In the event that any Lender shall have determined (which determination
shall be made in good faith and, absent manifest error, shall be final,
conclusive and binding upon all parties) at any time that the making or
continuance of any Eurodollar Advance has become unlawful by compliance by such
Lender in good faith with any applicable law, governmental rule, regulation,
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, the
Lender shall give prompt notice (by telephone confirmed in writing) to Borrower
and to the Administrative Agent of such determination and a summary of the basis
for such determination (which notice the Administrative Agent shall promptly
transmit to the other Lenders).
<PAGE>
(b) Upon the giving of the notice to Borrower referred to in subsection (a)
above, Borrower's right to request and such Lender's obligation to make
Eurodollar Advances shall be immediately suspended, and such Lender shall make
an Advance as part of the requested Borrowing of Eurodollar Advances as a Base
Rate Advance, which Base Rate Advance shall, for all other purposes, be
considered part of such Borrowing.
Section 3.10. Increased Costs.
(a) If, by reason of (x) after the date hereof, the introduction of or any
change (including, without limitation, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (y) the compliance with any guideline or request from any central
bank or other Governmental Agency exercising control over banks or financial
institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be subject to
any tax, duty or other charge with respect to its Eurodollar Advances or its
obligation to make Eurodollar Advances, or the basis of taxation of payments
to any Lender of the principal of or interest on its Eurodollar Advances or
its obligation to make Eurodollar Advances shall have changed (except for
changes in the tax on the overall net income of such Lender or its
applicable Lending Office imposed by the jurisdiction in which such Lender's
principal executive office or applicable Lending Office is located); or
(ii) any reserve (including, without limitation, any imposed by the
Board of Governors of the Federal Reserve System), special deposit or
similar requirement against assets of, deposits with or for the account of,
or credit extended by, any Lender's applicable Lending Office shall be
imposed or deemed applicable or any other condition affecting its Eurodollar
Advances or its obligation to make Eurodollar Advances shall be imposed on
any Lender or its applicable Lending Office or the London interbank market
or the United States secondary certificate of deposit market;
<PAGE>
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Advances
(except to the extent already included in the determination of the applicable
Adjusted LIBO Rate for Eurodollar Advances), or there shall be a reduction in
the amount received or receivable by such Lender or its applicable Lending
Office, then Borrower shall from time to time (subject, in the case of certain
Taxes, to the applicable provisions of Section 3.07(b)), upon written notice
from and demand by such Lender on Borrower (with a copy of such notice and
demand to the Administrative Agent), pay to the Administrative Agent for the
account of such Lender within five Business Days after the date of such notice
and demand, additional amounts sufficient to indemnify such Lender against such
increased cost. A certificate as to the amount of such increased cost, submitted
to Borrower and the Administrative Agent by such Lender in good faith and
accompanied by a statement prepared by such Lender describing in reasonable
detail the basis for and calculation of such increased cost, shall, except for
manifest error, be final, conclusive and binding for all purposes.
(b) If any Lender shall advise the Administrative Agent that at any time,
because of the circumstances described in clauses (x) or (y) in Section 3.10(a)
or any other circumstances beyond such Lender's reasonable control arising after
the date of this Agreement affecting such Lender or the London interbank market
or such Lender's position in such market, the Adjusted LIBO Rate, as determined
by the Administrative Agent, will not adequately and fairly reflect the cost to
such Lender of funding its Eurodollar Advances, then, and in any such event:
(i) the Administrative Agent shall forthwith give notice (by
telephone confirmed in writing) to Borrower and to the other Lenders of such
advice;
(ii) Borrower's right to request and such Lender's obligation
to make or permit portions of the Loans to remain outstanding past the last
day of the then current Interest Periods as Eurodollar Advances shall be
immediately suspended;
(iii) such Lender shall thereafter make all Advances as part of
requested Borrowings of Eurodollar Advances as Base Rate Advances, which
such Base Rate Advance shall, for all other purposes, be considered part of
such Borrowing; and
<PAGE>
(iv) Borrower may convert all Eurodollar Advances from such
Lender to Base Rate Advances without payment of amounts required under
Section 3.12 hereof.
Section 3.11. Lending Offices.
(a) Each Lender agrees that, if requested by Borrower, it will use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate an alternate Lending Office with respect to any of its Eurodollar
Advances affected by the matters or circumstances described in Sections 3.07(b),
3.08, 3.09 or 3.10 to reduce the liability of Borrower or avoid the results
provided thereunder, so long as such designation is not disadvantageous to such
Lender as determined by such Lender, which determination if made in good faith,
shall be conclusive and binding on all parties hereto. Nothing in this Section
3.11 shall affect or postpone any of the obligations of Borrower or any right of
any Lender provided hereunder.
(b) If any Lender that is organized under the laws of any jurisdiction
other than the United States of America or any State thereof (including the
District of Columbia) issues a public announcement with respect to the closing
of its lending offices in the United States such that any withholdings or
deductions and additional payments with respect to Taxes may be required to be
made by Borrower thereafter pursuant to Section 3.07(b), such Lender shall use
reasonable efforts to furnish Borrower notice thereof as soon as practicable
thereafter; provided, however, that no delay or failure to furnish such notice
shall in any event release or discharge Borrower from its obligations to such
Lender pursuant to Section 3.07(b) or otherwise result in any liability of such
Lender.
Section 3.12. Funding Losses. Except as set forth in clause (iv) of Section
3.10(b) hereof, Borrower shall compensate each Lender, upon its written request
to Borrower (which request shall set forth the basis for requesting such amounts
in reasonable detail and which request shall be made in good faith and, absent
manifest error, shall be final, conclusive and binding upon all of the parties
hereto), for all losses, expenses and liabilities (including, without
limitation, any interest paid by such Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Advances, in either case to the extent not
recovered by such Lender in connection with the re-employment of such funds and
<PAGE>
including loss of anticipated profits), which the Lender may sustain: (i) if for
any reason (other than a default by such Lender) a borrowing of, or conversion
to or continuation of, Eurodollar Advances to Borrower does not occur on the
date specified therefor in a Notice of Borrowing or Notice of
Conversion/Continuation (whether or not withdrawn), (ii) if any repayment
(including mandatory prepayments and any conversions pursuant to Section
3.09(b)) of any Eurodollar Advances to Borrower occurs on a date which is not
the last day of an Interest Period applicable thereto, or (iii), if, for any
reason, Borrower defaults in its obligation to repay its Eurodollar Advances
when required by the terms of this Agreement.
Section 3.13. Assumptions Concerning Funding of Eurodollar Advances.
Calculation of all amounts payable to a Lender under this Article III shall be
made as though that Lender had actually funded its relevant Eurodollar Advances
through the purchase of deposits in the relevant market bearing interest at the
rate applicable to such Eurodollar Advances in an amount equal to the amount of
the Eurodollar Advances and having a maturity comparable to the relevant
Interest Period and, in the case of Eurodollar Advances, through the transfer of
such Eurodollar Advances from an offshore office of that Lender to a domestic
office of that Lender in the United States of America; provided however, that
each Lender may fund each of its Eurodollar Advances in any manner it sees fit
and the foregoing assumption shall be used only for calculation of amounts
payable under this Article III.
Section 3.14. Apportionment of Payments. Aggregate principal and interest
payments in respect of Loans and payments in respect of facility fees and
commitment fees shall be apportioned among all outstanding Commitments and Loans
to which such payments relate, proportionately to the Lenders' respective pro
rata portions of such Commitments and outstanding Loans. The Administrative
Agent shall promptly distribute to each Lender at its payment office set forth
beside its name on the appropriate signature page hereof or such other address
as any Lender may request its share of all such payments received by the
Administrative Agent.
Section 3.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment or reduction (including, without limitation, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
<PAGE>
Code) of the Obligations (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in excess of its pro rata portion of
payments or reductions on account of such obligations obtained by all the
Lenders, such Lender shall forthwith (i) notify each of the other Lenders and
the Administrative Agent of such receipt, and (ii) purchase from the other
Lenders such participations in the affected obligations as shall be necessary to
cause such purchasing Lender to share the excess payment or reduction, net of
costs incurred in connection therewith, ratably with each of them, provided that
if all or any portion of such excess payment or reduction is thereafter
recovered from such purchasing Lender or additional costs are incurred, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery or such additional costs, but without interest unless the Lender
obligated to return such funds is required to pay interest on such funds.
Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 3.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of Borrower in the amount of such participation.
Section 3.16. Capital Adequacy. Without limiting any other provision of
this Agreement, in the event that any Lender shall have determined that any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy not currently in effect or fully applicable as
of the Closing Date, or any change therein or in the interpretation or
application thereof after the Closing Date, or compliance by such Lender with
any request or directive regarding capital adequacy not currently in effect or
fully applicable as of the Closing Date (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful) from a central
bank or Governmental Agency having jurisdiction, does or shall have the effect
of reducing the rate of return on such Lender's capital as a consequence of its
obligations hereunder to a level below that which such Lender could have
achieved but for such law, treaty, rule, regulation, guideline or order, or such
change or compliance (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then within ten (10) Business Days after written notice and demand by such
Lender (with copies thereof to the Administrative Agent), Borrower shall from
time to time pay to such Lender additional amounts sufficient to compensate such
<PAGE>
Lender for such reduction (but, in the case of outstanding Base Rate Advances,
without duplication of any amounts already recovered by such Lender by reason of
an adjustment in the applicable Base Rate). Each certificate as to the amount
payable under this Section 3.16 (which certificate shall set forth the basis for
requesting such amounts in reasonable detail), submitted to Borrower by any
Lender in good faith, shall, absent manifest error, be final, conclusive and
binding for all purposes.
Section 3.17. Benefits to Guarantors. In consideration for the execution
and delivery by the Guarantors of their Guaranty Agreement, Borrower agrees to
make the benefit of extensions of credit hereunder available to the Guarantors.
ARTICLE IV.
CONDITIONS TO BORROWINGS
The obligations of each Lender to make Advances to Borrower hereunder is
subject to the satisfaction of the following conditions:
Section 4.01. Conditions Precedent to Initial Loans. At the time of the
making of the initial Loans hereunder on the Closing Date, (A) all obligations
of Borrower hereunder incurred prior to the initial Loans (including, without
limitation, Borrower's obligations to reimburse the reasonable fees and expenses
of counsel to the Agent and any fees and expenses payable to the Agent and the
Lenders as previously agreed with Borrower) shall have been paid in full, (B)
the Avondale Debt and the Gintel Debt shall have been issued subject to terms
and conditions satisfactory to the Lenders, the Borrower shall have received the
proceeds therefrom and the Avondale Note, the Gintel Notes, the Gintel Warrant
and the Avondale/Gintel Documents shall be in form and substance satisfactory to
the Lenders and (C) the Agent shall have received the following, in form and
substance reasonably satisfactory in all respects to the Lenders:
(a) the duly executed counterparts of this Agreement;
(b) the duly completed and executed Notes evidencing the
Commitments;
<PAGE>
(c) the duly executed Guaranty Agreement;
(d) the duly executed Security Agreements, together with (i) such duly
executed UCC financing statements to be recorded in such jurisdictions as
the Required Lenders deem necessary or desirable to perfect the security
interests granted thereunder and (ii) such bailee letters filed with such
parties holding inventory of the Credit Parties, as the Required Lenders
deem necessary or desirable to perfect the security interest granted
thereunder;
(e) Lien search reports listing all effective financing statements
which name the Borrower or any Significant Subsidiaries as debtor, together
with copies of such other financing statements (none of which shall cover
the Collateral purported to be covered by either of the Security Agreements,
other than financing statements executed pursuant to clause (d) above);
(f) Evidence satisfactory to the Required Lenders that all other
actions necessary or desirable to perfect and protect the security interests
created by the Security Agreements have been taken;
(g) a duly executed Intercreditor Agreement, dated as of the date
hereof, among the Lenders and acknowledged by the Borrower;
(h) a duly executed Subordination Agreement, dated as of the date
hereof, among the Lenders, Avondale and Gintel, and acknowledged by the
Borrower;
(i) a duly executed closing certificate of Borrower in substantially
the form of Exhibit F attached hereto and appropriately completed;
(j) certificates of the Secretary or Assistant Secretary of each of the
Credit Parties attaching and certifying copies of (1) the certificate or
articles of incorporation of such entity certified by the Secretary of State
the state of such entity's incorporation, (2) the bylaws or comparable
governing documents of such entity, (3) the resolutions of the board of
directors of such entity, authorizing as applicable the execution, delivery
<PAGE>
and performance of the Credit Documents, and (4) the name, title and true
signature of each officer of such entity executing the Credit Documents;
(k) certificates of good standing or existence, as may be available
from the Secretary of State of the jurisdiction of incorporation or
organization of such Credit Party and each other jurisdiction in which the
failure of such Credit Party to be in good standing would have a Materially
Adverse Effect;
(l) copies of all documents and instruments, including all consents,
authorizations and filings, required or advisable under any Requirement of
Law or by any material Contractual Obligation of the Credit Parties, in
connection with the execution, delivery, performance, validity and
enforceability of the Credit Documents and the other documents to be
executed and delivered hereunder, and such consents, authorizations, filings
and orders shall be in full force and effect and all applicable waiting
periods shall have expired;
(m) acknowledgment from C.T. Corporation as to its appointment as
agent for service of process for the Borrower;
(n) certified copies of all Debt Instruments securing Indebtedness of
any Consolidated Company described on Schedule 5.12;
(o) certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations arising
from matters relating to employees of the Consolidated Companies, including
employee relations, collective bargaining agreements, Plans, and other
compensation and employee benefit plans;
(p) certificates, reports, environmental audits and investigations, and
other information as the Agent may reasonably request from any Consolidated
Company in order to satisfy the Lenders as to the absence of any material
liabilities or obligations arising from environmental and employee health
and safety exposures to which the Consolidated Companies may be subject, and
the plans of the Consolidated Companies with respect thereto;
<PAGE>
(q) certificates, reports and other information as the Agent may
reasonably request from any Consolidated Company in order to satisfy the
Lenders as to the absence of any material liabilities or obligations arising
from litigation (including without limitation, products liability and patent
infringement claims) pending or threatened against the Consolidated
Companies;
(r) certificates of insurance issued by the Borrower's insurers,
describing in reasonable detail the insurance maintained by the Borrower,
together with appropriate evidence showing that the Administrative Agent,
the Agent and the Lenders have been named as loss payee or additional
insured, as their interest may appear, on all insurance policies insuring
property of the Borrower and its Subsidiaries;
(s) the favorable opinion of Blau, Kramer, Wactler & Lieberman, P.C.,
counsel to the Borrower, substantially in the form of Exhibit G-1 addressed
to the Agent, the Administrative Agent and each of the Lenders;
(t) the favorable opinion of Womble, Carlyle, Sandridge & Rice, counsel
to the Guarantor in North Carolina, substantially in the form of Exhibit G-2
addressed to the Agent, the Administrative Agent and each of the Lenders;
(u) the favorable opinions of (1) Haskell, Slaughter, Young & Johnson,
local counsel to the Credit Parties in Alabama, (2) Johnson & Montgomery,
local counsel to the Credit Parties in Georgia, and (3) Womble, Carlyle,
Sandridge & Rice, local counsel to the Credit Parties in North Carolina and
South Carolina, each substantially in the form of Exhibit G-3 addressed to
the Agent, the Administrative Agent and each of the Lenders;
(v) the audited financial statements of Borrower and its Subsidiaries,
on a consolidated basis for the fiscal year ended on September 30, 1995;
(w) certified copies of all Subordinated Debt Documents, certified as
true and correct copies by the President or Chief Financial Officer of the
Borrower;
<PAGE>
(x) certified copies of the Prudential Agreement and all amendments
thereto, including the Amendment No. 6 to be executed on the date hereof,
amending the Prudential Agreement to reflect changes in certain financial
covenants and certified copies of all opinions and other documents delivered
in connection therewith, if any, all certified as true and correct copies by
the President or Chief Financial Officer of the Borrower; and
(y) an audit of the working capital assets of the Borrower and its
Subsidiaries.
In addition to the foregoing, the following conditions shall have been satisfied
or shall exist, all to the satisfaction of the Agent, as of the time the initial
Loans are made hereunder:
(x) the Loans to be made on the Closing Date and the use of proceeds
thereof shall not contravene, violate or conflict with, or involve the Agent
or any Lender in a violation of, any law, rule, injunction, or regulation,
or determination of any court of law or other Governmental Agency;
(y) all corporate proceedings and all other legal matters in connection
with the authorization, legality, validity and enforceability of the Credit
Documents shall be reasonably satisfactory in form and substance to the
Required Lenders; and
(z) the status of all pending and threatened litigation (including
products liability and patent claims) which might result in a Materially
Adverse Effect, including a description of any damages sought and the claims
constituting the basis therefor, shall have been reported in writing to the
Administrative Agent, the Administrative Agent shall have reported such
matters to the Lenders, and the Lenders shall be satisfied with such status.
Section 4.02. Conditions to All Loans. At the time of the making of all
Loans (before as well as after giving effect to such Loans and to the proposed
use of the proceeds thereof), the following conditions shall have been satisfied
or shall exist:
(a) there shall exist no Default or Event of Default;
<PAGE>
(b) all representations and warranties by Borrower contained herein
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on and as of the
date of such Loans;
(c) since the date of the most recent financial statements of the
Consolidated Companies described in Section 5.03, and except as set forth on
Schedule 5.03 hereof, there shall have been no change which has had or could
reasonably be expected to have a Materially Adverse Effect.
(d) there shall be no action or proceeding instituted or pending before
any court or other Governmental Agency or, to the knowledge of Borrower,
threatened (i) which reasonably could be expected to have a Materially
Adverse Effect, or (ii) seeking to prohibit or restrict one or more Credit
Party's ownership or operation of any portion of its business or assets, or
to compel one or more Credit Party to dispose of or hold separate all or any
portion of its businesses or assets, where such portion or portions of such
business(es) or assets, as the case may be, constitute a material portion of
the total businesses or assets of the Consolidated Companies;
(e) the Loans to be made and the use of proceeds thereof shall not
contravene, violate or conflict with, or involve the Agent or any Lender in
a violation of, any law, rule, injunction, or regulation, or determination
of any court of law or other Governmental Agency applicable to Borrower; and
(f) the Agent shall have received such other documents or legal
opinions as the Agent or any Lender may reasonably request, all in form and
substance reasonably satisfactory to the Agent.
Each request for a Borrowing and the acceptance by Borrower of the proceeds
thereof shall constitute a representation and warranty by Borrower, as of the
date of the Loans comprising such Borrowing, that the applicable conditions
specified in Sections 4.01 and 4.02 have been satisfied.
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents, warrants and covenants to Lenders that:
Section 5.01. Organization and Qualification. (a) Each of the Borrower and
its Subsidiaries is duly organized and validly existing under the laws of its
state of incorporation and has the corporate power to own its assets and to
transact the business in which it is presently engaged and in which it proposes
to be engaged. Schedule 5.01 hereto accurately and completely lists, as to each
of the Borrower and each Subsidiary: (i) the state of incorporation or
organization, and the type of legal entity that each of them is, and (ii) the
classes and number of authorized and outstanding shares of capital stock of each
such corporation, and the owners of such outstanding shares of capital stock
(other than with respect to the Borrower). Schedule 5.01 also designates the
Significant Subsidiaries as of the Closing Date.
(b) Each of the Borrower and its Subsidiaries is in good standing in its
state of organization and in each state in which it is qualified to do business.
There are no jurisdictions other than as set forth on Schedule 5.01 hereto in
which the character of the properties owned or proposed to be owned by the
Borrower or any Subsidiary or in which the transaction of the business of the
Borrower or any Subsidiary as now conducted or as proposed to be conducted
requires or will require the Borrower or any Subsidiary to qualify to do
business and as to which failure so to qualify could have a Materially Adverse
Effect.
Section 5.02. Corporate Authority. The Borrower and each Guarantor has the
power to execute, deliver and perform the Credit Documents, the Borrower has the
power to borrow hereunder and the Guarantor has the power to guarantee the
obligations of the Borrower. The execution and delivery by Borrower and the
Guarantors of and the performance by Borrower and Guarantors of their
obligations under the Credit Documents have been duly authorized by all
requisite corporate action and all requisite shareholder action, if any, on the
part of Borrower and the Guarantors and do not and will not (i) violate any
provision of Applicable Law to the Borrower and its Subsidiaries, (ii) conflict
with or result in a breach of any order, writ, injunction, ordinance,
resolution, decree, or other similar document or instrument of any court or
Governmental Agency applicable to the Borrower and its Subsidiaries, (iii)
<PAGE>
conflict with any certificate or articles of incorporation or bylaws of the
Borrower or any of its Subsidiaries, (iv) create (with or without the giving of
notice or lapse of time, or both) a default under or breach of, or give rights
of termination under, any Debt Instrument of the Borrower or any of its
Subsidiaries, or (v) result in the imposition of any Lien of any nature
whatsoever upon any of the properties or assets owned by or used in connection
with the business of the Borrower or its Subsidiaries, other than pursuant to
the Security Agreements.
Section 5.03. Financial Statements. (a) Each of the Financial Statements is
correct and complete and presents fairly the consolidated financial position,
the consolidated results of operations, and changes in financial position of the
Borrower and its Subsidiaries, as at and for its date, and has been prepared in
accordance with GAAP. Neither the Borrower nor any Subsidiary has any material
obligation, liability or commitment, direct or contingent (including, without
limitation, any Environmental Liability), that is required to be but is not
reflected in the Financial Statements. The Borrower's fiscal year is the
fifty-two/fifty-three week period ending on the closest Saturday to September
30th in each year.
(b) The Projections have been prepared on the basis of the assumptions
accompanying them and reflect as of the date thereof the Borrower's good faith
projections, after reasonable analysis, of the matters set forth therein, based
on such assumptions.
(c) Since the date of the latest balance sheet included in the Financial
Statements (the "Latest Balance Sheet") and except as is set forth on Schedule
5.03, (i) there has been no change in the condition (financial or otherwise) of
the business and operations of the Borrower, which either singly or in the
aggregate, is (or is likely to be) materially adverse to the Borrower; (ii) no
sale of goods or services or other transactions of the Borrower other than those
occurring in the ordinary and regular course of business; (iii) no material
change in the manner of conducting the business of the Borrower; (iv) no
material adverse change in the working capital position of the Borrower; and (v)
no financial or other commitments or obligations incurred by the Borrower except
such as may be incidental to carrying on the ordinary and regular course of
business.
<PAGE>
Section 5.04. Tax Returns. Each of Borrower and its Subsidiaries has filed
all federal, state and local tax returns required to be filed by it, and has not
failed to pay any taxes, or interest and penalties relating thereto, on or
before the due dates thereof. Except to the extent that reserves therefor are
reflected in the Financial Statements: (i) there are no material federal, state
or local tax liabilities of the Borrower or any Subsidiary due or to become due
for any tax year ended on or prior to the date of the Latest Balance Sheet
relating to such entity, whether incurred in respect of or measured by the
income of such entity, that are not properly reflected in the Latest Balance
Sheet relating to such entity, and (ii) there are no material claims pending or,
to the knowledge of the Borrower, proposed or threatened against the Borrower or
any of its Subsidiaries for past federal, state or local taxes, except those, if
any, as to which proper reserves are reflected in the Financial Statements.
Section 5.05. Judgments, Actions, Proceedings. Except as disclosed on
Schedule 5.05 hereto, there are no outstanding judgments, actions or
proceedings, including, without limitation, any Environmental Proceeding,
pending before any court or Governmental Agency, with respect to or, to the best
of the Borrower's knowledge, threatened against or affecting the Borrower or any
Subsidiary involving, in the case of any court proceeding, a claim in excess of
$100,000, nor, to the best of the Borrower's knowledge, is there any reasonable
basis for the institution of any such action or proceeding that is probable of
assertion, nor are there any such actions or proceedings in which the Borrower
or any Subsidiary is a plaintiff or complainant.
Section 5.06. Title to Properties. Each of Borrower and its Subsidiaries
has (i) good and marketable fee simple title to its respective real properties
(other than real properties which it leases from others), including such real
properties reflected in the consolidated balance sheet of Borrower and its
Subsidiaries as of September 30, 1995 hereinabove described (other than real
properties disposed of in the ordinary course of business), subject to no Lien
of any kind except Liens permitted by Section 7.02 and (ii) good title to all of
its other respective properties and assets (other than properties and assets
which it leases from others), including the other properties and assets
reflected in the consolidated balance sheet of Borrower and its Subsidiaries at
September 30, 1995 hereinabove described (other than properties and assets
disposed of in the ordinary course of business), subject to no Lien of any kind
<PAGE>
except Liens permitted by Section 7.02. Each of Borrower and its Subsidiaries
enjoys peaceful and undisturbed possession under all leases necessary in any
material respect for the operation of its respective properties and assets, none
of which contains any unusual or burdensome provisions which might materially
affect or impair the operation of such properties and assets, and all such
leases are valid and subsisting and in full force and effect.
Section 5.07. Enforceability of Agreement. The Borrower and the Guarantors
have duly executed and delivered each of the Credit Documents to which it is a
party, and such Credit Documents constitutes the valid and legally binding
obligation agreement of Borrower or such Guarantor, as the case may be,
enforceable against Borrower or such Guarantor, as the case may be, in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other similar
laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally and except that the remedy of specific performance
and other equitable remedies are subject to judicial discretion.
Section 5.08. Consent. No consent or approval of any Person (including,
without limitation, any Governmental Agency, any stockholder of the Borrower or
any landlord or mortgagee), no waiver of any Lien or right of distraint or other
similar right and no consent, license, certificate of need, approval,
authorization or declaration of any Governmental Agency is or will be required
in connection with the execution, delivery or performance by the Borrower or the
Guarantors, or the validity, enforcement or priority, of the Credit Documents or
any Lien created and granted thereunder, or in order to constitute the
Indebtedness to be incurred hereunder and under the Notes and the other Credit
Documents as "Senior Debt" or any similar term defined within each of the
Subordinated Notes, except as set forth on Schedule 5.08 hereto, each of which
either has been duly and validly obtained on or prior to the date hereof and is
now in full force and effect, or is designated on Schedule 5.08 as waived by the
Required Lenders.
Section 5.09. Use of Proceeds; Federal Reserve Regulations. The proceeds of
the Notes will be used solely for the purposes specified in Section 2.01(c), and
none of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any "margin security" or "margin stock" or for the
<PAGE>
purpose of reducing or retiring any indebtedness that originally was incurred to
purchase or carry a "margin security" or "margin stock" or for any other purpose
that might constitute this transaction a "purpose credit" within the meaning of
the regulations of the Board of Governors of the Federal Reserve System.
Section 5.10. ERISA.
(a) Except as disclosed on Schedule 5.10 hereto, no Pension Plan or Defined
Contribution Plan which is an Employee Benefit Plan, including without
limitation, any Multiemployer Plan, exists or has ever existed, and neither the
Borrower nor any ERISA Affiliate is a participating employer in any Pension Plan
which is an Employee Benefit Plan in which more than one employer makes
contributions as described in Sections 4063 and 4064 of ERISA. Except as
disclosed on Schedule 5.10, neither the Borrower nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefit under any
Employee Welfare Benefit Plan which is a welfare plan (as defined in Section
3(1) of ERISA), other than liability for health plan continuation coverage
described in Part 6 of Title I of ERISA, which together with any disclosed
liability on Schedule 5.10, will not have a Materially Adverse Effect. The
Borrower has given to the Lenders true and complete copies of all the following:
each Pension Plan or Defined Contribution Plan which is an Employee Benefit Plan
and related trust agreement (including all amendments and commitments with
respect to such Employee Benefit plan or trust) which the Borrower or any ERISA
Affiliate maintains or is committed to contribute to as of the date hereof and
the most recent summary plan description, actuarial report, determination letter
issued by the IRS and Form 5500 filed in respect of each such Employee Benefit
Plan; a listing of all of the Multiemployer Plans to which the Borrower or any
ERISA Affiliate contributes or is committed to contribute and the aggregate
amount of the most recent annual contributions required to be made to each such
Multiemployer Plan, and any information which has been provided to the Borrower
or any ERISA Affiliate regarding withdrawal liability under any Multiemployer
Plan and the collective bargaining agreement pursuant to which such contribution
is required to be made.
(b) Each Employee Benefit Plan complies, in both form and operation in all
material respects, with its terms, ERISA and the Code including, without
limitation, Code Section 4980B, and no condition exists or event has occurred
<PAGE>
with respect to any such plan which would result in the incurrence by the
Borrower or any ERISA Affiliate of any material liability, fine or penalty.
Neither the Borrower nor any ERISA Affiliate has incurred any liability to the
PBGC which remains outstanding other than the payment of premiums, and there are
no premiums which have become due which are unpaid. Neither the Borrower nor any
ERISA Affiliate has engaged in any transaction which could subject it to
liability under Section 4069 or Section 4212(c) of ERISA. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of the Borrower and
each ERISA Affiliate is legally valid and binding and in full force and effect.
Except as provided on Schedule 5.10 and subject to amendment and submission for
a determination letter with regard to the Tax Reform Act of 1986 requirements
and other post 1986 requirements, each Employee Benefit Plan that is intended to
be qualified under Section 401(a) of the Code has been determined by the IRS to
be so qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code. To the knowledge of the Borrower,
nothing has occurred or is expected to occur that would adversely affect the
qualified status of the Employee Benefit Plan or any related trust subsequent to
the issuance of such determination letter. No Employee Benefit Plan is being
audited or, to the knowledge of the Borrower, investigated by any government
agency or subject to any pending or threatened claim or suit.
(c) Each Pension Plan currently meets and always has met the minimum
funding standard of Section 302 of ERISA and Section 412 of the Code (without
regard to any funding waiver). All contributions or payments due and owing as
required by Section 302 of ERISA, Section 412 of the Code or the terms of any
Pension Plan have been made by the due date for such contributions or payments.
With respect to each Multiemployer Plan, the Borrower and each ERISA Affiliate
has paid or accrued all contributions pursuant to the terms of the applicable
collective bargaining agreement required to be paid or accrued by it. With
respect to each Pension Plan, the market value of assets (exclusive of any
contribution due to the Pension Plan) equals or exceeds the present value of
benefit liabilities as of the latest actuarial valuation date for such plan (but
not prior to 12 months prior to the date hereof), determined on the basis of a
shutdown of the Borrower or any ERISA Affiliate in accordance with actuarial
assumptions used by the PBGC in single-employer plan terminations and since its
last valuation date, there have been no amendments to such plan that materially
<PAGE>
increased the present value of accrued benefits nor any other material adverse
changes in the funding status of such plan. Neither the Borrower nor any ERISA
Affiliate is required to provide security to a Pension Plan pursuant to Section
307 of ERISA or Section 401(a) (29) of the Code.
(d) Neither the Borrower nor any ERISA Affiliate nor any fiduciary of any
Employee Benefit Plan has engaged in a prohibited transaction under Section 406
of ERISA or Section 4975 of the Code with regard to any such Employee Benefit
Plans. The execution, delivery and carrying out of the terms of any agreements
that are related to this transaction will not constitute a prohibited
transaction under the aforementioned sections.
(e) No Termination Event has occurred or is reasonably expected to occur.
(f) None of the following "reportable events" which are subject to the
30-day notice requirement of Section 4043(b) of ERISA in respect of any of the
Pension Plans has occurred: (i) an inability to pay benefits when due, (ii)
bankruptcy or insolvency of the sponsor of the Pension Plan, (iii) liquidation
or dissolution of the sponsor of the Pension Plan, (iv) a failure to meet the
minimum funding standards, or (v) certain transactions involving a change of
employer. The Borrower has not received any notice from the PBGC that any of the
Pension Plans is being involuntarily terminated or from the Secretary of the
Treasury that any partial or full termination of any of the Employee Benefit
Plans has occurred and no event shall have occurred, and there shall exist as of
the date hereof no condition or set of circumstances which present a material
risk of the involuntary termination of any of the Pension Plans.
(g) There are no agreements which will provide payments to any officer,
employee, shareholder or highly compensated individual which will be "parachute
payments" under Section 280G of the Code that are nondeductible to the Borrower
and which will be subject to the tax under Section 4999 of the Code for which
the Borrower or any ERISA Affiliate would have a material withholding liability.
(h) All references to the Borrower in this Section 5.10 or in any other
Section of this Agreement relating to ERISA shall be deemed to refer to the
Borrower and any other entity which is considered an ERISA Affiliate.
<PAGE>
(i) Neither the Borrower nor any ERISA Affiliate has ever contributed to a
Multiemployer Plan.
Section 5.11. Ownership Structure. All the outstanding shares of stock of
the Borrower and each of its Subsidiaries have been validly issued and are fully
paid and nonassessable and all such outstanding shares of the Subsidiaries,
except as noted on such Schedule 5.01, are owned by Borrower or a Wholly Owned
Subsidiary of Borrower free of any Lien or claim. Except as set forth on
Schedule 5.01, there are no outstanding warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of capital stock or other equity interests of the Borrower or any
Subsidiary, nor are there outstanding any securities that are convertible into
or exchangeable for any shares of capital stock or other equity interest of the
Borrower or any Subsidiary. Except as set forth on Schedule 5.01, neither the
Borrower nor any Subsidiary has any Subsidiary.
Section 5.12. Outstanding Debt. Except for the Refinanced Indebtedness to
be repaid and terminated on the Closing Date, and except for Indebtedness set
forth on Schedule 5.12 as of the Closing Date, and after giving effect to the
transactions contemplated by this Agreement, neither Borrower nor any of its
Subsidiaries has outstanding any Indebtedness evidenced by Debt Instruments.
Section 5.13. Burdensome Documents. None of the Consolidated Companies is a
party to or bound by any Contractual Obligation or Requirement of Law
(including, without limitation, any Environmental Matter) that has had or would
reasonably be expected to have a Materially Adverse Effect.
Section 5.14. No Defaults. Neither the Borrower nor any of its Subsidiaries
is (a) in default under any Debt Instrument relating to or evidencing
Indebtedness in a principal amount of $100,000 in the aggregate or (b) in
default under any other agreement, instrument, ordinance, resolution, decree,
order or judgment to which it is a party, by which it is bound, or by which any
of its properties or assets may be affected, which default could have a
Materially Adverse Effect.
<PAGE>
Section 5.15. Compliance with Laws. The Borrower and each Subsidiary has
complied and is in compliance in all respects with all Applicable Laws,
including, without limitation, all applicable Environmental Laws, non-compliance
with which could have a Materially Adverse Effect.
Section 5.16. Pollution and Other Regulations.
(a) Each of the Borrower and its Subsidiaries has complied in all material
respects with all applicable Environmental Laws, including without limitation,
compliance with permits, licenses, standards, schedules and timetables, and is
not in violation of, and does not presently have outstanding any liability
under, has not been notified that it is or may be liable under and does not have
knowledge of any liability or potential liability (including any liability
relating to matters set forth on Schedule 5.16) except as set forth on Schedule
5.16, under any applicable Environmental Law, which violation, liability or
potential liability could reasonably be expected to have a Materially Adverse
Effect.
(b) Except as set forth on Schedule 5.16, the Borrower nor any of its
Subsidiaries has received a written request for information under CERCLA, any
other Environmental Laws or any comparable state law, or any public health or
safety or welfare law or written notice that any such entity has been identified
as a potential responsible party under CERCLA, any other Environmental Laws, or
any comparable state law, or any public health or safety or welfare law, nor has
any such entity received any written notification that any Hazardous Materials
that it or any of its respective predecessors in interest has generated, stored,
treated, handled, transported, or disposed of, has been released or is
threatened to be released at any site at which any Person intends to conduct or
is conducting a remedial investigation or other action pursuant to any
applicable Environmental Law, or any other Environmental Laws.
(c) Except as set forth on Schedule 5.16, each of the Borrower and its
Subsidiaries has obtained all permits, licenses or other authorizations required
for the conduct of their respective operations under all applicable
Environmental and Asbestos Laws where a failure to hold such permit, license or
other authorization would have a material adverse effect on the related property
<PAGE>
or would otherwise have a Materially Adverse Effect, and each such authorization
is in full force and effect.
(d) Each of Borrower and its Subsidiaries complies in all material respects
with all laws and regulations relating to equal employment opportunity and
employee safety in all jurisdictions in which it is presently doing business,
and Borrower will use its best efforts to comply, and to cause each of its
Subsidiaries to comply, with all such laws and regulations which may be legally
imposed in the future in jurisdictions in which Borrower or any of its
Subsidiaries may then be doing business, non-compliance with which could have a
Materially Adverse Effect.
Section 5.17. Possession of Franchises, Licenses, Etc. Each of Borrower and
its Subsidiaries possesses all material licenses, permits, franchises and
authorizations from Governmental Agencies, free from burdensome restrictions,
that are necessary in any material respect for the ownership, maintenance and
operation of its properties and assets, and neither Borrower nor any of its
Subsidiaries is in violation of any thereof in any material respect.
Section 5.18. Intangibles. Each of Borrower and its Subsidiaries possesses
all patents, trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, which are necessary to the
conduct of its business as now conducted and as proposed to be conducted,
without any conflict with the with the patents, trademarks, service marks, trade
names, and copyrights and rights with respect to the foregoing, of any other
Person, each of such patents, trademarks, service marks, trade names, copyrights
and rights with respect thereto, together with any pending applications
therefor, in each case which are material to the operations of the Borrower and
its Subsidiaries, are listed on Schedule 5.18 hereto. Nothing has come to the
attention of Borrower, any of its Subsidiaries or any of their respective
directors and officers to the effect that (i) any product, process, method,
substance, part or other material presently contemplated to be sold by or
employed by Borrower or any of its Subsidiaries in connection with its business
may infringe any patent, trademark, service mark, trade name, copyright, license
or other right owned by any other Person, (ii) there is pending or threatened
any claim or litigation against or affecting Borrower or any of its Subsidiaries
<PAGE>
contesting its right to sell or use any such product, process, method,
substance, part or other material or (iii) there is, or there is pending or
proposed, any patent, invention, device, application or principle or any
statute, law, rule, regulation, standard or code which would prevent, inhibit or
render obsolete the production or sale of any products of, or substantially
reduce the projected revenues of, or otherwise materially adversely affect the
business, condition or operations of, Borrower or any of its Subsidiaries.
Section 5.19. Governmental Consent. Neither the nature of Borrower or any
of its Subsidiaries nor any of their respective businesses or properties, nor
any relationship between Borrower and any other Person, nor any circumstance in
connection with the execution and delivery of the Credit Documents and the
consummation of the transactions contemplated thereby is such as to require on
behalf of Borrower or any of its Subsidiaries any consent, approval or other
action by or any notice to or filing with any court or Governmental Agency in
connection with the execution and delivery of this Agreement and the Credit
Documents.
Section 5.20. Disclosure. Neither this Agreement, the Credit Documents, the
Financial Statements, the Projections nor any other certificate, opinion,
documents or any other statement made or furnished to the Lenders in writing by
or on behalf of Borrower or any Subsidiary in connection herewith or the
transactions contemplated herein 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, as of the date such statement was
made. To the knowledge of the Borrower, there is no fact peculiar to Borrower
which materially adversely affects or in the future may (so far as Borrower can
now foresee) materially adversely affect the business, property or assets,
financial condition or prospects of Borrower which has not been set forth in
this Agreement or in the Credit Documents, certificates and written statements
furnished to Lenders by or on behalf of Borrower prior to the date hereof in
connection with the transactions contemplated hereby.
Section 5.21. Insurance Coverage. Each property of Borrower or any of its
Subsidiaries is insured in amounts deemed adequate by Borrower's management and
no less than those amounts customary in the industry in which Borrower and its
Subsidiaries operate against risks usually insured against by Persons operating
businesses similar to those of Borrower or its Subsidiaries in the localities
<PAGE>
where such properties are located, and the Agent, the Administrative Agent and
the Lenders have been named (1) as loss payee and additional insured, as their
interests may appear, on all property and casualty policies insuring any of the
Collateral and (2) as additional insured on all general and comprehensive
liability policies, as their interests may appear.
Section 5.22. Labor Matters. Except as set forth on Schedule 5.22: (a)
there are no collective bargaining agreements or other labor contracts covering
the Borrower or any Subsidiary; (b) no such collective bargaining agreement or
other labor contract will expire during the term of this Agreement; (c) no union
or other labor organization is seeking to organize, or to be recognized as
bargaining representative for, a bargaining unit of employees of the Borrower or
any Subsidiary; (d) there is no pending or threatened strike, work stoppage,
material unfair labor practice claim or charge, arbitration or other material
labor dispute against or affecting the Borrower or any Subsidiary or their
representative employees; (e) there has not been, during the five (5) year
period prior to the date hereof, a strike, work stoppage, material unfair labor
practice claim or charge, arbitration or other material labor dispute against or
affecting the Borrower or any Subsidiary or any of their representative
employees, and (f) there are no actions, suits, charges, demands, claims,
counterclaims or proceedings pending or, to the best of the Borrower's
knowledge, threatened against the Borrower or any of the Subsidiaries, by or on
behalf of, or with, its employees, other than employee grievances arising in the
ordinary course of business, that are not in the aggregate, material.
Section 5.23. Name Changes, Mergers, Acquisitions. Except as set forth on
Schedule 5.23, neither the Borrower nor any Subsidiary has within the five-year
period immediately preceding the date of this Agreement changed its name, been
the surviving entity of a merger or consolidation, or acquired all or
substantially all of the assets of any Person.
Section 5.24. Condition of Assets. All of the assets and properties of the
Borrower and the Subsidiaries that are reasonably necessary for the operation of
their respective businesses are in good working condition, ordinary wear and
tear excepted, and are able to serve the function for which they are currently
being used.
<PAGE>
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as it may borrow under this
Agreement or so long as any indebtedness remains outstanding under the Notes
that the Borrower shall, and cause each of its Subsidiaries to:
Section 6.01. Corporate Existence, Etc. Preserve and keep in full force and
effect its corporate existence and all permits, rights, privileges, franchises,
licenses, material patents and copyrights (for the scheduled duration thereof),
trademarks, trade names, and service marks, necessary for the proper conduct of
its business, and its qualification to do business as a foreign corporation in
all jurisdictions where it conducts business or other activities making such
qualification necessary, where the failure to do so would reasonably be expected
to have a Materially Adverse Effect, and continue to engage in the same line of
business and comply in all material respects with all applicable laws,
regulations and orders.
Section 6.02. Compliance with Laws, Etc. (a) Comply with all Requirements
of Law (including, without limitation, ERISA, the Code and the Environmental
Laws) and Contractual Obligations applicable to or binding on any of them where
the failure to comply with such Requirements of Law and Contractual Obligations
would reasonably be expected to have a Materially Adverse Effect;
(b) Operate all property owned or leased by it such that no obligation,
including a clean-up obligation, shall arise under any Environmental Law, which
obligation would constitute a Lien on any property of any Consolidated Company;
provided, however, that in the event that any such claim is made or any such
obligation arises, such Consolidated Company shall, at its own cost and expense
either (i) immediately satisfy such claim or obligation; or (ii) contests such
claim by appropriate proceedings and upon final judgment (subject to no further
appeal) immediately satisfy such judgment; provided, however, that in all such
cases, the Borrower shall file a bond when necessary to avoid the creation of a
Lien against any of the properties of the Consolidated Companies; and provided,
further, that the Borrower shall indemnify and hold harmless the Lenders from
any liability, responsibility or obligation in respect thereof or in respect of
any clean-up of any other liability, as successor, secured party or otherwise
<PAGE>
for any reason, including, without limitation, the enforcement of the Lenders'
rights under any Credit Document or by operation of law.
Section 6.03. Payment of Taxes and Claims, Etc. Pay and discharge all of
its obligations and liabilities, including, without limitation, (i) all taxes,
assessments and governmental charges upon its income and properties when due,
and (ii) all claims (including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon its property,
unless but only to the extent that such obligations, liabilities, taxes,
assessments and governmental charges shall be contested in good faith and by
appropriate proceedings and that, to the extent required by GAAP, proper and
adequate book reserves relating thereto are established by the Borrower, or, as
the case may be, by the appropriate Subsidiary and then only to the extent that
a bond is filed in cases where the filing of a bond is necessary to avoid the
creation of a Lien, other than a Permitted Lien, against any of its properties.
Section 6.04. Books and Records. Keep proper books of record and account,
in a manner reasonably satisfactory to the Lenders, in which full, true and
correct entries in conformity with GAAP shall be made of all dealings or
transactions in relation to its business and activities.
Section 6.05. Inspections and Audits. Permit any representative of the
Agent or any Lender (i) to make or cause to be made, inspections and audits of
any books, records and papers of the Borrower and each of its Subsidiaries and
to make extracts therefrom and copies thereof, (ii) to discuss its affairs,
finances and accounts with its officers, and (iii) to make inspections and
examinations of any properties and facilities of the Borrower and the
Subsidiaries on reasonable notice, at all such reasonable times and as often as
the Agent or any Lender may reasonably require, in order to assure the Agent and
each Lender that the Borrower is and will be in compliance with its obligations
under the Credit Documents or to evaluate any Lender's investment in the then
outstanding Notes; ; provided, however, that at any time following the
occurrence and during the continuance of a Default or an Event of Default, the
Agent or any of the Lenders may take any of the above-mentioned actions at any
time, with no notice and at the Borrower's expense.
<PAGE>
Section 6.06. Maintenance and Repairs. Maintain in good repair, working
order and condition, subject to normal wear and tear, all material properties
and assets from time to time owned by it and used in or necessary for the
operation of its business, and make all reasonable repairs, replacements,
additions and improvements thereto.
Section 6.07. Reporting Covenants. Furnish to each Lender:
(a) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year of Borrower, balance sheets of
the Consolidated Companies as at the end of such year, presented on a
consolidated basis, and the related statements of income, shareholders' equity,
and cash flows of the Consolidated Companies for such fiscal year, presented on
a consolidated basis, setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail and accompanied by (i) a
report thereon of Arthur Andersen or other independent public accountants of
comparable recognized national standing, which such report shall be unqualified
as to going concern and scope of audit and shall state that such financial
statements present fairly in all material respects the financial condition as at
the end of such fiscal year on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for such
fiscal year in accordance with GAAP and that the examination by such accountants
in connection with such consolidated financial statements has been made in
accordance with generally accepted auditing standards and (ii) a certificate of
such accountants to the effect that they are familiar with the terms and
provisions of this Agreement and that in making their audit they have not
discovered any condition, act or omission to act which would constitute a
Default or Event of Default;
(b) Quarterly Financial Statements. As soon as available and in any event
within 60 days after the end of each fiscal quarter of Borrower (other than the
fourth fiscal quarter), balance sheets of the Consolidated Companies as at the
end of such quarter presented on a consolidated basis and the related statements
of income, shareholders' equity, and cash flows of the Consolidated Companies
for such fiscal quarter and for the portion of Borrower's fiscal year ended at
the end of such quarter, presented on a consolidated basis setting forth in each
<PAGE>
case in comparative form the figures for the corresponding quarter and the
corresponding portion of Borrower's previous fiscal year, all in reasonable
detail and certified by the chief financial officer or principal accounting
officer of Borrower that such financial statements fairly present in all
material respects the financial condition of the Consolidated Companies as at
the end of such fiscal quarter on a consolidated basis, and the results of
operations and statements of cash flows of the Consolidated Companies for such
fiscal quarter and such portion of Borrower's fiscal year, in accordance with
GAAP consistently applied (subject to normal year-end audit adjustments and the
absence of certain footnotes);
(c) No Default/Compliance Certificate. Together with the financial
statements required pursuant to subsections (a) and (b) above, a certificate of
the President, Chief Financial Officer, Treasurer or Principal Accounting
Officer of Borrower (i) to the effect that, based upon a review of the
activities of the Consolidated Companies and such financial statements during
the period covered thereby, there exists no Event of Default and no Default
under this Agreement, or if there exists an Event of Default or a Default
hereunder, specifying the nature thereof and the proposed response thereto, and
(ii) demonstrating in reasonable detail compliance as at the end of such fiscal
year or such fiscal quarter with Section 6.08 and Sections 7.02 through 7.04;
(d) Borrowing Base Certificate. Within two (2) Business Days after the end
of each calendar week, a Certificate of the President, Chief Financial Officer,
Treasurer or Principal Accounting Officer of the Borrower in the form of Exhibit
H hereto;
(e) Notice of Default. Promptly after Borrower has notice or knowledge of
the occurrence of an Event of Default or a Default, a certificate of the Chief
Financial Officer, Treasurer, or Principal Accounting Officer of Borrower
specifying the nature thereof and the proposed response thereto;
(f) Litigation. Promptly after (i) the occurrence thereof, notice of the
institution of or any adverse development in any litigation, legal proceeding or
dispute or any governmental investigation or any arbitration, before any court
or arbitrator or any Governmental Agency, involving amounts in excess of Five
Hundred Thousand ($500,000) Dollars, affecting any of the Consolidated Companies
<PAGE>
or any of their respective properties, whether or not fully covered by
insurance, and regardless of the subject matter thereof (excluding, however, any
actions relating to workers' compensation claims or negligence claims relating
to use of motor vehicles, if fully covered by insurance, subject to deductibles)
or (ii) actual knowledge thereof, notice of the threat of any such litigation,
legal proceeding, dispute, investigation or arbitration;
(g) Environmental Notices. Prompt written notification if any Consolidated
Company (i) receives (A) any notice of any violation or administrative or
judicial complaint or order having been filed or about to be filed against such
Consolidated Company alleging violations of any Environmental Law, or (B) any
notice from any Governmental Agency or any other Person alleging that such
Consolidated Company is or may be subject to any Environmental Liability, in
each case providing the Lenders with a copy of such notice together with a
statement of the action such Consolidated Company intends to take with respect
thereto and (ii) has any actual or alleged spill, leak, disposal or other
release of any waste, petroleum product, or hazardous waste or Hazardous
Materials which could result in penalties, fines, claims or other liabilities to
any Consolidated Company in amounts in excess of $500,000 individually or in the
aggregate;
(h) ERISA.
(A) Promptly after the occurrence thereof with respect to any Plan
of any Consolidated Company or any ERISA Affiliate thereof, or any trust
established thereunder, written notice of (x) a "Reportable Event" as
defined in Section 404 of ERISA, if a notice of such Reportable event is
required under ERISA to be delivered to the PBGC within 30 days after the
occurrence thereof, together with a description of such Reportable Event and
a statement of the action that the Consolidated Company or such ERISA
Affiliate intends to take with respect thereto, together with a copy of the
notice thereof given to the PBGC, or (y) any other event which could subject
any Consolidated Company to any tax, penalty or liability under Title I or
Title IV of ERISA or Chapter 43 of the Code, or any tax or penalty resulting
from a loss of deduction under Sections 162, 404 or 419 of the Code, where
any such taxes, penalties or liabilities exceed or could exceed $250,000 in
the aggregate;
(B) Promptly after such notice must be provided to the PBGC, or to
a Plan participant, beneficiary or alternative payee, any notice required
under Section 101(d), 302(f)(4), 303, 307, 4041(b)(1)(A) or 4041(c)(1)(A) of
ERISA or under Section 401(a)(29) or 412 of the Code with respect to any
Plan of any Consolidated Company or any ERISA Affiliate thereof;
(C) Promptly after receipt, any notice received by any
Consolidated Company or any ERISA Affiliate thereof (i) concerning the
intent of the PBGC or any other Governmental Agency to terminate a Plan of
such Company or ERISA Affiliate thereof which is subject to Title IV of
ERISA, or which will impose any liability on such Company or ERISA Affiliate
under Title IV of ERISA or Chapter 43 of the Code or (ii) an assessment of
withdrawal liability in connection with a complete or partial withdrawal
with respect to any Plan, and a statement of the action that the
Consolidated Company or such ERISA Affiliate intends to take with respect
thereto;
(D) Upon the request of the Administrative Agent, promptly upon
the filing thereof with the Internal Revenue Service ("IRS") or the
Department of Labor ("DOL"), a copy of IRS Form 5500 or annual report for
each Plan of any Consolidated Company or ERISA Affiliate thereof which is
subject to Title IV of ERISA;
(E) Upon the request of the Administrative Agent, (A) true and
complete copies of any and all documents, government reports and IRS
determination or opinion letters or rulings for any Plan of any Consolidated
Company from the IRS, PBGC or DOL, (B) any reports filed with the IRS, PBGC
or DOL with respect to a Plan of the Consolidated Companies or any ERISA
Affiliate thereof, or (C) a current statement of withdrawal liability for
each Multiemployer Plan of any Consolidated Company or any ERISA Affiliate
thereof;
(i) Liens. Promptly upon any Consolidated Company becoming aware thereof,
notice of the filing of any federal statutory Lien, tax or other state or local
government Lien or any other Lien affecting their respective properties, other
than those Liens expressly permitted by Section 7.02;
(j) Public Filings, Etc. Promptly upon the filing thereof or otherwise
becoming available, copies of all financial statements, annual, quarterly and
<PAGE>
special reports, proxy statements and notices sent or made available generally
by Borrower to its public security holders, of all regular and periodic reports
and all registration statements and prospectuses, if any, filed by any of them
with any securities exchange, and of all press releases and other statements
made available generally to the public containing material developments in the
business or financial condition of Borrower and the other Consolidated
Companies;
(k) Accountants' Reports. Promptly upon receipt thereof, copies of all
financial statements of, and all reports submitted by, independent public
accountants to Borrower in connection with each annual, interim, or special
audit of Borrower's consolidated financial statements;
(l) Burdensome Restrictions, Etc. Promptly upon the existence or occurrence
thereof, notice of the existence or occurrence of (i) any Contractual Obligation
or Requirement of Law described in Section 5.13, (ii) failure of any
Consolidated Company to hold in full force and effect those material trademarks,
service marks, patents, trade names, copyrights, licenses and similar rights
necessary in the normal conduct of its business, and (iii) any strike, labor
dispute, slow down or work stoppage as described in Section 5.22;
(m) New Significant Subsidiaries. Within 30 days after the formation or
acquisition of any Significant Subsidiary, or any other event resulting in the
creation of a new Significant Subsidiary, notice of the formation or acquisition
of such Significant Subsidiary or such occurrence, including a description of
the assets of such entity, the activities in which it will be engaged, and such
other information as the Agent may request;
(n) Intercompany Asset Transfers. Promptly upon the occurrence thereof,
notice of the transfer of any assets from Borrower or any Guarantor to any other
Consolidated Company that is not Borrower or a Guarantor (in any transaction or
series of related transactions), excluding sales or other transfers of assets in
the ordinary course of business, where the Asset Value of such assets is greater
than $500,000;
(o) Subordinated Lenders. Concurrently with dissemination to the
Subordinated Lenders, all other reports as the Borrower shall, from time to
time, disseminate to the Subordinated Lenders; and
<PAGE>
(p) Other Information. With reasonable promptness, such other information
about the Consolidated Companies as the Agent or any Lender may reasonably
request from time to time.
Section 6.08. Financial Covenants.
(a) Debt Service Coverage Ratio. Maintain as of the last day of each fiscal
quarter of the Borrower, commencing with the fiscal quarter ending on September
30, 1996, a minimum Debt Service Coverage Ratio, calculated for the immediately
preceding four fiscal quarters, of at least:
<TABLE>
<CAPTION>
Fiscal Quarter Required
Ending On Ratio
<S> <C>
September 30, 1996 1.00 to 1.0
December 31, 1996 1.40 to 1.0
March 31, 1997 and thereafter 1.50 to 1.0
</TABLE>
(b) Leverage Ratio. Maintain as of the last day of each fiscal quarter of
the Borrower ending on December 31, June 30 and September 30, commencing with
the fiscal quarter ending on June 30, 1996, a maximum Leverage Ratio of no more
than 0.45:1.0, and maintain as of the last day of each fiscal quarter of the
Borrower ending on March 31, commencing with the fiscal quarter ending on March
31, 1996, a maximum Leverage Ratio of not more than 0.50:1.0.
(c) Fixed Charge Coverage Ratio. Maintain as of the last day of each fiscal
quarter of the Borrower, commencing with the fiscal quarter ending on September
30, 1996, a minimum Fixed Charge Coverage Ratio, calculated for the immediately
preceding four fiscal quarters, of at least:
<TABLE>
<CAPTION>
Fiscal Quarter Required
Ending On Ratio
<S> <C>
September 30, 1996 0.85 to 1.0
December 31, 1996 and 1.50 to 1.0
thereafter
</TABLE>
(d) Current Ratio. Maintain as of the last day of each fiscal quarter of
the Borrower, commencing with the fiscal quarter ending as of March 31, 1996, a
minimum Current Ratio of at least 2.0 to 1.0.
(e) Funded Debt Coverage Ratio. Maintain as of the last day of each fiscal
quarter of the Borrower, commencing on September 30, 1996, a maximum Funded Debt
Coverage Ratio, calculated for the immediately preceding four fiscal quarters,
of no more than (i) 4.0 to 1.0 for the fiscal quarter ending on September 30,
1996; and (ii) 3.0 to 1.0 for each fiscal quarter thereafter ending on December
31, June 30 or September 30 and 3.5 to 1.0 for each fiscal quarter thereafter
ending on March 31.
Section 6.09. Notices Under Certain Other Indebtedness. Promptly upon
receipt thereof, furnish to the Agent a copy of any notice received by it or any
other Consolidated Company from the holder(s) of any Indebtedness of the
Borrower (or from any trustee, agent, attorney, or other party acting on behalf
of such holder(s)) in an amount which, in the aggregate, exceeds $100,000, where
such notice states or claims (i) the existence or occurrence of any default or
event of default with respect to such Indebtedness under the terms of any Debt
Instrument evidencing or governing such Indebtedness, or (ii) the existence or
occurrence of any event or condition which requires or permits holder(s) of any
Indebtedness to exercise rights under any "change in control" provision under
any Debt Instrument, in each case regardless of whether the holders of such
Indebtedness waive, or amend any Debt Instrument the effect of which is to
waive, such default or event of default. Borrower also agrees, promptly upon
receipt thereof, to furnish to the Agent a copy of any waiver or amendment to
any Debt Instrument which waives or has the effect of waiving any default or
event of default thereunder. Borrower further agrees to take such actions as may
be necessary to require the holder(s) of any Indebtedness (or any trustee or
agent acting on their behalf) incurred pursuant to Debt Instruments executed or
amended and restated after the Closing Date, to furnish copies of all such
notices, waivers and amendments directly to the Agent simultaneously with the
furnishing thereof to Borrower, and that such requirement may not be altered or
rescinded without the prior written consent of the Agent.
Section 6.10. Additional Significant Subsidiaries. Promptly after (i) the
formation or acquisition (provided that nothing in this Section shall be deemed
<PAGE>
to authorize the acquisition of any entity) of any Significant Subsidiary not
listed on Schedule 5.01, (ii) the transfer of assets to any Consolidated Company
if notice thereof is required to be given pursuant to Section 4.07(q) and as a
result thereof the recipient of such assets becomes a Significant Subsidiary,
(iii) the occurrence of any other event creating a new Significant Subsidiary,
Borrower shall execute and deliver, and cause to be executed and delivered
documents of the kind described in Schedule 6.10, all of which must be in form
and substance satisfactory to the Agent and the Required Lenders.
Section 6.11. Ownership of Significant Subsidiaries. Maintain its
percentage of ownership existing as of the date hereof of all Significant
Subsidiaries, and shall not decrease its ownership percentage in each Person
which becomes a Significant Subsidiaries after the date hereof, as such
ownership exists at the time such Person becomes a Significant Subsidiary.
Section 6.12. Insurance. (a) Maintain or cause to be maintained with
financially sound and reputable insurance companies acceptable to the Lenders,
such insurance on such of its properties and business, in such amounts and
against such risks as is customarily maintained by similar businesses; (ii) file
with the Agent upon its request a detailed list of the insurance then in effect,
stating the names of the insurance companies, the amounts and rates of the
insurance, the dates of the expiration thereof and the properties and risks
covered thereby; and (iii) within ten (10) days after notice in writing from the
Agent, obtain such additional insurance as the Required Lenders may reasonably
request; provided, that, the Borrower may maintain self-insurance consistent
with its past practices and policies; and (b) carry all insurance available
through the PBGC or any private insurance companies covering its obligations to
the PBGC.
Section 6.13. Copies of Corporate Documents. Promptly deliver to the Agent
copies of any amendments or modifications to the certificate or articles of
incorporation and by-laws of the Borrower or any of its Subsidiaries, certified
with respect to the certificate or articles of incorporation by the Secretary of
State of the state of incorporation of the Borrower or such Subsidiary and, with
respect to the by-laws, by the secretary or assistant secretary of the Borrower
or such Subsidiary.
<PAGE>
ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as it may borrow under this
Agreement or so long as any Indebtedness remains outstanding under the Notes,
the Borrower shall not, and shall cause each of its Subsidiaries not to:
Section 7.01. Reserved.
Section 7.02. Liens. Create, or assume or permit to exist, any Lien on any
of the properties of the Consolidated Companies whether now owned or hereafter
acquired, except:
(a) Permitted Liens;
(b) Liens existing on the date hereof disclosed on Schedule 7.02 (excluding
Liens securing Refinanced Indebtedness);
(c) any Lien on any property securing Indebtedness incurred or assumed for
the purpose of financing all or a part of the acquisition cost of such property
and any refinancing thereof; provided that such Lien secures only the repayment
of the purchase price of such property and such Lien does not extend to any
other property;
(d) Liens securing a cash management line of credit in favor of the
Borrower in a principal amount not to exceed $2,500,000; provided, however, that
(1) the value of the collateral subject to such Liens does not exceed 143% of
the principal amount of such Indebtedness and (2) such collateral shall not
include, in whole or in part, the Collateral as defined in the Company Security
Agreement or the Guarantor Security Agreement;
(e) Liens granted in "Assigned Accounts" pursuant to and as defined in the
Non-Notification Factoring Agreement; and
(f) Liens securing any Indebtedness other than the cash management line of
credit described in clause (d) above; provided, however, that (1) sixty-six and
two-thirds percent (66.66%) of the proceeds from such Indebtedness must be
applied to repay Indebtedness outstanding hereunder, (2) the Commitments shall
be permanently reduced by an amount equal to sixty-six and two-thirds percent
(66.66%) of the proceeds from such Indebtedness and (3) the collateral secured
by such Liens shall not include, in whole or in part, the Collateral as defined
in the Company Security Agreement or the Guarantor Security Agreement.
<PAGE>
Section 7.03. Mergers, Acquisitions. Merge or consolidate with any Person
(whether or not the Borrower or any Subsidiary is the surviving entity), or
acquire all or substantially all of the assets or any of the capital stock of
any Person, except (a) any Subsidiary may merge with or into any other
Subsidiary or the Borrower (so long as the Borrower is the surviving entity) and
(b) as permitted pursuant to Section 7.04 hereof.
Section 7.04. Investments, Loans, Etc. Make, or suffer to exist, any
Investment in any Person, including, without limitation, any shareholder,
director, officer or employee of any Consolidated Company, except Investments:
(a) Investments in:
(i) obligations issued or guaranteed by the United
States of America;
(ii) certificates of deposit, bankers acceptances and other "money
market instruments" issued by any bank or trust company organized under the
United States of America or any State thereof and having capital and surplus
in an aggregate amount of not less than $200,000,000;
(iii) open market commercial paper bearing the highest credit rating
issued by Standard & Poor's Corporation or by another nationally recognized
credit rating agency;
(iv) repurchase agreements entered into with any bank or trust company
organized under the laws of the United States of America or any state
thereof and having capital and surplus in an aggregate amount of not less
than $200,000,000 relating to United States of America government
obligations; and
(v) shares of "money market funds", each having net
assets of not less than $100,000,000;
<PAGE>
in each case maturing or being due or payable in full not more than 180 days
after the acquisition thereof.
(b) Investments by the Borrower in entities related to the business of the
Borrower in an aggregate amount not to exceed $1,000,000;
(c) Investments by the Borrower in its Subsidiaries which are outstanding
on the Closing Date;
(d) Investments in the form of loans or advances to employees; provided
that such Investments do not exceed $1,000,000 in the aggregate; and
(e) Investments consisting of the remainder of the outstanding shares of
stock of Oneita-Strathleven Limited which it does not currently own for an
aggregate purchase price not to exceed $300,000.
Section 7.05. Capital Expenditures. Make any Capital Expenditures,
excluding Fayette Alabama Plant Expenditures, (i) in excess of $9,000,000 during
the 1996 fiscal year of the Borrower, of which no more than $6,000,000 may be
used for capital expenditures on property, plant and equipment, the remainder to
be used for other capital expenditures, including capital expenditures related
to transaction costs for this transaction, the Subordinated Debt transaction and
the rights offering contemplated to be made by the Borrower, and (ii) such
amount as the parties shall mutually and reasonably agree upon for fiscal years
1997 and 1998 fiscal years of the Borrower; the Borrower and the Lenders agree
to negotiate such cap on Capital Expenditures for the Borrower's 1997 and 1998
fiscal years in good faith prior to the end of July of each of the Borrower's
1996 and 1997 fiscal years, respectively.
Section 7.06. Minimum Tangible Net Worth. Permit the Consolidated Tangible
Net Worth at the end of any fiscal quarter of the Borrower, plus the amount of
all Subordinated Debt then outstanding, to be less than the sum of (i)
$82,000,000 plus (ii) (A) $2,000,000 at the end of the fiscal quarter ending on
June 30, 1996, (B) $4,000,000 at the end of the fiscal quarter ending on
September 30, 1996 and (C) $6,000,000 at the end of each fiscal quarter ending
on December 31, 1996 and thereafter, plus (iii) for each fiscal quarter ending
on March 31, 1997 and thereafter, 50% of Consolidated Net Income (but not loss)
<PAGE>
for the period beginning October 1, 1996 and ending on the last day of such
fiscal quarter plus (iv) 100% of the proceeds of all Subordinated Debt and
equity offerings by the Borrower (in each case, net of taxes and reasonable
transactional costs incurred in connection therewith).
Section 7.07. Sale and Leaseback Transactions. Sell or transfer any
property, real or personal, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which any Consolidated
Company intends to use for substantially the same purpose or purposes as the
property being sold or transferred, to the extent that the aggregate fair market
value of any such property sold or transferred and then rented or leased back
does not exceed $5,000,000 per fiscal year of the Borrower.
Section 7.08. Transactions with Affiliates. Except as expressly permitted
by this Agreement, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any assets
to an Affiliate; (c) merge into or consolidate with or purchase or acquire
assets from an Affiliate; or (d) enter into any other transaction directly or
indirectly with or for the benefit of any Affiliate (including, without
limitation, guarantees and assumptions of obligations of an Affiliate);
provided, however, that: (i) any Affiliate who is a natural person may serve as
an employee or director of the Borrower and receive reasonable compensation for
his services in such capacity, (ii) the Borrower may enter into any transaction
with an Affiliate providing for the leasing of property, the rendering or
receipt of services or the purchase or sale of product, inventory and other
assets in the ordinary course of business if the monetary or business
consideration arising therefrom would be substantially as advantageous to the
Borrower as the monetary or business consideration that would obtain in a
comparable arm's length transaction with a Person not an Affiliate, (iii) the
Borrower may issue the Gintel Notes, the Gintel Warrant, the Avondale Note and
the Convertible Notes and enter into and perform the Avondale/Gintel Documents
and (iv) for purposes of this Section 7.08, an Affiliate shall not be deemed to
include a Significant Subsidiary of the Borrower.
Section 7.09. Optional Prepayments. Directly or indirectly, prepay (other
than mandatory prepayments required under the Prudential Agreement), purchase,
redeem, retire (other than at scheduled maturity dates), defease or otherwise
<PAGE>
acquire, or make any optional payment on account of any principal of, interest
on, or premium payable in connection with the optional prepayment, redemption or
retirement of, any of its Indebtedness, or give a notice of redemption with
respect to any such Indebtedness, or prepay any accounts payable other than in
the ordinary course of business, or make any payment in violation of the
subordination provisions of any Subordinated Debt, except that the following
shall be permitted: (1) prepayments of the Obligations under this Agreement and
the Notes, (2) prepayments of the Indebtedness and Capitalized Lease Obligations
described on Schedule 5.12 hereof owed to City of Fayette, Alabama (with respect
to the HUD UDAG loan of $353,077), Chase Home Mortgage Corporation (with respect
to the Mortgage Note of $57,131 and Spartanburg County, South Carolina (with
respect to the Industrial Revenue Bond of $270,000), (3) replacement of the
Avondale Note and one of the Gintel Notes with promissory notes convertible into
shares of common stock of the Borrower but which otherwise have substantially
the same terms as the promissory notes being replaced (including, without
limitation, with the same principal, interest rate, scheduled principal
payments, maturity date, on an unsecured basis and subject to the terms of the
Agreement) (the "Convertible Notes"), (4) conversion of the Convertible Notes
into, and the exercise of the Gintel Warrant for, shares of common stock of the
Borrower pursuant to their terms, (5) prepayment of any Subordinated Debt but
solely with, and in an amount equal to, the proceeds received by the Borrower
from the Rights Offering and (6) offset of the Avondale Note and one of the
Gintel Notes against the obligations of Avondale and Gintel, respectively, under
the Standby Agreement.
Section 7.10. Changes in Business; Sales or Pledges of Assets. Make any
material change in its business on a consolidated basis, or in the nature of its
operation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or make any Asset Sales except (i) a sale of the Fingerville,
South Carolina plant, (ii) a sale of the corporate condominium located in
Georgetown County, South Carolina, (iii) sales in the ordinary course of
business and (iv) sales in connection with a transaction permitted under Section
7.07 hereof and in each case for a fair consideration; or dispose of any shares
of stock or any Indebtedness, whether now owned or hereafter acquired, or
discount, sell, pledge, hypothecate or otherwise dispose of accounts receivable,
except pursuant to the Security Agreements and except to SunTrust Bank, Atlanta
pursuant to the Non-Notification Factoring Agreement, so long as the proceeds
received therefrom are used to prepay Indebtedness outstanding hereunder.
<PAGE>
Section 7.11. ERISA Obligations. (a) Permit the occurrence of any
Termination Event, or the occurrence of a termination or partial termination of
a Defined Contribution Plan which would have a Materially Adverse Effect on the
Borrower; or
(b) permit any accumulated deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code) with respect to any Pension Plan, whether or not
waived; or
(c) engage, or permit the Borrower or any ERISA Affiliate to engage, in any
prohibited transaction under Section 406 of ERISA or Section 4975 of the Code
for which a civil penalty pursuant to Section 502(i) of ERISA or a tax pursuant
to Section 4975 of the Code which would have a Materially Adverse Effect on the
Borrower; or
(d) engage or permit the Borrower or any ERISA Affiliate to engage, in any
breach of fiduciary duty under Part 4 of Title I of ERISA for which 20 percent
of the applicable recovery amount under Section 502(l) of ERISA which would have
a Materially Adverse Effect on the Borrower; or
(e) fail, or permit any ERISA Affiliate to fail, to establish, maintain and
operate each Employee Benefit Plan in compliance in all material respects with
the provisions of ERISA, the Code and all other applicable laws and the
regulations and interpretations thereof.
Section 7.12. Additional Negative Pledges. Create or otherwise cause or
suffer to exist or become effective, directly or indirectly, any prohibition or
restriction on the creation or existence of any Lien upon any asset of any
Consolidated Company, other than pursuant to (i) any requirement of Applicable
Law or any regulatory authority having jurisdiction over any of the Consolidated
Companies or (ii) the Prudential Agreement.
Section 7.13. Limitation on Payment Restrictions Affecting Consolidated
Companies. Create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction on the ability of any Consolidated Company
to (i) pay dividends or make any other distributions on such Consolidated
<PAGE>
Company's stock, or (ii) pay any indebtedness owed to Borrower or any other
Consolidated Company, or (iii) transfer any of its property or assets to
Borrower or any other Consolidated Company, except any consensual encumbrance or
restriction existing under the Credit Documents and the Prudential Agreement as
in effect on the Closing Date.
Section 7.14. Actions Under Certain Documents. Modify, amend, cancel or
rescind any agreements or documents evidencing or governing Subordinated Debt,
the Indebtedness outstanding to Prudential or any other Indebtedness secured by
a Lien permitted under clause (d) or (f) of Section 7.02 hereof.
Section 7.15. Redemptions, Distributions.
(a) Purchase, redeem, retire or otherwise acquire, directly or indirectly,
or make any sinking fund payments with respect to, or set apart any sum for
payment with respect to, the Subordinated Debt, any shares of any capital stock
of the Borrower, any options, warrants, or other rights to acquire such
Subordinated Debt or capital stock, whether now or hereafter outstanding;
provided, however, that (i) the Avondale Note and one of the Gintel Notes may be
replaced with Convertible Notes, (ii) the Convertible Notes may be converted
into, and the Gintel Warrant may be exercised for, shares of common stock of the
Borrower pursuant to their terms, (iii) the Borrower may prepay any Subordinated
Debt but solely with, and in an amount equal to, the proceeds received by the
Borrower from an Rights Offering and (iv) the Avondale Note and one of the
Gintel Notes may be offset against the obligations of Avondale and Gintel,
respectively, under the Standby Agreement, and tendered for credit against the
subscription price pursuant thereto; or
(b) Declare or pay any dividends or make any distribution of any kind on
the Borrower's outstanding capital stock, or set aside any sum for any such
purpose, except that the Borrower may declare or pay any dividend payable solely
in shares of its capital stock or the Borrower may distribute rights to purchase
its shares of common stock in the Rights Offering.
Section 7.16. Stock Issuance. Issue any additional shares or any right
or option to acquire any shares, or any security convertible into any shares, of
the capital stock of any Subsidiary, except to the Borrower or a directly or
indirectly wholly owned Subsidiary.
<PAGE>
Section 7.17. Fiscal Year. Change its fiscal year.
Section 7.18. Hazardous Material. Cause or permit (i) any Hazardous
Materials to be placed, held, located or disposed of, on, under or at any real
property used in connection with the operation of the business of the Borrower
or any of its Subsidiaries ("Real Property") or any part thereof, except for
such Hazardous Materials which are necessary for the Borrower's operation of its
business thereon and which shall be used, stored and disposed of in compliance
with all applicable Environmental Laws or (ii) such Real Property or any part
thereof to be used as a collection, storage or dump site for any Hazardous
Material.
ARTICLE VIII
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each, an "Event of Default"):
Section 8.01. Payments. Borrower shall fail to make promptly when due
(including, without limitation, by mandatory prepayment) any payment of
principal or interest with respect to the Notes, or Borrower shall fail to make
within three (3) days after the due date thereof any payment of any fee or other
amount payable hereunder;
Section 8.02. Covenants Without Notice. Borrower shall fail to observe or
perform any covenant or agreement contained in Section 6.08 or in Article 7;
Section 8.03. Other Covenants. Borrower shall fail to perform or observe
any other term, condition, covenant or agreement contained in this Agreement,
other than those referred to in Sections 8.01 and 8.02, or of any of the other
Credit Documents to which it is a party, which shall remain unremedied for a
period of 15 days after the earlier of (i) any of the executive officers of the
Borrower obtaining actual knowledge thereof, or (ii) notice thereof shall have
been given to Borrower by Agent or any Lender;
<PAGE>
Section 8.04. Representations. Any representation or warranty made or
deemed to have been made to the Lenders under this Agreement or any other Credit
Document (including the Schedules attached thereto), or any certificate,
statement or report made or delivered in compliance with this Agreement or any
other Credit Document, shall have been false or misleading in any material
respect when made or deemed to be made or delivered;
Section 8.05. Non-Payments of Other Indebtedness. Any Consolidated Company
shall fail to make when due (whether at stated maturity, by acceleration, on
demand or otherwise, and after giving effect to any applicable grace period) any
payment of principal of or interest on any Indebtedness (other than (i) the
Obligations, (ii) any of the Borrower's accounts payable or (iii) any taxes,
assessments, governmental charges, accrued liabilities and deferred liabilities,
other than Indebtedness for borrowed money or Capitalized Lease Obligations, to
the extent that any dispute regarding such failure to pay is being contested in
good faith by appropriate proceedings and for which adequate reserves are being
maintained to the extent required by GAAP) exceeding $500,000 in the aggregate;
Section 8.06. Defaults Under Other Agreements. (a) Any Consolidated Company
shall fail to perform or observe any term, condition or covenant of any of its
Debt Instruments, so that, as a result of any such failure to perform or
observe, the Indebtedness included therein or secured or covered thereby is
accelerated, or the holder of such Indebtedness or any other Person would be
permitted to accelerate the maturity of such Indebtedness;
(b) Any event or condition referred to in any Debt Instrument of any
Consolidated Company shall occur or fail to occur, so that as a result thereof,
the Indebtedness included therein or secured or covered thereby is accelerated,
or the holder of such Indebtedness or any other Person is permitted to
accelerate the maturity of such Indebtedness;
(c) Failure to pay any Indebtedness for borrowed money when due;
provided, however, that the provisions of this Section 8.06 shall not be
applicable to any Debt Instrument of any Consolidated Company that relating to
or evidencing Indebtedness in a principal amount of less than $500,000 in the
aggregate;
<PAGE>
Section 8.07. Bankruptcy. (a) The Borrower or any Subsidiary shall make an
assignment for the benefit of creditors, file a petition in bankruptcy, be
adjudicated insolvent, petition or apply to any tribunal for the appointment of
a receiver, custodian, or any trustee for it or a substantial part of its
assets, or shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or the Borrower or any
Subsidiary shall take any corporate action to authorize any of the foregoing
actions; or there shall have been filed any such petition or application, or any
such proceeding shall have been commenced against it, that remains undismissed
for a period of thirty (30) days or more; or any order for relief shall be
entered in any such proceeding; or the Borrower or any Subsidiary by any act or
omission shall indicate its consent to, approval of or acquiescence in any such
petition, application or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any of its properties, or shall
suffer any custodianship, receivership or trusteeship to continue undischarged
for a period of thirty (30) days or more;
(b) The Borrower or any Subsidiary shall generally not pay its debts as
such debts become due; or
(c) The Borrower or any Subsidiary shall have concealed, removed, or
permitted to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property that may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law; or shall have made any transfer of its
property to or for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or shall have suffered or permitted,
while insolvent, any creditor to obtain a Lien upon any of its property through
legal proceedings or distraint that is not vacated within thirty (30) days from
the date thereof; or
Section 8.08. Judgment. A judgment or order for the payment of money in
excess of $500,000 or a non-monetary judgment having a Materially Adverse Effect
shall be rendered against Borrower or any other Consolidated Company and such
<PAGE>
judgment or order shall continue unsatisfied (in the case of a money judgment)
and in effect for a period of 30 days during which execution shall not be
effectively stayed or deferred (whether by action of a court, by agreement or
otherwise);
Section 8.09. Attachments. An attachment, levy, execution or similar action
shall be made on or taken against any of the assets of any Consolidated Company
for any amount in excess of $500,000 in the aggregate and is not removed,
suspended or enjoined within thirty (30) days of the same being made or any
suspension or injunction being lifted;
Section 8.10. ERISA.
(a) The termination of any Pension Plan or the institution by the PBGC of
proceedings for the involuntary termination of any Pension Plan, in either case,
by reason of, or that results in, a "material accumulated funding deficiency"
under Section 412 of the Code;
(b) Failure by the Borrower to make required contributions, in accordance
with the applicable provisions of ERISA, to each of the Pension Plans hereafter
established or assumed by it;
Section 8.11. Ownership of Credit Parties and Pledged Entities. If Borrower
shall at any time fail to own and control the required percentage of the voting
stock of any Significant Subsidiary, either directly or indirectly through a
Wholly Owned Subsidiary of Borrower;
Section 8.12. Change in Control of Borrower. (a) Any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other
than Gintel, shall become the "beneficial owner(s)" (as defined in said Rule
13d-3) of more than twenty-five percent (25%) of the shares of the outstanding
common stock of Borrower entitled to vote for members of Borrower's board of
directors, or (b) any event or condition shall occur or exist which, pursuant to
the terms of any change in control provision, requires or permits the holder(s)
of Indebtedness of any Consolidated Company to require that such Indebtedness be
redeemed, repurchased, defeased, prepaid or repaid, in whole or in part, or the
maturity of such Indebtedness to be accelerated in any respect; or
<PAGE>
Section 8.13. Credit Documents. Any Credit Document ceases to be in full
force and effect or the validity or enforceability thereof is disaffirmed by or
on behalf of Borrower or any other Credit Party, or at any time it is or becomes
unlawful for Borrower or any other Credit Party to perform or comply with its
obligations under any Credit Document, or the obligations of Borrower or any
other Credit Party under any Credit Document are not or cease to be legal, valid
and binding on Borrower or any such Credit Party;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Agent may, and upon the written request of the
Required Lenders, shall, by written notice to Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent, any Lender or
the holder of any Note to enforce its claims against Borrower or any other
Credit Party: (i) declare all Commitments terminated, whereupon the Commitment
of each Lender shall terminate immediately and any commitment fee shall
forthwith become due and payable without any other notice of any kind; and (ii)
declare the principal of and any accrued interest on the Loans, and all other
Obligations owing hereunder, to be, whereupon the same shall become, forthwith
due and payable without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by Borrower; provided, that, if an Event of
Default specified in Section 8.07 shall occur, the result which would occur upon
the giving of written notice by the Agent to any Credit Party, as specified in
clauses (i) and (ii) above, shall occur automatically without the giving of any
such notice.
ARTICLE IX
THE AGENT
Section 9.01. Appointment of Agent and the Administrative Agent. Each
Lender hereby designates SunTrust and First Union as Agent, and SunTrust as
Administrative Agent to administer all matters concerning the Loans and to act
as herein specified. Each Lender hereby irrevocably authorizes, and each holder
of any Note by the acceptance of a Note shall be deemed irrevocably to
authorize, the Agent and Administrative Agent to take such actions on its behalf
under the provisions of this Agreement, the other Credit Documents, and all
<PAGE>
other instruments and agreements referred to herein or therein, and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent and Administrative Agent by
the terms hereof and thereof and such other powers as are reasonably incidental
thereto. Each Agent and Administrative Agent may perform any of its duties
hereunder by or through their agents or employees. The provisions of this
Section 9.01 are solely for the benefit of Agent and the Administrative Agent,
and Borrower and the other Consolidated Companies shall not have any rights as
third party beneficiaries of any of the provisions hereof. In performing its
functions and duties under this Agreement, each Agent and the Administrative
Agent, as the case may be, shall act solely as agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligations towards or
relationship of agency or trust with or for the Borrower and the other
Consolidated Companies.
Section 9.02. Nature of Duties of Agent and the Administrative Agent. The
Agent and Administrative Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Credit Documents. None
of the Agent and Administrative Agent nor any of their respective officers,
directors, employees or agents shall be liable for any action taken or omitted
by it as such hereunder or in connection herewith, unless caused by its or their
gross negligence or willful misconduct. The duties of the Agent and
Administrative Agent shall be ministerial and administrative in nature; the
Agent and Administrative Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
express or implied, is intended to or shall be so construed as to impose upon
the Agent or Administrative Agent any obligations in respect of this Agreement
or the other Credit Documents except as expressly set forth herein.
Section 9.03. Lack of Reliance on the Agent and the Administrative Agent.
(a) Independently and without reliance upon the Agent or the Administrative
Agent, each Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of the Credit Parties in connection with the taking or not
taking of any action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly provided in
<PAGE>
this Agreement, the Agent and the Administrative Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the making of the Loans or at any time or times
thereafter.
(b) The Agent and Administrative Agent shall not be responsible to any
Lender for any recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Agreement, the
Notes, the Guaranty Agreement, or any other documents contemplated hereby or
thereby, or the financial condition of the Credit Parties, or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Notes, the Guaranty
Agreement, or the other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties, or the existence or possible
existence of any Default or Event of Default; provided, however, to the extent
that the Agent or the Administrative Agent has been advised that a Lender has
not received any information formally delivered to the Agent or the
Administrative Agent pursuant to Section 6.07, the Agent or the Administrative
Agent, as the case may be, shall deliver or cause to be delivered such
information to such Lender.
Section 9.04. Certain Rights of the Agent and the Administrative Agent. If
the Agent or the Administrative Agent shall request instructions from the
Required Lenders with respect to any action or actions (including the failure to
act) in connection with this Agreement, the Agent or the Administrative Agent
shall be entitled to refrain from such act or taking such act, unless and until
it shall have received instructions from the Required Lenders; and the Agent and
the Administrative Agent shall not incur liability in any Person by reason of so
refraining. Without limiting the foregoing, no Lender shall have any right of
action whatsoever against the Agent or the Administrative Agent as a result of
the Agent or the Administrative Agent acting or refraining from acting hereunder
in accordance with the instructions of the Required Lenders.
<PAGE>
Section 9.05. Reliance by Agent and Administrative Agent. The Agent and the
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cable gram, radiogram, order or other
documentary, teletransmission or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person. The
Agent and the Administrative Agent may consult with legal counsel (including
counsel for any Credit Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 9.06. Indemnification of the Agent and the Administrative Agent. To
the extent the Agent and the Administrative Agent are not reimbursed and
indemnified by the Credit Parties, each Lender will reimburse and indemnify the
Agent and the Administrative Agent, ratably according to the respective amounts
of the Loans outstanding under all Facilities (or if no amounts are outstanding,
ratably in accordance with the Total Commitments), in either case, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent and the Administrative
Agent in performing its duties hereunder, in any way relating to or arising out
of this Agreement or the other Credit Documents; provided that no Lender shall
be liable to the Agent or the Administrative Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's or the
Administrative Agent's gross negligence or willful misconduct.
Section 9.07. The Agent and Administrative Agent in their Individual
Capacities. With respect to its obligation to lend under this Agreement, the
Loans made by it and the Notes issued to it, the Agent and the Administrative
Agent shall have the same rights and powers hereunder as any other Lender or
holder of a Note and may exercise the same as though it were not performing the
duties specified herein; and the terms "Lenders", "Required Lenders", "holders
of Notes", or any similar terms shall, unless the context clearly otherwise
indicates, include either the Agent or the Administrative Agent in its
<PAGE>
individual capacity. The Agent and the Administrative Agent may accept deposits
from, lend money to, and generally engage in any kind of banking, trust,
financial advisory or other business with the Consolidated Companies or any
affiliate of the Consolidated Companies as if it were not performing the duties
specified herein, and may accept fees and other consideration from the
Consolidated Companies for services in connection with this Agreement and
otherwise without having to account for the same to the Lenders.
Section 9.08. Holders of Notes. The Agent and the Administrative Agent may
deem and treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent and the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of such Note or of
any Note or Notes issued in exchange therefor.
Section 9.09. Successor Agent; Successor Administrative Agent.
(a) The Agent and the Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and Borrower and may be removed at any
time with or without cause by the Required Lenders; provided, however, the Agent
and the Administrative Agent may not resign or be removed until a successor
Agent or Administrative Agent has been appointed and shall have accepted such
appointment. Upon any such resignation or removal, the Required Lenders shall
have the right to appoint a successor Agent or Administrative Agent subject to
Borrower's prior written approval. If no successor Agent or Administrative Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent's or Administrative
Agent's giving of notice of resignation or the Required Lenders' removal of the
retiring Agent or Administrative Agent, then the retiring Agent or
Administrative Agent may, on behalf of the Lenders, appoint a successor Agent or
Administrative Agent subject to Borrower's prior written approval, which shall
be a bank which maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or any State thereof,
<PAGE>
or any Affiliate of such bank, having a combined capital and surplus of at least
$100,000,000. If at any time SunTrust is removed as a Lender, SunTrust shall
simultaneously resign as Agent and Administrative Agent. If at any time First
Union is removed as a Lender, First Union shall simultaneously resign as Agent.
(b) Upon the acceptance of any appointment as the Agent or the
Administrative Agent hereunder by a successor Agent or Administrative Agent,
such successor Agent or Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Agent or Administrative Agent, and the retiring Agent or Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's or Administrative Agent's resignation or removal hereunder
as Agent or Administrative Agent, the provisions of this Article IX shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
an Agent or Administrative Agent under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including bank wire, telecopy or
similar teletransmission or writing) and shall be given to such party at its
address or applicable teletransmission number set forth on the signature pages
hereof, or such other address or applicable teletransmission number as such
party may hereafter specify by notice to the Administrative Agent, the Agent and
Borrower. Each such notice, request or other communication shall be effective
(i) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, (ii) if given by
telecopy, when such telecopy is transmitted to the telecopy number specified in
this Section and the appropriate confirmation is received, or (iii) if given by
any other means (including, without limitation, by air courier), when delivered
or received at the address specified in this Section; provided that notices to
the Agent and the Administrative Agent shall not be effective until received.
Section 10.02. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the other Credit Documents, nor consent to any departure by
<PAGE>
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or consent shall,
unless in writing and signed by all the Lenders do any of the following: (i)
increase the Commitments or other contractual obligations to Borrower under this
Agreement, (ii) reduce the principal of, or interest on, the Notes or any fees
hereunder (other than fees required under Section 3.05(c)), (iii) postpone any
date fixed for the payment in respect of principal of, or interest on, the Notes
or the fees owed pursuant to Section 3.05 hereof, including, without limitation,
the Termination Date, (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number or identity of
Lenders which shall be required for the Lenders or any of them to take any
action hereunder, (v) release any Guarantor from its obligations under any
Guaranty Agreement or release any of the collateral securing the Loans, the
Notes or other obligations of the Borrower or any Significant Subsidiary to the
Lenders, whether granted pursuant to the Security Agreements or otherwise, (vi)
modify the definition of "Required Lenders" or "Borrowing Base" or (vii) modify
this Section 10.02. Notwithstanding the foregoing, no amendment, waiver or
consent shall, unless in writing and signed by the Agent and the Administrative
Agent in addition to the Lenders required hereinabove to take such action,
affect the rights or duties of the Agent and the Administrative Agent under this
Agreement or under any other Credit Document.
Section 10.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of the Administrative Agent, the Agent, any Lender or any holder of a Note
in exercising any right or remedy hereunder or under any other Credit Document,
and no course of dealing between any Credit Party and the Administrative Agent,
the Agent, any Lender or the holder of any Note shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
hereunder or under any other Credit Document preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Administrative Agent, the
Agent, any Lender or the holder of any Note would otherwise have. No notice to
or demand on any Credit Party not required hereunder or under any other Credit
Document in any case shall entitle any Credit Party to any other or further
<PAGE>
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent, the Agent, the Lenders or the holder of any
Note to any other or further action in any circumstances without notice or
demand.
Section 10.04. Payment of Expenses, Indemnity, Etc. Borrower shall:
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the
Agent and the Administrative Agent in the administration (both before and
after the execution hereof and including reasonable expenses actually
incurred relating to advice of counsel as to the rights and duties of the
Agent and the Administrative Agent and the Lenders with respect thereto) of,
and in connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and, after a Default or Event
of Default, refinancing, renegotiation or restructuring of, this Agreement
and the other Credit Documents and the documents and instruments referred to
therein, and any amendment, waiver or consent relating thereto (including,
without limitation, the reasonable fees actually incurred and disbursements
of counsel for the Agent and the Administrative Agent), and in the case of
enforcement of this Agreement or any Credit Document after an Event of
Default, all such reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred and disbursements
of counsel), for any of the Lenders;
(b) subject, in the case of certain Taxes, to the applicable
provisions of Section 3.07(b), pay and hold each of the Lenders harmless
from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Notes and any other
Credit Documents, any collateral described therein, or any payments due
thereunder, and save each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay
such Taxes; and
(c) protect, indemnify and save harmless the Agent, the
Administrative Agent and each Lender, and their respective officers,
directors, employees, representatives and agents from, and hold each of them
<PAGE>
harmless against, any and all costs, losses, liabilities, claims, damages or
expenses incurred by any of them (whether or not any of them is designated a
party thereto) (an "Indemnitee") arising out of or by reason of any
investigation, litigation or other proceeding related to any actual or
proposed use of the proceeds of any of the Loans or any Credit Party's
entering into and performing of the Agreement, the Notes, or the other
Credit Documents, including, without limitation, the reasonable fees
actually incurred and disbursements of counsel (including foreign counsel)
incurred in connection with any such investigation, litigation or other
proceeding; provided, however, Borrower shall not be obligated to indemnify
any Indemnitee for any of the foregoing arising out of such Indemnitee's
gross negligence or willful misconduct;
(d) without limiting the indemnities set forth in subsection
(iii) above, indemnify each Indemnitee for any and all expenses and costs
(including without limitation, remedial, removal, response, abatement,
cleanup, investigative, closure and monitoring costs), losses, claims
(including claims for contribution or indemnity and including the cost of
investigating or defending any claim and whether or not such claim is
ultimately defeated, and whether such claim arose before, during or after
any Credit Party's ownership, operation, possession or control of its
business, property or facilities or before, on or after the date hereof, and
including also any amounts paid incidental to any compromise or settlement
by the Indemnitee or Indemnitees to the holders of any such claim),
lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including without limitation
damages for contamination or destruction of natural resources), penalties
and fines of any kind or nature whatsoever (including without limitation in
all cases the reasonable fees actually incurred, other charges and
disbursements of counsel in connection therewith) incurred, suffered or
sustained by that Indemnitee based upon, arising under or relating to
Environmental Laws based on, arising out of or relating to in whole or in
part, the existence or exercise of any rights or remedies by any Indemnitee
under this Agreement, any other Credit Document or any related documents
(but excluding those incurred, suffered or sustained by any Indemnitee as a
result of any action taken by or on behalf of the Lenders with respect to
<PAGE>
any Subsidiary of Borrower (or the assets thereof) owned or controlled by
the Lenders.
If and to the extent that the obligations of Borrower under this Section 10.04
are unenforceable for any reason, Borrower hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law.
Section 10.05. Right of Setoff. In addition to and not in limitation of all
rights of offset that any Lender or other holder of a Note may have under
applicable law, each Lender or other holder of a Note shall, upon the occurrence
of any Event of Default and whether or not such Lender or such holder has made
any demand or any Credit Party's obligations are matured, have the right to
appropriate and apply to the payment of any Credit Party's obligations hereunder
and under the other Credit Documents, all deposits of any Credit Party (general
or special, time or demand, provisional or final) then or thereafter held by and
other indebtedness or property then or thereafter owing by such Lender or other
holder to any Credit Party, whether or not related to this Agreement or any
transaction hereunder. Each Lender shall promptly notify Borrower of any offset
hereunder.
Section 10.06. Benefit of Agreement.
(a) This 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 Borrower may not assign or transfer any of its interest hereunder
without the prior written consent of the Lenders.
(b) Any Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of such Lender.
(c) Each Lender may assign all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion of any of its
Commitments and the Loans at the time owing to it and the Notes held by it) to
any Eligible Assignee; provided, however, that (i) the Administrative Agent and,
so long as no Default or Event of Default exists or is continuing, Borrower must
give their prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed) unless such assignment is an Affiliate of the
<PAGE>
assigning Lender (in which case no consent from the Administrative Agent or the
Borrower is required), (ii) the amount of the Commitments or Loans, in the case
of assignment of Loans, of the assigning Lender subject to each assignment
(determined as of the date the assignment and acceptance with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000, unless such amount constitutes the entire remaining Commitment and
Loans of the assigning Lender, (iii) the parties to each such assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a Note or Notes subject to such assignment and, unless such
assignment is to an Affiliate of such Lender, a processing and recordation fee
of $2500, (iv) so long as no Default has occurred hereunder and is continuing,
each of SunTrust and First Union agrees that it shall maintain at all times a
Commitment at least equal to the lesser of (A) $20,000,000 and (B) the amount of
the largest Commitment of any other Lender, unless the Borrower shall otherwise
give its consent to a Commitment in a lesser amount, and (v) so long as no
Default has occurred hereunder and is continuing, there may be no more than six
(6) Lenders under this Agreement at any one time. Borrower shall not be
responsible for such processing and recordation fee or any costs or expenses
incurred by any Lender or the Administrative Agent in connection with such
assignment. From and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days after
the execution thereof, the assignee thereunder shall be a party hereto and to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement. Within five (5)
Business Days after receipt of the notice and the Assignment and Acceptance,
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the
order of such assignee in a principal amount equal to the applicable Commitments
or Loans assumed by it pursuant to such Assignment and Acceptance and, if
applicable, new Note or Notes to the assigning Lender in the amount of its
retained Commitment or Commitments or amount of its retained Loans. Such new
Note or Notes shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Note or Notes, shall be dated the date of
the surrendered Note or Notes which they replace, and shall otherwise be in
substantially the form attached hereto.
<PAGE>
(d) Each Lender may, without the consent of Borrower, the Administrative
Agent or the Agent, sell participations to one or more banks or other entities
in all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments in the Loans owing to it and the
Notes held by it), (ii) such Lender's obligations under this Agreement shall
remain unchanged, (iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iv) the participating
bank or other entity shall not be entitled to the benefit (except through its
selling Lender) of the cost protection provisions contained in Article IV of
this Agreement, and (v) Borrower, the Agent, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with each Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Credit Documents, and such Lender shall retain the sole right to
enforce the obligations of Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provisions of this Agreement. Any
Lender selling a participation hereunder shall provide prompt written notice to
Borrower of the name of such participant.
(e) Any Lender or participant may, in connection with the assignment or
participation or proposed assignment or participation, pursuant to this Section,
disclose to the assignee or participant or proposed assignee or participant any
information relating to Borrower or the other Consolidated Companies furnished
to such Lender by or on behalf of Borrower or any other Consolidated Company.
With respect to any disclosure of confidential, non-public, proprietary
information, such proposed assignee or participant shall agree to use the
information only for the purpose of making any necessary credit judgments with
respect to this credit facility and not to use the information in any manner
prohibited by any law, including without limitation, the securities laws of the
United States. The proposed participant or assignee shall agree not to disclose
any of such information except (i) to directors, employees, auditors, affiliates
or counsel to whom it is necessary to show such information, each of whom shall
be informed of the confidential nature of the information, (ii) in any statement
or testimony pursuant to a subpoena or order by any court or Governmental Agency
asserting jurisdiction over such entity, or as otherwise required by law or
regulatory process (provided prior notice is given to Borrower, the
Administrative Agent and the Agent unless otherwise prohibited by the subpoena,
order or law and except for routine bank regulatory examinations), and (iii)
<PAGE>
upon the request or demand of any regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee shall further agree to
return, upon request, all documents or other written material and copies thereof
received from any Lender, the Agent, the Administrative Agent or Borrower
relating to such confidential information unless otherwise properly disposed of
or safeguarded by such entity.
(f) Any Lender may at any time assign all or any portion of its rights in
this Agreement and the Notes issued to it to a Federal Reserve Bank; provided
that no such assignment shall release the Lender from any of its obligations
hereunder.
(g) If (i) any Taxes referred to in Section 3.07(b) have been levied or
imposed so as to require withholdings or deductions by Borrower and payment by
Borrower of additional amounts to any Lender as a result thereof, (ii) any
Lender shall make demand for payment of any material additional amounts as
compensation for increased costs pursuant to Section 3.10 or for its reduced
rate of return pursuant to Section 3.16, or (iii) any Lender shall decline to
consent to a modification or waiver of the terms of this Agreement or the other
Credit Documents requested by Borrower, then and in such event, upon request
from Borrower delivered to such Lender, the Administrative Agent and the Agent,
such Lender shall assign, in accordance with the provisions of Section 10.06(c),
all of its rights and obligations under this Agreement and the other Credit
Documents to another Lender or an Eligible Assignee selected by Borrower, in
consideration for the payment by such assignee to the Lender of the principal
of, and interest on, the outstanding Loans accrued to the date of such
assignment, and the assumption of such Lender's Total Commitment hereunder,
together with any and all other amounts owing to such Lender under any
provisions of this Agreement or the other Credit Documents accrued to the date
of such assignment.
Section 10.07. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES
THEREOF) OF THE STATE OF GEORGIA.
<PAGE>
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE
NOTES OR ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT OF
FULTON COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, BORROWER HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND BORROWER HEREBY IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(c) BORROWER HEREBY IRREVOCABLY DESIGNATES THE CT CORPORATION, ATLANTA,
GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON
BEHALF OF BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR ANY
DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON
SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY THE
SERVER OF SUCH PROCESS BY MAIL TO BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS
SIGNATURE BELOW, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY SHALL NOT
AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS 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 BORROWER AT ITS SAID ADDRESS, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING.
(d) Nothing herein shall affect the right of the Agent, the Administrative
Agent, any Lender, any holder of a Note or any Credit Party to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against Borrower in any other jurisdiction.
Section 10.08. Independent Nature of Lenders' Rights. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights pursuant to
this Agreement and its Notes, and it shall not be necessary for any other Lender
to be joined as an additional party in any proceeding for such purpose.
<PAGE>
Section 10.09. Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
Section 10.10. Effectiveness; Survival.
(a) This Agreement shall become effective on the date (the "Effective
Date") on which all of the parties hereto shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have delivered the same
to the Administrative Agent pursuant to Section 10.01 or, in the case of the
Lenders, shall have given to the Agent or the Administrative Agent written
notice (actually received) that the same has been signed and mailed to them.
(b) The obligations of Borrower under Sections 3.07(b), 3.10, 3.12, 3.13,
3.16, and 10.04 hereof shall survive for ninety (90) days after the payment in
full of the Notes after the Final Maturity Date. All representations and
warranties made herein, in the certificates, reports, notices, and other
documents delivered pursuant to this Agreement shall survive the execution and
delivery of this Agreement, the other Credit Documents, and such other
agreements and documents, the making of the Loans hereunder, and the execution
and delivery of the Notes.
Section 10.11. Severability. In case any provision in or obligation under
this Agreement or the other Credit Documents shall be invalid, illegal or
unenforceable, in whole or in part, in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
Section 10.12. Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitation of, another covenant, shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
<PAGE>
Section 10.13. Change in Accounting Principles, Fiscal Year or Tax Laws. If
(i) any preparation of the financial statements referred to in Section 6.07
hereafter occasioned by the promulgation of rules, regulations, pronouncements
and opinions by or required by the Financial Accounting Standards Board or the
American Institute of Certified Public Accounts (or successors thereto or
agencies with similar functions) (other than changes mandated by FASB 106)
result in a material change in the method of calculation of financial covenants,
standards or terms found in this Agreement, (ii) there is any change in
Borrower's fiscal quarter or fiscal year, or (iii) there is a material change in
federal tax laws which materially affects any of the Consolidated Companies'
ability to comply with the financial covenants, standards or terms found in this
Agreement, Borrower and the Required Lenders agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating any of the Consolidated
Companies' financial condition shall be the same after such changes as if such
changes had not been made. Unless and until such provisions have been so
amended, the provisions of this Agreement shall govern.
Section 10.14. Headings Descriptive; Entire Agreement. The headings of the
several sections and subsections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement. This Agreement, the other Credit Documents, and the
agreements and documents required to be delivered pursuant to the terms of this
Agreement constitute the entire agreement among the parties hereto and thereto
regarding the subject matters hereof and thereof and supersede all prior
agreements, representations and understandings related to such subject matters.
Section 10.15. Time is of the Essence. Time is of the essence in
interpreting and performing this Agreement and all other Credit Documents.
Section 10.16. Usury. It is the intent of the parties hereto not to violate
any federal or state law, rule or regulation pertaining either to usury or to
the contracting for or charging or collecting of interest, and Borrower and
Lenders agree that, should any provision of this Agreement or of the Notes, or
any act performed hereunder or thereunder, violate any such law, rule or
regulation, then the excess of interest contracted for or charged or collected
<PAGE>
over the maximum lawful rate of interest shall be applied to the outstanding
principal indebtedness due to Lenders by Borrower under this Agreement.
Section 10.17. Construction. Should any provision of this Agreement require
judicial interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party who itself or
through its agents prepared the same, it being agreed that Borrower, Agent,
Administrative Agent, Lenders and their respective agents have participated in
the preparation hereof.
Section 10.18. Release of Collateral. At any time that no Default or Event
of Default has occurred and is continuing, the Borrower may request that the
Lenders release the collateral securing its obligations and those of the
Guarantors to the Lenders. The Lenders shall have no obligation to release such
collateral and will do so only in their sole and absolute discretion. The
Borrower acknowledges that release of such collateral will require the consent
of all Lenders holding all Commitments, and will require the consent of
Prudential independently of this Agreement. In considering such request by the
Borrower, the Lenders will take into consideration the operating performance of
the Consolidated Companies, the balance sheet leverage at the time the request
is made and the ability of the Consolidated Companies to issue unsecured
Long-term Indebtedness in the institutional market.
Section 10.19. Confidentiality. Each Lender agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower to
it which is either financial or clearly indicated to be confidential
information, confidential from any one other than persons employed or retained
by such Lender who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loans; provided, however, that
nothing herein shall prevent any Lender from disclosing such information (i) to
any other Lender, (ii) upon the order of any court or administrative agency,
(iii) upon the request or demand of any regulatory agency or authority having
jurisdiction over such Lender, (iv) to the extent reasonably required in
connection with any litigation to which the Agent, the Administrative Agent, any
Lender or their respective Affiliates may be a party, (v) to the extent
<PAGE>
reasonably required in connection with the exercise of any remedy hereunder,
(vi) to such Lender's legal counsel and independent auditors and (vii) to any
actual or proposed participants or assignee of all or part of its rights
hereunder which has agreed in writing to be bound by the provisions of this
Section 10.19.
Section 10.20. Provisions relating to the Refinanced Indebtedness. Upon the
fulfillment of all conditions precedent to this Agreement set forth in Section
4.01 and 4.02 and after the application of the proceeds from the initial
Borrowing to repay the Refinanced Indebtedness and to repurchase the Factored
Receivables, (1) the promissory notes and other agreements relating to or
evidencing or governing the Refinanced Indebtedness shall be deemed terminated
and (2) that certain Factoring Agreement, dated as of December 27, 1995, between
the Borrower and SunTrust Bank, Atlanta (the "December 1995 Factoring
Agreement") shall be deemed terminated, and SunTrust shall be deemed to have
sold to the Borrower, and the Borrower shall be deemed to have purchased from
SunTrust, the Factored Receivables for an amount equal to the face amount of
such Factored Receivables, discounted by the same discount rate applied by
SunTrust when it purchased such Factored Receivables from the Borrower under the
December 1995 Factoring Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Atlanta, Georgia, by their duly authorized
officers as of the day and year first above written.
BORROWER:
ONEITA INDUSTRIES, INC.
Address for Notices: By: /s/ James L. Ford
4130 Faber Place Drive James L. Ford
Suite 200 Chief Financial Officer
Charleston, SC 29405
Attn: James L. Ford
Attest:/s/ Edward I. Kramer
Name: Edward I. Kramer
Secretary
[CORPORATE SEAL]
<PAGE>
Address for Notices: SUNTRUST BANK, ATLANTA,
P. O. Box 4418 individually, as Agent and as
Atlanta, Georgia 30302 Administrative Agent
Attn: Mr. David Westerfield
and Mr. Tom Matthesen
By: /s/ David Westerfield
Title: Group Vice President
Telecopy No. 404/332-3940
By: /s/ Thomas S. Matthesen
Payment Office:
Title:____________________________
55 Park Place
Atlanta, Georgia 30303
- -------------------------------------
Commitment: $25,000,000
Pro Rata Share of Commitment: 41.67%
<PAGE>
Address for Notices: FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA,
P. O. Box 1329 individually and as Agent
Greenville, SC 29602
Attn: Mr. Frank R. Wrenn, III By: /s/ Frank R. Wrenn
Title: Senior Vice President
Telecopier No: 803/255-8357
Payment Office:
P. O. Box 1329
Greenville, SC 29602
- -------------------------------------
Commitment: $25,000,000
Pro Rata Share of Commitment: 41.67%
<PAGE>
Address for Notices: NATWEST BANK N.A.
100 Jericho Quadrangle By: /s/ Chris Mendelsohn
Jericho, New York 11753
Attn: Christopher J. Title: Vice President
Mendelsohn
Telecopy No. 516/349-2098
Payment Office:
100 Jericho Quadrangle
Jericho, New York 11753
- -------------------------------------
Commitment: $10,000,000
Pro Rata Share of Commitment: 16.66%
<PAGE>
Schedule 1.01 to the Revolving Credit Agreement
<TABLE>
<CAPTION>
Applicable Applicable
Funded Debt Funded Debt Margin for Margin for
to Total to EBITDA Eurodollar Base Rate
Capital Ratio Ratio Advances Advances
<S> <C> <C> <C>
Less than 0.25 Less than 1.5
to 1.00 to 1.0 1.25 0.00
Greater than or
equal to 1.5 to
1.0, but less
than 2.5 to 1.0 1.50 0.00
Greater than or
equal to 2.5 1.75 0.00
Greater than or Less than 1.5 1.50 0.00
equal to .25 to to 1.0
1.00, but less
than .35 to 1.00
Greater than or 2.00 0.25
equal to 1.5 to
1.0, but less
than 2.5 to 1.0
Greater than or 2.25 0.50
equal to 2.5
Greater than or Less than 1.5 1.75 0.00
equal to .35 to 1.0
to 1.00
Greater than or 2.25 0.50
equal to 1.5 to
1.0, but less
than 2.5 to 1.0
Greater than or 2.75 0.75
equal to 2.5
</TABLE>
<PAGE>
Schedule 6.10 to the Revolving Credit Agreement
Additional Significant Subsidiaries Documentation
1. Supplement to Guarantor Security Agreement (as defined in
the Credit Agreement)
2. Supplement to Guaranty Agreement (as defined in the
Credit Agreement)
3. Lien Search Results in such locations as the Secured
Parties shall require
4. UCC Financing Statements in such locations as the Secured
Parties shall require
5. Opinions of Counsel as the Secured Parties shall require
6. Corporate Authority Documents (article of incorporation,
bylaws, resolutions of the Board of Directors,
incumbency)
7. Such other documents, instruments and certificates as the
Secured Parties shall reasonably require consistent with
the Credit Agreement
<PAGE>
Schedule 7.02 to the Revolving Credit Agreement
[Attach Lien Summary]
REVOLVING CREDIT NOTE
January 26, 1996 $25,000,000
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, ONEITA INDUSTRIES, INC., a corporation
organized and existing under the laws of the State of Delaware (the "Borrower"),
promises to pay to the order of SunTrust Bank, Atlanta, a Georgia banking
corporation (the "Lender"), on January 26, 1999 or on such earlier date as is
provided for in the Credit Agreement (as hereinafter defined), the principal sum
of Twenty-five Million Dollars and 00/100 ($25,000,000) or so much thereof as
may from time to time be disbursed hereunder prior to the maturity of this
Revolving Credit Note, as may be shown on the grid schedule attached hereto.
In addition to principal, the Borrower agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of each
disbursement until paid at such rates of interest and upon such dates as
provided in the Credit Agreement. All indebtedness outstanding under this Note
shall bear interest after maturity, whether at stated maturity, by acceleration
or otherwise, at the default rate specified in the Credit Agreement, and all
such interest shall be payable on demand.
This Revolving Credit Note (this "Note") is one of the Notes defined in,
and evidences Advances incurred pursuant to, that certain Revolving Credit
Agreement, dated as of the date hereof, by and among the Borrower, SunTrust
Bank, Atlanta ("SunTrust"), First Union National Bank of South Carolina ("First
Union") and NatWest Bank N.A. as Lenders thereunder, SunTrust and First Union as
Agent for such Lenders and SunTrust as Administrative Agent for such Lenders (as
the same may be from time to time supplemented, amended, renewed or extended,
the "Credit Agreement"). Reference hereby is made to the Credit Agreement for a
full and complete description of such terms and conditions, including, without
limitation, the circumstances under which the maturity of this Note may or will
<PAGE>
be accelerated and the unpaid balance and all accrued and unpaid interest shall
become due and payable. Unless otherwise defined herein, all capitalized terms
used in this Note shall have the same meanings as set forth in the Credit
Agreement.
Payment of both principal and interest on this Note are to be made at the
office specified in writing from time to time by SunTrust or any successor
Administrative Agent; the initial office for payment shall be at 55 Park Place,
Atlanta, Georgia, 30303. All payments of principal and interest shall be in the
currency of the United States of America and in immediately available funds.
The Lender shall at all times have a right of set-off against any deposit
balances of the Borrower in the possession of the Lender, and the Lender may
apply the same against payment of this Note or any other indebtedness of the
Borrower to the Lender, provided that such indebtedness has matured (by its
terms, by acceleration or otherwise). The payment of any indebtedness evidenced
by this Note shall not affect the enforceability of this Note as to any future,
different or other indebtedness evidenced hereby. In the event the indebtedness
evidenced by this Note is collected by legal action or through an attorney at
law, the Lender shall be entitled to recover from the Borrower all costs of
collection including reasonable attorneys' fees actually incurred.
The Borrower acknowledges that the actual crediting of the amount of any
Advance under the Credit Agreement to an account of the Borrower or recording
such amount on the grid schedule attached hereto shall, in the absence of
manifest error, constitute presumptive evidence of such Advance. Such account
records or grid schedule shall constitute, in the absence of manifest error,
presumptive evidence of principal amounts outstanding and repayments made under
this Note and the Credit Agreement, at any time and from time to time, provided
that the failure of the Lender to record on the grid schedule or in such account
records the amount of any Advance shall not affect the obligation of the
undersigned to repay such amount together with interest thereon in accordance
with this Note and the Credit Agreement.
Failure or forbearance of the Lender to exercise any right hereunder, or
otherwise granted by the Credit Agreement or by law, shall not affect or release
the liability of the Borrower hereunder, and shall not constitute a waiver of
such right unless so stated in writing by such of the Lenders as are required
<PAGE>
under the Credit Agreement to effect such waiver. THIS NOTE SHALL BE DEEMED TO
BE MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE
LAWS OF THE STATE OF GEORGIA. Time is of the essence of this Note.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
Executed under hand and seal in Atlanta, Georgia, on the day and year first
above written.
ONEITA INDUSTRIES, INC.
By: /s/ Herbert J. Fleming
Herbert J. Fleming
President
[CORPORATE SEAL]
Attest: /s/ Edward I. Kramer
Name: Edward I. Kramer
Secretary
<PAGE>
GRID SCHEDULE TO REVOLVING CREDIT NOTE
This Note evidences Loans made by the Lender to the Borrower under the
within described Credit Agreement, in the principal amounts, and on the dates
set forth below, subject to the payments or prepayments of principal set forth
below:
Principal Principal
Date Type of Amount of Amount Paid Balance
Made Loan Loan or Prepaid Outstanding Initials
REVOLVING CREDIT NOTE
January 26, 1996 $25,000,000
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, ONEITA INDUSTRIES, INC., a corporation
organized and existing under the laws of the State of Delaware (the "Borrower"),
promises to pay to the order of First Union Bank of South Carolina a national
banking association (the "Lender"), on January 26, 1999 or on such earlier date
as is provided for in the Credit Agreement (as hereinafter defined), the
principal sum of Twenty-five Million Dollars and 00/100 ($25,000,000) or so much
thereof as may from time to time be disbursed hereunder prior to the maturity of
this Revolving Credit Note, as may be shown on the grid schedule attached
hereto.
In addition to principal, the Borrower agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of each
disbursement until paid at such rates of interest and upon such dates as
provided in the Credit Agreement. All indebtedness outstanding under this Note
shall bear interest after maturity, whether at stated maturity, by acceleration
or otherwise, at the default rate specified in the Credit Agreement, and all
such interest shall be payable on demand.
This Revolving Credit Note (this "Note") is one of the Notes defined in,
and evidences Advances incurred pursuant to, that certain Revolving Credit
Agreement, dated as of the date hereof, by and among the Borrower, SunTrust
Bank, Atlanta ("SunTrust"), First Union National Bank of South Carolina ("First
Union") and NatWest Bank N.A. as Lenders thereunder, SunTrust and First Union as
Agent for such Lenders and SunTrust as Administrative Agent for such Lenders (as
the same may be from time to time supplemented, amended, renewed or extended,
the "Credit Agreement"). Reference hereby is made to the Credit Agreement for a
full and complete description of such terms and conditions, including, without
limitation, the circumstances under which the maturity of this Note may or will
be accelerated and the unpaid balance and all accrued and unpaid interest shall
<PAGE>
become due and payable. Unless otherwise defined herein, all capitalized terms
used in this Note shall have the same meanings as set forth in the Credit
Agreement.
Payment of both principal and interest on this Note are to be made at the
office specified in writing from time to time by SunTrust or any successor
Administrative Agent; the initial office for payment shall be at 55 Park Place,
Atlanta, Georgia, 30303. All payments of principal and interest shall be in the
currency of the United States of America and in immediately available funds.
The Lender shall at all times have a right of set-off against any deposit
balances of the Borrower in the possession of the Lender, and the Lender may
apply the same against payment of this Note or any other indebtedness of the
Borrower to the Lender, provided that such indebtedness has matured (by its
terms, by acceleration or otherwise). The payment of any indebtedness evidenced
by this Note shall not affect the enforceability of this Note as to any future,
different or other indebtedness evidenced hereby. In the event the indebtedness
evidenced by this Note is collected by legal action or through an attorney at
law, the Lender shall be entitled to recover from the Borrower all costs of
collection including reasonable attorneys' fees actually incurred.
The Borrower acknowledges that the actual crediting of the amount of any
Advance under the Credit Agreement to an account of the Borrower or recording
such amount on the grid schedule attached hereto shall, in the absence of
manifest error, constitute presumptive evidence of such Advance. Such account
records or grid schedule shall constitute, in the absence of manifest error,
presumptive evidence of principal amounts outstanding and repayments made under
this Note and the Credit Agreement, at any time and from time to time, provided
that the failure of the Lender to record on the grid schedule or in such account
records the amount of any Advance shall not affect the obligation of the
undersigned to repay such amount together with interest thereon in accordance
with this Note and the Credit Agreement.
Failure or forbearance of the Lender to exercise any right hereunder, or
otherwise granted by the Credit Agreement or by law, shall not affect or release
the liability of the Borrower hereunder, and shall not constitute a waiver of
such right unless so stated in writing by such of the Lenders as are required
under the Credit Agreement to effect such waiver. THIS NOTE SHALL BE DEEMED TO
<PAGE>
BE MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE
LAWS OF THE STATE OF GEORGIA. Time is of the essence of this Note.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
Executed under hand and seal in Atlanta, Georgia, on the day and year first
above written.
ONEITA INDUSTRIES, INC.
By: /s/ Herbert J. Fleming
Herbert J. Fleming
President
[CORPORATE SEAL]
Attest: /s/ Edward I. Kramer
Name: Edward I. Kramer
Secretary
<PAGE>
GRID SCHEDULE TO REVOLVING CREDIT NOTE
This Note evidences Loans made by the Lender to the Borrower under the
within described Credit Agreement, in the principal amounts, and on the dates
set forth below, subject to the payments or prepayments of principal set forth
below:
Principal Principal
Date Type of Amount of Amount Paid Balance
Made Loan Loan or Prepaid Outstanding Initials
REVOLVING CREDIT NOTE
January 26, 1996 $10,000,000
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, ONEITA INDUSTRIES, INC., a corporation
organized and existing under the laws of the State of Delaware (the "Borrower"),
promises to pay to the order of NatWest Bank N.A. a national banking association
(the "Lender"), on January 26, 1999 or on such earlier date as is provided for
in the Credit Agreement (as hereinafter defined), the principal sum of Ten
Million Dollar and 00/100 ($10,000,000) or so much thereof as may from time to
time be disbursed hereunder prior to the maturity of this Revolving Credit Note,
as may be shown on the grid schedule attached hereto.
In addition to principal, the Borrower agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the date of each
disbursement until paid at such rates of interest and upon such dates as
provided in the Credit Agreement. All indebtedness outstanding under this Note
shall bear interest after maturity, whether at stated maturity, by acceleration
or otherwise, at the default rate specified in the Credit Agreement, and all
such interest shall be payable on demand.
This Revolving Credit Note (this "Note") is one of the Notes defined in,
and evidences Advances incurred pursuant to, that certain Revolving Credit
Agreement, dated as of the date hereof, by and among the Borrower, SunTrust
Bank, Atlanta ("SunTrust"), First Union National Bank of South Carolina ("First
Union") and NatWest Bank N.A. as Lenders thereunder, SunTrust and First Union as
Agent for such Lenders and SunTrust as Administrative Agent for such Lenders (as
the same may be from time to time supplemented, amended, renewed or extended,
the "Credit Agreement"). Reference hereby is made to the Credit Agreement for a
full and complete description of such terms and conditions, including, without
limitation, the circumstances under which the maturity of this Note may or will
be accelerated and the unpaid balance and all accrued and unpaid interest shall
become due and payable. Unless otherwise defined herein, all capitalized terms
used in this Note shall have the same meanings as set forth in the Credit
Agreement.
<PAGE>
Payment of both principal and interest on this Note are to be made at the
office specified in writing from time to time by SunTrust or any successor
Administrative Agent; the initial office for payment shall be at 55 Park Place,
Atlanta, Georgia, 30303. All payments of principal and interest shall be in the
currency of the United States of America and in immediately available funds.
The Lender shall at all times have a right of set-off against any deposit
balances of the Borrower in the possession of the Lender, and the Lender may
apply the same against payment of this Note or any other indebtedness of the
Borrower to the Lender, provided that such indebtedness has matured (by its
terms, by acceleration or otherwise). The payment of any indebtedness evidenced
by this Note shall not affect the enforceability of this Note as to any future,
different or other indebtedness evidenced hereby. In the event the indebtedness
evidenced by this Note is collected by legal action or through an attorney at
law, the Lender shall be entitled to recover from the Borrower all costs of
collection including reasonable attorneys' fees actually incurred.
The Borrower acknowledges that the actual crediting of the amount of any
Advance under the Credit Agreement to an account of the Borrower or recording
such amount on the grid schedule attached hereto shall, in the absence of
manifest error, constitute presumptive evidence of such Advance. Such account
records or grid schedule shall constitute, in the absence of manifest error,
presumptive evidence of principal amounts outstanding and repayments made under
this Note and the Credit Agreement, at any time and from time to time, provided
that the failure of the Lender to record on the grid schedule or in such account
records the amount of any Advance shall not affect the obligation of the
undersigned to repay such amount together with interest thereon in accordance
with this Note and the Credit Agreement.
Failure or forbearance of the Lender to exercise any right hereunder, or
otherwise granted by the Credit Agreement or by law, shall not affect or release
the liability of the Borrower hereunder, and shall not constitute a waiver of
such right unless so stated in writing by such of the Lenders as are required
under the Credit Agreement to effect such waiver. THIS NOTE SHALL BE DEEMED TO
BE MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE
LAWS OF THE STATE OF GEORGIA. Time is of the essence of this Note.
<PAGE>
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE HEREBY WAIVED.
Executed under hand and seal in Atlanta, Georgia, on the day and year first
above written.
ONEITA INDUSTRIES, INC.
By: /s/ Herbert J. Fleming
Herbert J. Fleming
President
[CORPORATE SEAL]
Attest: /s/ Edward I. Kramer
Name: Edward I. Kramer
Secretary
<PAGE>
GRID SCHEDULE TO REVOLVING CREDIT NOTE
This Note evidences Loans made by the Lender to the Borrower under the
within described Credit Agreement, in the principal amounts, and on the dates
set forth below, subject to the payments or prepayments of principal set forth
below:
Principal Principal
Date Type of Amount of Amount Paid Balance
Made Loan Loan or Prepaid Outstanding Initials
SECURITY AGREEMENT
(BORROWER)
THIS SECURITY AGREEMENT (this "Agreement"), made as of the 26th of January,
1996, by ONEITA INDUSTRIES, INC., a Delaware corporation (the "Company"), in
favor of SUNTRUST BANK, ATLANTA, a Georgia banking corporation ("SunTrust"), as
collateral agent (SunTrust, in such capacity, the "Collateral Agent") for
itself, First Union National Bank of South Carolina, a national banking
association ("First Union"), NatWest Bank N.A., a national banking association
("NatWest"), and The Prudential Insurance Company of America, a New Jersey
corporation ("Prudential") (each of SunTrust, First Union, NatWest and
Prudential, together with their respective successors and assigns, are
hereinafter referred to individually, a "Lender" and collectively the
"Lenders").
W I T N E S S E T H :
WHEREAS, SunTrust, First Union and NatWest (the "Credit Agreement Lenders")
have agreed to make available to the Company a $60,000,000 revolving credit
facility (the "Revolving Credit Facility") pursuant to that certain Revolving
Credit Agreement, dated as of the date hereof, among the Company, SunTrust,
First Union and NatWest as Lenders, SunTrust and First Union as Agent for the
Credit Agreement Lenders and SunTrust as Administrative Agent for the Credit
Agreement Lenders (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement");
WHEREAS, on December 20, 1988, Prudential purchased from the Company its
senior promissory note, dated as of December 20, 1988, in the stated principal
amount of $20,000,000, of which $9,230,766 remains outstanding, pursuant to that
certain Note Agreement, dated as of December 20, 1988, between Prudential and
the Company (as heretofore and hereafter amended, restated, supplemented or
otherwise modified from time to time, the "Prudential Agreement"), and in
connection with the establishment of the Revolving Credit Facility, Prudential
<PAGE>
has agreed to make certain amendments to the terms and covenants of the
Prudential Agreement (the "Prudential Amendment"); and
WHEREAS, it is a condition precedent to the establishment of the Revolving
Credit Facility and to Prudential's agreeing to the Prudential Amendment that
the Company enter into this Agreement, and the Company wishes to fulfill said
condition precedent; and
NOW, THEREFORE, in order to induce the Credit Agreement Lenders to extend
the Revolving Credit Facility and Prudential to enter into the Prudential
Amendment and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined, and the following terms
shall have the following meanings (such meanings being equally applicable to
both the singular and plural forms of the terms defined):
"Account Debtor" shall mean any "account debtor," as such term is defined
in Section 9-105(1)(a) of the UCC.
"Accounts" shall mean any "account," as such term is defined in Section
9-106 of the UCC, now owned or hereafter acquired by the Company or in which the
Company now has or hereafter acquires any rights, wherever located, and in any
event, shall include, without limitation, all accounts receivable, book debts
and other rights to payment and forms of obligations (other than those evidenced
by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to the Company (including, without limitation,
under any trade names, styles or divisions thereof) arising out of goods sold or
leased or services rendered by the Company and all of the Company's rights in,
to and under all purchase orders or receipts now owned or hereafter acquired by
it for goods or services, and all of the Company's rights to any goods
represented by any of the foregoing (including, without limitation, unpaid
seller's rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), and all moneys due or to
become due to the Company under all contracts for the sale of goods or the
performance of services or both by the Company (whether or not yet earned by
performance on the part of the Company or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
<PAGE>
contracts, and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing and all insurance policies insuring
any of the foregoing.
"Chattel Paper" shall mean any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights and wherever
located.
"Collateral" shall have the meaning assigned to such term in Section 2 of
this Security Agreement.
"Consignee" shall have the meaning assigned to such term in Section 5(l) of
this Security Agreement.
"Contracts" shall mean all contracts, undertakings, or other agreements
relating to or governing all Accounts and Inventory (other than rights evidenced
by Chattel Paper, Documents or Instruments) in or under which the Company may
now or hereafter have any right, title or interest and wherever located, subject
to any limitations or prohibitions contained therein, including, without
limitation, any agreement relating to the terms of payment of an Account or the
terms of performance thereof.
"Credit Agreement" shall mean that certain Revolving Credit Agreement,
dated as of the date hereof, among the Company, the Credit Agreement Lenders,
SunTrust and First Union as Agent for the Credit Agreement Lenders and SunTrust
as Administrative Agent for the Credit Agreement Lenders, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"Credit Agreement Lenders" shall mean, collectively, SunTrust, First Union
and NatWest, together with their successors and assigns under the Credit
Agreement.
"Credit Documents" shall mean the Credit Agreement, the Prudential
Agreement, each Exhibit and Schedule to the Credit Agreement and the Prudential
Agreement, the Notes, the Guaranty Agreements, the Intercreditor Agreement, the
Security Documents, the Supplemental Documents hereafter executed and delivered
to the Lenders and the Collateral Agent and each other document, instrument,
certificate and opinion executed and delivered in connection with the foregoing,
each as amended, restated, supplemented or otherwise modified from time to time.
1
<PAGE>
"Documents" shall mean any "documents," as such term is defined in Section
9-105(1)(f) of the UCC, now owned or hereafter acquired by the Company or in
which the Company now has or hereafter acquires any rights and wherever located,
relating to or governing any Accounts or Inventory.
"Event of Default" shall mean any "Event of Default" as defined in the
Credit Agreement or as defined in the Prudential Agreement.
"Facility" shall mean either the $60,000,000 revolving credit facility made
available to the Company by the Credit Agreement Lenders pursuant to the Credit
Agreement or the $9,230,766 term loan made to the Company by Prudential pursuant
to the Prudential Agreement, and the term "Facilities" shall mean all such
facilities, collectively.
"General Intangibles" shall mean any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by the
Company or in which the Company now has or hereafter acquires any rights, and,
in any event, shall include, without limitation, all right, title and interest
which the Company may now or hereafter have in, under or with respect to any
Contract, causes of action, franchises, tax refund claims, customer lists,
Trademarks, Patents, rights in intellectual property, Licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
and discoveries (whether patented or patentable or not) and technical
information, procedures, designs, know-how, software, data bases, business
records data, processes, models, drawings, materials and records, goodwill, all
claims under guaranties, security interests or other security held by or granted
to the Company to secure payment of the Accounts by an Account Debtor obligated
thereon, all rights of indemnification and all other intangible property of any
kind and nature, in each case, as the foregoing relate to any Accounts or
Inventory.
"Government Agency" shall mean the United States of America, any federal,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions thereof
or pertaining thereto.
"Guarantor" shall mean Oneita-Kinston Corp., a North Carolina corporation
and a wholly owned subsidiary of the Company, together with all Significant
Subsidiaries of the Company that hereafter execute or join a Guaranty Agreement.
2
<PAGE>
"Guaranty Agreements" shall mean, collectively, (i) that certain Guaranty
Agreement, dated as of the date hereof, executed by the Guarantor in favor of
SunTrust and First Union as Agents for the Credit Agreement Lenders, as
hereafter amended, restated, supplemented or otherwise modified from time to
time and (ii) that certain Guaranty Agreement, dated as of the date hereof,
executed by the Guarantor in favor of Prudential, as hereafter amended,
restated, supplemented or otherwise modified from time to time.
"hereby," herein," hereof," hereunder" and words of similar import refer to
this Security Agreement as a whole (including, without limitation, any schedules
hereto) and not merely to the specific Section, paragraph or clause in which the
respective word appears.
"Instruments" shall mean any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by the Company
or in which the Company now has or hereafter acquires any rights, in either case
as Proceeds from any Accounts or Inventory and wherever located, other than
instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement,
dated as of the date hereof, among the Lenders, and acknowledged and agreed to
by the Company and the Subsidiary Guarantor, as hereafter amended, restated,
supplemented or otherwise modified from time to time.
"Inventory" shall mean any "inventory," as such term is defined in Section
9-109(4) of the UCC, now owned or hereafter acquired by the Company or in which
the Company now has or hereafter acquires any rights and wherever located, and,
in any event, shall include, without limitation, all inventory, merchandise,
goods and other personal property, now owned or hereafter acquired by the
Company or in which the Company now has or hereafter acquires any rights and
wherever located, which are held for sale or lease or are furnished or are to be
furnished under a contract of service or which constitute raw materials, work in
process or materials used or consumed or to be used or consumed in the Company's
business, or the processing, packaging, delivery or shipping of the same, and
all finished goods.
"License" shall mean any Patent License, Trademark License or other license
under which the Company is the licensor or licensee relating to Accounts or
Inventory, and in the case of Licenses under which the Company is the licensor,
all rights to collect royalties thereunder.
3
<PAGE>
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind or description and shall include, without limitation,
any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof including any lease or
similar arrangement with a public authority executed in connection with the
issuance of industrial development revenue bonds or pollution control revenue
bonds, and the filing of or agreement to give any financing statement under the
Uniform Commercial Code of any jurisdiction.
"Notes" shall mean, collectively, the Revolving Credit Notes and that
certain Senior Note due October 31, 1998, dated as of December 20, 1988,
executed by the Company in favor of Prudential in the initial principal amount
of $20,000,000, as heretofore amended or modified.
"Patent License" shall mean all written agreements granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by the Company or in which
the Company now has or hereafter acquires any rights, relating to Accounts or
Inventory.
"Patent" or "Patents" shall mean one or all of the following now owned or
hereafter acquired or developed by the Company or in which the Company now has
or hereafter acquires any rights, including, without limitation, pursuant to any
Patent License, and wherever located, to the extent related to Accounts or
Inventory: (i) all letters patent of the United States or any other country and
all applications for letters patent of the United States or any other country,
and (ii) all reissues, reexaminations, continuations, continuations-in-part,
divisions, and extensions of any of the foregoing.
"Proceeds" shall mean "proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (i)
any and all proceeds of any insurance, indemnity, warranty or guaranty payable
to the Company from time to time with respect to any of the Collateral, (ii) any
and all payments (in any form whatsoever) made or due and payable to the Company
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority, bureau or agency (or any person acting under color
of governmental authority), (iii) any claim of the Company against third parties
4
<PAGE>
(A) for past, present or future infringement of any Patent or Patent License or
(B) for past, present or future infringement or dilution of any Trademark or
Trademark License or for injury to the goodwill associated with any Trademark,
Trademark registration or Trademark licensed under any Trademark License, (iv)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral, and (v) the following types of property
acquired with cash proceeds: Accounts, Chattel Paper, Contracts, Documents,
General Intangibles and Inventory.
"Prudential" shall mean The Prudential Insurance Company of America, a New
Jersey corporation.
"Prudential Agreement" shall mean that certain Note Agreement, dated as of
December 20, 1988, between the Company and Prudential, as heretofore and as
hereafter amended, restated, renewed, extended, supplemented or otherwise
modified from time to time, pursuant to which Prudential purchased the Company's
senior promissory note, dated as of December 20, 1988 in the current principal
amount of $9,230,766.
"PTO" shall mean the United States Patent and Trademark Office and its
successors.
"Secured Obligations" shall mean all present and future obligations of the
Company and its Subsidiaries incurred under, with respect to or evidenced by the
Credit Agreement, the Prudential Agreement, the Notes, the Security Documents,
the Guaranty Agreements, the other Credit Documents and all other agreements,
documents and instruments evidencing any of the Facilities, including without
limitation all loans evidenced by the Notes, interest accruing thereon,
make-whole and yield maintenance premiums required thereunder (including,
without limitation, the Make-Whole Premium (as defined in the Prudential
Agreement)), and fees payable thereunder and all other indebtedness,
liabilities, obligations, covenants and duties of the Company to any of the
Secured Parties, of every kind, nature and description, direct or indirect,
absolute or contingent, due or not due, in contract or tort, liquidated or
unliquidated, arising under, with respect to or evidenced by the Credit
Agreement, the Prudential Agreement, the Notes, the Security Documents, the
Guaranty Agreements, the other Credit Documents and all other agreements,
documents and instruments evidencing any of the Facilities, by operation of law
or otherwise, now existing or hereafter arising or whether or not for the
payment of money or the performance or the nonperformance of any act, including,
5
<PAGE>
but not limited to, all debts, liabilities and obligations owing by the Company
to others which the Lenders may have obtained by assignment or otherwise, and
all damages which the Company may owe to any of the Secured Parties by reason of
any breach by the Company of any representation, warranty, covenant, agreement
or other provision of the Credit Agreement, the Prudential Agreement, the Notes,
the Security Documents, the Guaranty Agreements, all other Credit Documents and
all other agreements, documents and instruments evidencing any of the
Facilities.
"Secured Parties" shall mean, collectively, the Collateral Agent, the
Lenders, SunTrust in its capacity as Agent and Administrative Agent for the
Credit Agreement Lenders and First Union in its capacity as Agent for the Credit
Agreement Lenders.
"Security Agreement" shall mean this Security Agreement, as the same may be
amended, restated, supplemented or otherwise modified from time to time and any
exhibits or schedules hereto.
"Security Documents" shall mean, collectively, this Security Agreement and
that certain Security Agreement (Guarantors), dated as of the date hereof,
executed by the Subsidiary Guarantor in favor of the Collateral Agent, as
hereafter amended, restated, supplemented or otherwise modified from time to
time, and all UCC financing statements naming the Company or any of its
Subsidiaries as debtor and the Collateral Agent as secured party.
"Supplemental Documents" shall mean, collectively, the documents described
on Schedule 6 executed or delivered by any Significant Subsidiary after the
Closing Date.
"Trademark License" shall mean all written agreements granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
the Company or in which the Company now has or hereafter acquires any rights.
"Trademark" or "Trademarks" shall mean one or all of the following now
owned or hereafter acquired by the Company or in which the Company now has or
hereafter acquires any rights to the extent related to any Accounts or Inventory
(including, without limitation, pursuant to any Trademark License): (i) all
trademarks, trade names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
6
<PAGE>
applications in connection therewith, including, without limitation,
registrations, recordings and applications in the PTO or any other country or
any political subdivision thereof, (ii) all extensions or renewals thereof and
(iii) the goodwill of the Company business connected with the use of, and
symbolized by, any of the foregoing.
"UCC" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Georgia; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Secured Parties' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Georgia, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"Value" shall mean, with respect to any Inventory, the lower of FIFO cost
or market value of such Inventory.
2. Grant of Security Interest. (a) As collateral security for the prompt
and complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Secured Obligations and to induce the
Credit Agreement Lenders to enter into the Credit Agreement and Prudential to
enter into the Prudential Amendment and to extend the Facilities in accordance
with the terms thereof, the Company hereby pledges to the Collateral Agent, for
ratable benefit of the Secured Parties, and hereby grants to the Collateral
Agent, for the ratable benefit of the Secured Parties, a security interest in
all of the Company's right, title and interest in, to and under the following
(all of which being hereinafter collectively referred to as the "Collateral"):
(i) all Accounts of the Company;
(ii) all Chattel Paper of the Company;
(iii) all Contracts of the Company;
(iv) all Documents of the Company;
(v) all General Intangibles of the Company;
(vi) all Instruments of the Company;
(vii) all Inventory of the Company;
8
<PAGE>
(viii) all accounts maintained by the Company with any financial
institution, including without limitation, all of the accounts
described in Schedule 5 attached hereto, and all funds on deposit
therein, all investments arising out of such funds, all claims
thereunder or in connection therewith, all cash, securities, rights and
other property at any time and from time to time received, receivable
or otherwise distributed in respect of such accounts, such funds or
such investments;
(ix) all books, records, printouts, ledger cards, files,
correspondence, computer programs, tapes, disks and related data
processing software, including source and object codes (owned by the
Company or in which it has an interest) which at any time evidence or
contain information relating to any of the collateral (including,
without limitation, customer lists and supplier lists) or are otherwise
necessary or helpful in the collection thereof or realization
thereupon;
(x) all guaranties, warranties, liens on real or personal property,
leases, and other agreements and property which in any way secure or
relate to any Accounts, Inventory, General Intangibles, Contracts,
Documents, Instruments or Chattel Paper, or are acquired for the
purpose of securing and enforcing any item thereof; and
(xi) to the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements
for, and rents, profits and products of each of the foregoing;
provided, however, that the foregoing grant of a security interest shall
not include a security interest in, and the term "Collateral" shall not include
any equipment (as such term is defined in Section 9-109(2) of the UCC), any real
estate, plants or fixtures (as such term is defined in Section 9-313(1) of the
UCC) or any Patent License, Trademark License or equipment lease of the Company
to the extent that the granting of a security interest in such Patent License,
Trademark License or equipment lease is prohibited by the terms thereof;
9
<PAGE>
provided, further that upon the termination or expiration of any such
prohibition with respect to any such Patent License, Trademark License or
equipment lease, such Patent License, Trademark License or equipment lease shall
become subject to the security interest hereunder and shall thereafter be deemed
to be Collateral.
(b) In addition, as collateral security for the prompt and complete payment
and performance when due of the Secured Obligations and in order to induce the
Lenders as aforesaid, each Lender is hereby granted a lien and security interest
in all property of the Company held by such Lender, including, without
limitation, all Property of every description, now or hereafter in the
possession or custody of or in transit to such Lender for any purpose, including
safekeeping, collection or pledge, for the account of the Company, or as to
which the Company may have any right or power.
(c) The Company intends and hereby acknowledges that the grant of a
security interest in the Collateral to the Collateral Agent, for the ratable
benefit of the Secured Parties, conveys a security interest in all right, title
and interest of the Company to the Collateral, whether such Collateral is owned
individually, jointly or severally by the Company.
3. Right of the Secured Parties; Limitations on the Secured Parties'
Obligations. It is expressly agreed by the Company that, anything herein to the
contrary notwithstanding, the Company shall remain liable under each of its
Contracts and each of its Licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, and the Company shall
perform all of its duties and obligations thereunder, all in accordance with and
pursuant to the terms and provisions of each such Contract or License. None of
the Secured Parties shall have any obligation or liability under any Contract or
License by reason of or arising out of this Security Agreement or the granting
to the Collateral Agent or any other Secured Party of a security interest
therein or the receipt by the Collateral Agent or any other Secured Party of any
payment relating to any Contract or License pursuant hereto, nor shall the
Collateral Agent or any other Secured Party be required or obligated in any
manner to perform or fulfill any of the obligations of the Company under or
pursuant to any Contract or License, or to make any payment, or to make any
inquiry as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract or License, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
10
<PAGE>
4. Representations, Warranties and Covenants. The Company hereby
represents, warrants and covenants that: (a) all of the Inventory is located at
the places specified in Schedule 1 attached hereto and such location is an
owned, leased or bailment location as specified in Schedule 1 attached hereto.
The correct corporate name, the principal place of business and the chief
executive office of the Company and the places where the Company's books and
records concerning the Collateral are currently kept are set forth in Schedule 2
attached hereto and made a part hereof. All records concerning Accounts and
General Intangibles and all originals of any Documents, Instruments or Chattel
Paper are located at the addresses set forth on Schedule 2 and none of the
Accounts is evidenced by a promissory note or other Instrument.
(b) The amount represented by the Company from time to time to the
Collateral Agent as the amount owing by each Account Debtor or by all Account
Debtors in respect of any Accounts will, at such time, be the correct amount
actually and unconditionally owing by such Account Debtor(s) thereunder, (except
to the extent, if any, that such Account Debtor(s) may be entitled to normal
trade discounts, adjustments, returns and allowances).
(c) The Company has exclusive possession and control of the Inventory,
except for (i) Inventory temporarily in transit with common or other carriers
and (iii) Inventory located at (A) a location specified on Schedule 1 attached
hereto or (B) such other locations as are permitted by the Collateral Agent
pursuant to Section 5 of this Security Agreement.
(d) The Company is the legal and beneficial owner of, or has rights to use,
the Collateral free and clear of all Liens. The Company has not, during the five
(5) years preceding the date hereof, been known as or used any other corporate,
trade or fictitious name, except as disclosed on Schedule 3 hereto, nor acquired
all or substantially all the assets, capital stock or operating unit of any
Person, except as disclosed on Schedule 3 hereto, and each predecessor in
interest of the Company during the five (5) years preceding the Closing Date is
disclosed on Schedule 3 hereto.
(e) This Security Agreement creates in favor of the Collateral Agent, for
the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien
on the Collateral, securing the payment of the Secured Obligations. When
financing statements have been filed in the appropriate offices under the UCC in
11
<PAGE>
the locations listed on Schedule 4, the Collateral Agent will have a fully
perfected first priority Lien on the Collateral, to the extent such Lien may be
perfected by UCC filings.
(f) No authorization, approval, or other action by, and no notice to or
filing with, any Governmental Agency is required either (i) for the grant of a
Lien by the Company in the Collateral pursuant to this Security Agreement or
(ii) the exercise by the Collateral Agent of the rights provided for in this
Security Agreement or the remedies in respect to the Collateral pursuant to this
Security Agreement, except in the case of clause (ii), the filings described in
the preceding Section 4(e).
(g) (i) As of the date hereof, the Trademarks are subsisting, valid and
enforceable, and no claim has been made that the Company's use of any Trademark
does or may violate the rights of any third person, and (ii) the Company has
used, and will continue to use for the duration of this Security Agreement,
reasonably necessary statutory notice in connection with its use of Trademarks.
5. Covenants. The Company covenants and agrees with the Collateral Agent
and the other Secured Parties that from and after the date of this Security
Agreement:
(a) At any time and from time to time, upon the Collateral Agent's
reasonable request and at the expense of the Company, the Company will promptly
and duly execute and deliver any and all such further instruments and documents
and take such further action as the Collateral Agent may deem necessary or
desirable in order to perfect and protect any Lien granted or purported to be
granted hereby or to enable the Collateral Agent to exercise and enforce its
right and remedies hereunder with respect to the Collateral. Without limiting
the generality of the foregoing, the Company will (i) secure all consents and
approvals necessary or appropriate for the assignment to the Collateral Agent of
any material License or material Contract held by the Company or in which the
Company has any rights, (ii) mark conspicuously each item of Chattel Paper and
each related Contract and each of its records pertaining to the Chattel Paper,
with a legend, in form and substance satisfactory to the Collateral Agent,
indicating that such Chattel Paper or related Contract is subject to the
security interest granted hereby, (iii) if any Account shall be evidenced by a
promissory note or other Instrument (including, without limitation, any letter
of credit on which the Company is named as a beneficiary), deliver and pledge to
the Collateral Agent hereunder such certificate, note or other Instrument duly
12
<PAGE>
indorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance reasonably satisfactory to the Collateral Agent, and
(iv) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, in form and substance reasonably satisfactory to the Collateral
Agent, in order to perfect and preserve the security interest granted or
purported to be granted hereby. The Company hereby authorizes the Collateral
Agent to file any such financing or continuation statements without the
signature of the Company to the extent permitted by applicable law. The Company
hereby agrees that a carbon, photographic, photostatic or other reproduction of
this Security Agreement or of a financing statement is sufficient as a financing
statement to the extent permitted by applicable law. If any Inventory is in the
possession or control of any warehouseman or any of the Company's agents or
processors, the Company shall, upon the Collateral Agent's reasonable request,
notify such warehouseman, agent or processor of the Collateral Agent's security
interest in such Inventory and, upon the Collateral Agent's request, instruct
them to hold all such Inventory for the Collateral Agent's account and, from and
after the occurrence of, and during the continuance of, an Event of Default,
subject to the Collateral Agent's instructions.
(b) (i) The Company shall keep the Inventory at the places
specified in Schedule 1 hereof, except for Inventory temporarily in
transit between such locations. So long as no Event of Default has
occurred and is continuing the Company may designate additional
Inventory locations by delivering written notice thereof to the
Collateral Agent at least fifteen (15) days prior to establishing any
such location where the Value of the Inventory at such location will
equal or exceed $1,500,000. Written notice of additional Inventory
locations where the Value of the Inventory located thereon will be less
than $1,500,000 shall be provided by the Company to the Collateral
Agent no later than the date that the next weekly Borrowing Base
Certificate is delivered by the Company to the Lenders pursuant to the
Credit Agreement after the establishment of such Inventory location;
nothing contained in this clause (i) shall limit the obligations of the
Company in clause (ii) and (iii) below.
(ii) Prior to the establishment of any such location within the
United States, the Company shall (1) cause to be made all filings under
the UCC necessary or appropriate to preserve the perfection of the
security interests described herein in the Inventory to be located at
13
<PAGE>
such locations and deliver to the Collateral Agent recorded
counterparts to all such filings, (2) to the extent that such location
is leased by the Company from any other Person and the Value of the
Inventory of the Company and the Guarantors at such location is at
least $2,500,000, obtain and deliver to the Collateral Agent a landlord
agreement substantially in the form of Exhibit A hereto from each party
directly or indirectly leasing such location to the Company (including
the title owner of such property), and (3) to the extent such location
is not owned or leased by the Company and the Value of the Inventory of
the Company and the Guarantors at such location is at least $300,000,
obtain and deliver to the Collateral Agent a bailee letter
substantially in the form of Exhibit B hereto from the party directly
controlling possession of such Inventory at such location.
(iii) Prior to the establishment of any such location outside the
United States, the Company shall obtain and deliver to the Collateral
Agent a bailee letter substantially in the form of Exhibit B hereto
from the party directly controlling possession of such Inventory at
such location; provided, however, that if at any time the Value of the
Inventory at locations outside the United States is equal to or exceeds
the lesser of (i) 20% of the aggregate Value of all Inventory of the
Company and (ii) $15,000,000, then the Company shall promptly deliver
such security documents, filing instruments and opinions as the
Collateral Agent shall reasonably deem necessary or desirable in order
to ascertain that the Collateral Agent has a first priority perfected
lien on such Inventory at such locations.
(iv) Notwithstanding the foregoing, no more than 10% of all
Inventory of the Company and the Guarantors may be located at leased
locations in the United States for which no landlord waiver has been
obtained and delivered to the Collateral Agent and at locations which
are neither owned nor leased by the Company or the Guarantors for which
no bailee letter has been obtained and delivered to the Collateral
Agent; provided, however, Inventory of the Company may be located at
the Fayette, Alabama plant while no landlord waiver has been obtained
for a period of fifteen days after the date hereof, and the Company
agrees to undertake to obtain a landlord waiver from its landlord at
Fayette, Alabama during such fifteen-day period.
14
<PAGE>
(v) Upon the establishment of any new locations in accordance with
the foregoing clauses (i) through (iv), Schedule 1 hereto shall be
deemed amended to add such location thereto without further action by
the Collateral Agent or the Company, and the Company hereby authorizes
the Collateral Agent to substitute a new Schedule 1 hereto to reflect
such additional location(s).
(c) The Company will keep its principal place of business and chief
executive office and the office where it keeps its records concerning the
Accounts, and the office where it keeps all originals of all Chattel Paper, at
the locations therefor specified in Schedule 2 unless (i) the Company shall have
given the Collateral Agent at least thirty (30) days' prior written notice of
the establishment of a new location which shall be within the United States and
the Collateral Agent shall have consented in writing thereto and (ii) the
Company shall have made all filings under the UCC necessary or appropriate (as
determined by the Collateral Agent in its reasonable discretion) to preserve the
perfection of Collateral Agent's Lien in the Accounts and other Collateral. The
Company will hold and preserve such records and Chattel Paper and will permit
representatives of the Collateral Agent or any Lender, or any authorized
employee, agent or representative thereof, at any time during customary business
hours and as often as shall be reasonably requested, to inspect and make copies
and abstracts from such records and Chattel Paper. The Company will maintain a
set of books and records related to its Accounts at all times at its Andrews,
South Carolina location, which books and records shall be updated daily.
(d) The Company will keep and maintain at the Company's own cost and
expense satisfactory and complete records of the Collateral in a manner
reasonably acceptable to the Collateral Agent, including, without limitation, a
record of all payments received and all credits granted with respect to such
Collateral and a record of the Collateral Agent's security interest on the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Company shall, for the Collateral Agent's further security, deliver
and turn over to the Collateral Agent or the Collateral Agent's designated
representatives at any time upon request by the Collateral Agent or the
Collateral Agent's designated representative, copies any such books and records
(including, without limitation, any and all computer tapes, programs, and source
codes relating to the Collateral or any part or parts thereof).
15
<PAGE>
(e) In any suit, proceeding or action brought by the Collateral Agent with
respect to any Account, Chattel Paper, Contract, Instrument or General
Intangible comprising part of the Collateral, the Company will save, indemnify
and keep the Collateral Agent and each other Secured Party harmless from and
against all expense, loss or damages suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the obligor
thereunder, arising out of a breach by the Company of any obligation or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such obligor or its successors from the Company, and all such
obligations of the Company shall be and shall remain enforceable against and
only against the Company and shall not be enforceable against the Collateral
Agent or any other Secured Party; provided that the Company shall have no
obligation to indemnify the Collateral Agent with respect to costs caused by or
resulting from the willful misconduct or gross negligence of the Collateral
Agent.
(f) The Company will not create, permit or suffer to exist, and will defend
the Collateral against and take such other action as is necessary to remove, any
Lien on the Collateral, and will defend the right, title and interest of the
Collateral Agent in and to the Company's rights to the Collateral, including,
without limitation, the Proceeds and products thereof, against the claims and
demands of all Persons whatsoever, excluding any Liens permitted under the
Credit Agreement and the Prudential Agreement.
(g) The Company will not (i) grant any extension of the time of payment of
any of the Collateral except in the ordinary course of business or compromise,
compound or settle the same for less than the full amount thereof except in the
ordinary course of business, (ii) release, wholly or partly, any Person liable
for the payment thereof, except in the ordinary course of business in connection
with a settlement permitted under clause (i) hereof, or (iii) allow any credit
or discount whatsoever thereon other than trade discounts granted in the
ordinary course of business.
(h) The Company will not sell, transfer, lease or otherwise dispose of any
of the Collateral or contract to do so, except to the extent permitted under the
terms of each of the Credit Agreement and the Prudential Agreement.
(i) The Company will advise the Collateral Agent promptly, and in
reasonable detail, of (i) any material Lien or claim made by or asserted against
any or all of the Collateral (other than Liens permitted under the Credit
16
<PAGE>
Agreement and the Prudential Agreement), and (ii) the occurrence of any other
event which would have a material adverse effect on the aggregate value of the
Collateral or on the Liens with respect to such Collateral created hereunder.
(j) The Company shall, at the Collateral Agent's request, in the event that
the Company has Accounts with respect to which the Account Debtor is the United
States of America or any department, agency or instrumentality thereof (all such
Accounts hereinafter referred to as "Government Receivables"), promptly comply
with the Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727 et seq.),
with respect to such Government Receivables and shall promptly deliver to the
Collateral Agent evidence of such compliance, which evidence shall be in form
and substance reasonably satisfactory to the Collateral Agent.
(k) The Company will not change its name, identity or corporate structure
in any manner which might make any financing statement filed hereunder seriously
misleading, unless it shall have (i) given the Collateral Agent at least thirty
(30) days' prior written notice thereof (and received in writing any consent of
the Lenders that may be required under the terms of the Credit Agreement and the
Prudential Agreement), and (ii) certified to the Collateral Agent that all
filings reflecting such new name, identity or structure have been made which are
necessary or appropriate to preserve the perfection of the security interests
described herein.
(l) The Company will not at any time place any Inventory on consignment
with any Person without the Collateral Agent's prior written consent, which
consent will not be unreasonably withheld. If at any time during the term of
this Security Agreement, any Inventory is placed by the Company on consignment
with any Person ("Consignee"), with the prior written consent of the Collateral
Agent, the Company shall, prior to the delivery of any such consigned Inventory:
(i) provide the Collateral Agent with all consignment agreements and other
instruments and documentation to be used in connection with such consignment,
all of which agreements, instruments and documentation shall be acceptable in
form and substance to the Collateral Agent, (ii) prepare, execute and file
appropriate financing statements with respect to any consigned Inventory showing
the Consignee as debtor, the Company as secured party and the Collateral Agent
as assignee of secured party, (iii) prepare, execute and file appropriate
financing statements with respect to any consigned Inventory showing the Company
as debtor and the Collateral Agent as secured party, (iv) after all financing
17
<PAGE>
statements referred to in clauses (ii) and (iii) above shall have been filed,
conduct a search of all filings made against the Consignee in all jurisdictions
in which the Inventory to be consigned is to be located while on consignment,
and deliver to the Collateral Agent copies of the results of all such searches,
and (v) notify, in writing, all creditors of the Consignee which are or may be
holders of security interests in the Inventory to be consigned that the Company
expects to deliver certain Inventory to the Consignee, all of which Inventory
shall be described in such notice by item or type.
(m) The Company shall notify the Collateral Agent immediately if it knows
or has reason to know that any Patent or any registration relating to any
Trademark which is material to the conduct of the Company's business may become
abandoned, cancelled or declared invalid, or if any Trademark or the invention
disclosed in any of the Patents is dedicated to the public domain, or of any
material adverse determination in any proceeding in the PTO or in any United
States court regarding the Company's ownership of any Patent or Trademark which
is material to the conduct of the Company's business, its right to register the
same, or to keep and maintain the same. If the Company, either itself or through
any agent, employee, licensee or designee, applies for a Patent or files an
application for the registration of any Trademark with the PTO or in any
analogous office or agency in any other country or any political subdivision
thereof, or otherwise obtains rights in any Patent or Trademark, the Company
will promptly inform the Collateral Agent, and, upon request of the Collateral
Agent, execute and deliver any and all agreements, instruments, documents and
papers as the Collateral Agent may request to evidence the Collateral Agent's
security interest in such Patent or Trademark and the General Intangibles used
in connection therewith, including, without limitation, in the case of
Trademarks, the goodwill of the Company's business connected with the use
thereof or symbolized thereby. Consistent with the Company's past business
practice, the Company will (i) take all reasonably necessary actions permitted
by applicable law to prosecute each Patent or Trademark application which is
material to the conduct of the company's business; (ii) to attempt to obtain the
broadest Patent or registration of a Trademark therefrom and (iii) to maintain
each Patent and Trademark registration which is material to the conduct of the
Company's business, including, without limitation, with respect to Patents,
payments of required maintenance fees, and, with respect to Trademarks, filing
of applications for renewal, affidavits of use and affidavits of
incontestability. In the event that the Company fails to take any of such
actions, the Collateral Agent may do so in the Company's name or, if an Event of
18
<PAGE>
Default has occurred and is continuing in the Collateral Agent's name, and all
expenses incurred by the Collateral Agent in connection therewith shall be paid
by the Company in accordance with Section 9 hereof. Consistent with the
Company's past business practices, the Company shall use its best efforts to
detect infringers of the Patents and Trademarks which are material to its
business. In the event that any of the Patents or Trademarks is infringed or, in
the case of any Trademark, diluted by a third party, the Company shall (i)
notify the Collateral Agent promptly after it learns thereof and (ii) unless the
Company shall reasonably determine that such Patent or Trademark is not material
to the conduct of the Company's business, to promptly take appropriate action to
enjoin such infringement or, in the case of any Trademark, dilution and to seek
any and all damages for such infringement or dilution or shall take such other
actions (including entering into licenses or covenants not to sue) as the
Company in the exercise of its business judgment shall reasonably deem
appropriate under the circumstances to protect the Patents or Trademarks. In the
event that the Company fails to take any such actions the Collateral Agent may
do so in the Company's name or, if an Event of Default has occurred and is
continuing the Collateral Agent's name, and all expenses incurred by the
Collateral Agent in connection therewith shall be paid by the Company in
accordance with Section 9 hereof.
6. Insurance. (a) The Company shall at its sole cost and expense provide
and maintain in full force and effect insurance with respect to the Collateral
and all parts thereof, as required under, and on the terms and conditions set
forth in, Section 6.12 of the Credit Agreement, which terms and conditions are
hereby incorporated herein by reference as fully as if fully set forth herein
and, in addition shall (i) provide for all losses in excess of $250,000 to be
paid directly to the Collateral Agent pursuant to a loss payable endorsement in
form and substance satisfactory to the Collateral Agent, (ii) name the Secured
Parties as additional insureds thereunder (without any representation or
warranty by or any obligation by or any obligation upon the Collateral Agent) as
their interest may appear, (iii) obtain the agreement by the insurer that any
proceeds thereunder shall be payable to the Collateral Agent notwithstanding any
action, inaction or breach of representation or warranty by the Company, (iv)
provide that there shall be no recourse against the Secured Parties for payment
of premiums or other amounts with respect thereto, and (v) provide that at least
30 days' prior written notice of cancellation or of lapse of such policy shall
be given to the Collateral Agent by the insurer unless otherwise agreed to by
the Collateral Agent. The Company shall, if so requested by the Collateral
19
<PAGE>
Agent, deliver to the Collateral Agent original or duplicate copies of such
insurance and, as often as the Collateral Agent may reasonably request, a report
of a reputable insurance broker with respect to such insurance.
(b) The Company hereby (i) directs all insurers under such policies of
insurance maintained hereunder and under the Credit Agreement for which the
Collateral Agent is required to be named loss payee to pay all proceeds payable
thereunder in excess of $250,000 irectly to the Collateral Agent, for the
ratable benefit of the Secured Parties and (ii) irrevocably makes, constitutes
and appoints the Collateral Agent (and all officers, employees or agents
designated by the Collateral Agent) as the Company's true and lawful attorney
(and agent-in-fact) for the purpose of making, settling and adjusting claims
under such policies of insurance if the proceeds of such claims are to be
applied to the Secured Obligations pursuant to the last sentence of this Section
6(b), endorsing the name of the Company on any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance which are to be
applied to the Obligations pursuant to the last sentence of this Section 6(b),
and for making all determinations and decisions with respect to such policies of
insurance which relate to proceeds to be applied to the Obligations; provided,
however, that the Collateral Agent agrees not to exercise such rights as the
Company's true and lawful attorney (and agent-in-fact) unless a Default or Event
of Default has occurred and is continuing. The Company shall promptly notify the
Collateral Agent in writing of any payment it receives of insurance proceeds in
respect of damaged or destroyed Collateral. Proceeds of such insurance received
by the Collateral Agent in respect of damages or destruction to the Collateral,
after deducting therefrom all expenses incurred by the Collateral Agent in
collecting or administering such funds, shall be applied by the Collateral Agent
to the payment of outstanding Secured Obligations in accordance with the
Intercreditor Agreement.
(c) If any insurance required to be provided hereunder shall expire, be
withdrawn, become void by breach of any condition thereof by the Company, or
become void or questionable by reason of the failure or impairment of the
capital of any insurer, or if for any other reason whatsoever any such insurance
shall become unsatisfactory to the Collateral Agent in its reasonable credit
judgment, the Company immediately shall obtain new or additional insurance which
shall be satisfactory to the Collateral Agent in its reasonable credit judgment.
The Company shall not take out any separate or additional insurance which is
contributing in the event of loss unless it is properly endorsed and otherwise
satisfactory to the Collateral Agent in all respects.
20
<PAGE>
(d) In the event the Company at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, the Collateral Agent, without
waiving or releasing any obligations or default by the Company hereunder, may at
any time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which the Collateral Agent deems advisable. All sums so
disbursed by the Collateral Agent, including attorneys' fees, court costs,
expenses and other charges relating thereto, shall be payable, on demand, by the
Company to the Collateral Agent in accordance with Section 9 hereof.
7. Collections, Verifications. (a) The Collateral Agent may at any time,
upon the occurrence and during the continuation of any Event of Default, open
the Company's mail and collect any and all amounts due from Account Debtors and
notify Account Debtors of the Company, parties to the Contracts of the Company,
obligors of Instruments of the Company and obligors in respect of Chattel Paper
of the Company that the Accounts and the right, title and interest of the
Company in and under such Contracts, Instruments and Chattel Paper have been
assigned to the Collateral Agent and that payments shall be made directly to the
Collateral Agent or to a lockbox designated by the Collateral Agent. Upon the
request of the Collateral Agent, the Company will so notify such Account
Debtors, parties to such Contracts, obligors of such Instruments and obligors in
respect of such Chattel Paper. The Collateral Agent may at any time, in its own
name or in the name of the Company, communicate with such Account Debtors,
parties to such Contracts, obligors of such Instruments and obligors in respect
of such Chattel Paper to verify with such Persons to the Collateral Agent's
satisfaction the existence, amount and terms of any such Accounts, Contracts,
Instruments or Chattel Paper.
(b) The Collateral Agent shall have the right to make test verifications of
the Accounts and physical verifications of the Inventory in any manner and
through any medium that it considers advisable, and the Company agrees to
furnish all such assistance and information as the Collateral Agent may require
in connection therewith.
21
<PAGE>
8. Collateral Agent's Appointment as Attorney-in-Fact. (a) The Company
hereby irrevocably constitutes and appoints the Collateral Agent and any officer
or agent thereof with full power of substitution as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Company and in the name of the Company or otherwise from time to
time in the Collateral Agent's discretion, to take any action and to execute and
deliver any and all documents and instruments which the Collateral Agent may
deem necessary or advisable to accomplish the purposes of this Security
Agreement and, without limiting the generality of the foregoing, hereby gives
the Collateral Agent the power and right, on behalf of the Company, without
notice to or assent by the Company to do the following:
(i) upon failure or refusal of the Company to execute
and/or deliver to the Collateral Agent any financing statement,
continuation statement, instrument or document which the Collateral
Agent may deem necessary or desirable to obtain the full benefits of
this Security Agreement and of the rights and powers granted hereunder,
to sign the Company's name on any of the foregoing documentation and to
deliver such documentation to any Person as the Collateral Agent shall
elect;
(ii) upon the occurrence of an Event of Default and
subject to Section 8(b) below, to ask, demand, collect, receive and
give acquittances and receipts for any and all moneys due and to become
due under any Collateral and, in the name of the Company or its own
name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for the payment
of moneys due under any Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Collateral Agent for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by the
Collateral Agent for the purpose of collecting any and all such moneys
due under any Collateral whenever payable;
(iii) upon failure of the Company to do so, to pay or
discharge taxes (except for those being contested in good faith by the
Company for which adequate reserves have been established) or Liens
levied or placed on or threatened against the Collateral, to obtain any
insurance called for by the terms of the Credit Agreement, the
22
<PAGE>
Prudential Agreement or this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof;
(iv) upon an Event of Default and the failure of
the Company to do so, to effect any repairs called for by the terms of
this Security Agreement and to pay all or any of the costs
thereof; and
(v) upon the occurrence of an Event of Default and
subject to Section 8(b) below, (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and all
moneys due, and to become due thereunder, directly to the Collateral
Agent or as the Collateral Agent shall direct, (B) to receive payment
of and receipt for any and all moneys, claims and other amounts due,
and to become due at any time, in respect of or arising out of any
Collateral, (C) to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with
accounts and other Documents constituting or relating to the
Collateral, (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral, (E) to defend any suit, action or
proceeding brought against the Company with respect to any Collateral,
(F) to settle, compromise or adjust any suit, action or proceeding
described above and, in connection therewith, to give such discharges
or releases as the Collateral Agent may reasonably deem appropriate,
(G) to license or, to the extent permitted by an applicable license,
sublicense, whether general, special or otherwise, and whether on an
exclusive or non-exclusive basis, any Patent or Trademark, throughout
the world for such term or terms, on such conditions, and in such
manner, as the Collateral Agent shall in its sole discretion determine,
and (H) generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and
completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and to do, at the Collateral Agent's option
and the Company's expense, at any time, or from time to time, all acts
and things which the Collateral Agent deems necessary to protect,
preserve or realize upon the Collateral and the Lien of the Collateral
Agent and the other Secured Parties therein, in order to effect the
intent of this Security Agreement, all as fully and effectively as the
Company might do.
23
<PAGE>
(b) The Company hereby ratifies, to the extent permitted by law, all that
said attorneys shall lawfully do or cause to be done by virtue hereof. The power
of attorney granted pursuant to this Section 8 is a power coupled with an
interest and shall be irrevocable until the Secured Obligations are indefeasibly
paid in full.
(c) The powers conferred on the Collateral Agent hereunder are solely to
protect the interests of the Collateral Agent and the other Secured Parties in
the Collateral and shall not impose any duty upon any of them to exercise any
such powers. The Collateral Agent shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to the
Company for any act or failure to act, except for its own gross negligence or
willful misconduct.
(d) The Company also authorizes the Collateral Agent (i) to communicate in
its own name with any party to any Contract with regard to the assignment of the
right, title and interest of the Company in and under the Contracts hereunder
and other matters relating thereto and (ii) to execute, in connection with any
sale provided for in Section 10 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
9. Performance by the Collateral Agent of the Company's Obligations. If the
Company fails to perform or comply promptly with any of its agreements contained
herein and the Collateral Agent, as provided for by the terms of this Security
Agreement, itself performs or complies, or otherwise causes performance or
compliance, with such agreement, the expenses of the Collateral Agent incurred
in connection with such performance or compliance, together with interest
thereon at the highest rate then applicable under the Credit Agreement, shall be
payable by the Company to the Collateral Agent on demand and shall constitute
Secured Obligations secured hereby.
10. Remedies Upon Default. (a) If an Event of Default shall occur and be
continuing, the Collateral Agent may exercise, in addition to all other rights
and remedies granted to it in this Security Agreement and in any other Credit
Document, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, the Company expressly agrees that in
24
<PAGE>
any such event the Collateral Agent, without demand of performance or other
demand, advertisement or notice of any kind (except the notice specified below
of time and place of public or private sale) to or upon the Company or any other
Person (all and each of which demands, advertisements and/or notices are hereby
expressly waived to the extent permitted by the UCC and other applicable law),
may forthwith enter upon the premises of the Company where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving the Company notice and opportunity for a hearing on the
Collateral Agent's claim or the Collateral Agent's action, and without paying
rent, and collect, receive, assemble, process, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or sell or otherwise dispose of and deliver
said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's board or
at any of the Collateral Agent's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Collateral Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by applicable law,
upon any such private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption the Company hereby releases. Such sales may be adjourned and
continued from time to time with or without notice. The Collateral Agent shall
have the right to conduct such sales on the Company's premises or elsewhere and
shall have the right to use the Company's premises without charge for such sales
for such time or times as Collateral Agent deems necessary or advisable. The
Company further agrees, at the Collateral Agent's request, to assemble the
Collateral and make it available to the Collateral Agent at places which the
Collateral Agent shall select, whether at the Company's premises or elsewhere.
Until the Collateral Agent is able to effect a sale, lease, or other disposition
of Collateral, the Collateral Agent shall have the right to use or operate
Collateral, or any part thereof, to the extent that it deems appropriate for the
purpose of preserving Collateral or its value or for any other purpose deemed
appropriate by the Collateral Agent. The Collateral Agent shall have no
obligation to the Company to maintain or preserve the rights of the Company as
against third parties with respect to Collateral while Collateral is in the
possession of the Collateral Agent. The Collateral Agent may, if it so elects,
seek the appointment of a receiver or keeper to take possession of Collateral
and to enforce any of the Collateral Agent's remedies with respect to such
appointment without prior notice or hearing. The Collateral Agent shall apply
25
<PAGE>
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, as provided in Section 10(d) hereof, the Company remaining
liable for any deficiency remaining unpaid after such application, and the
Collateral Agent shall be required to account for the surplus, if any, to the
Company only after so paying over such net proceeds and after the payment by the
Collateral Agent of any other amount required by any provision of law, including
Section 9-504(1)(c) of the UCC. To the extent permitted by applicable law, the
Company waives all claims, damages and demands against the Collateral Agent and
Lenders arising out of the repossession, retention or sale of the Collateral
except such as arise out of the gross negligence or wilful misconduct of the
Collateral Agent or any Lender. The Company agrees that the Collateral Agent
need not give more than ten (10) days' notice (which notification shall be
deemed given when given in the manner provided in Section 14 hereof) of the time
and place of any public sale or of the time after which a private sale may take
place and that such notice is reasonable notification of such matters. The
Company shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
the Company also being liable for the reasonable fees and expenses of any
attorneys employed by the Collateral Agent to collect such deficiency.
(b) The Company also agrees to pay all costs of the Collateral Agent,
including, without limitation, the expenses and reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.
(c) The Company hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon all or
any part of the Collateral shall be distributed by the Collateral Agent in
accordance with the priorities set forth in the Intercreditor Agreement.
11. Grant of License to Use Patent and Trademark Collateral. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
Section 10 hereof at such time as the Collateral Agent, without regard to this
Section 11, shall be lawfully entitled to exercise such rights and remedies, the
Company hereby grants to the Collateral Agent an irrevocable, non-exclusive
license (exercisable upon the occurrence of an Event of Default without payment
of royalty or other compensation to the Company) to use, license or sublicense
26
<PAGE>
any Patent or Trademark. Any such license shall include, without limitation,
access to all media in which any of the licensed items may be recorded or stored
and to all computer and automatic machinery, software and programs used for the
compilation or printout thereof.
12. Limitation on the Collateral Agent's Duties. The powers conferred on
the Collateral Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for exercising reasonable care in the custody and preservation of
Collateral in its possession or possession of its agents or nominees and the
accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral or any income thereon or as to the
taking of any necessary steps to preserve rights against any parties or any
other rights pertaining to the Collateral. The Collateral Agent shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Collateral Agent accords its own property.
13. Term of Agreement; Reinstatement. This Agreement and the Liens granted
hereunder shall remain in full force and effect until the later of (x) the
payment and performance in full of all Secured Obligations and all other amounts
payable hereunder and (y) the expiration or termination of all Facilities.
Further, this Agreement and the Liens granted hereunder shall remain in full
force and effect and continue to be effective should any petition be filed by or
against the Company for liquidation or reorganization, should the Company become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of the
Company's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations
and the cash collateral for any such contingent obligations and liabilities, or
any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference", "fraudulent conveyance", or
otherwise, all as though such payment or performance had not been made. In the
event that any payment or performance or any such cash collateral, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
27
<PAGE>
14. Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including telecopier) and shall be effective (a)
if given by mail, when deposited in the mails or (b) if given by telecopier,
when so telecopied. Notices hereunder shall be mailed or telecopied as follows:
If to the Company:
Oneita Industries, Inc.
4130 Faber Place Drive, Ste. 200
Charleston, South Carolina 29405
Attention: James L. Ford
Telephone No: 803-529-5102
Telecopy No: 803-529-5120
with a copy to:
Johnson & Montgomery
3060 Peachtree Road, N.W., Ste. 400
Atlanta, Georgia 30305
Attention: Thomas Sherman
Telephone No: 404-240-7631
Telecopy No: 404-262-1222
If to the Collateral Agent:
SunTrust Bank, Atlanta
55 Park Place,
Eighth Floor
Atlanta, GA 30303
Attention: Mr. David Westerfield and
Mr. Tom Matthesen
Telephone No: (404) 588-7920
Telecopy No: (404) 332-3940
with a copy to:
King & Spalding
191 Peachtree Street
Atlanta, GA 30303
Attention: G. Lemuel Hewes
Telephone No: (404) 572-4600
Telecopy No: (404) 572-5100
28
<PAGE>
15. Severability. Every provision of this Agreement is intended to be
severable. If any term or provision of this Agreement or any other document
delivered in connection herewith shall be unenforceable in any respect, the
enforceability of the remaining provisions shall not thereby be affected. Time
is of the essence of this Agreement.
16. No Waiver; Cumulative Remedies. Neither the Collateral Agent nor any
other Secured Party shall by any act, delay, omission or otherwise be deemed to
have waived any of its rights or remedies hereunder, and no waiver shall be
valid unless in writing, signed by the Collateral Agent, and then only to the
extent therein set forth. A waiver by the Collateral Agent of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Collateral Agent would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the part
of the Collateral Agent or any other Secured Party, any right, power or
privilege hereunder, shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies hereunder provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights and
remedies provided by law. None of the terms or provisions of this Security
Agreement may be altered, modified or amended except by an instrument in
writing, duly executed by the Company and Collateral Agent, and then such
alteration, modification or amendment shall only be effective for the specific
instance and for the specific purpose for which given. None of the terms and
provisions of this Security Agreement may be waived except by an instrument in
writing, duly executed by the Collateral Agent and then such waiver shall only
be effective for the specific instance and for the specific purpose for which
given.
17. Successors and Assigns. This Security Agreement and all obligations of
the Company hereunder shall be binding upon the successors and assigns of the
Company, and shall, together with the rights and remedies of the Collateral
Agent hereunder, inure to the benefit of the Collateral Agent and the other
Secured Parties and any of their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Secured Obligations or any
portion thereof or interest therein shall in any manner affect the security
interest granted to the Collateral Agent or the other Secured Parties hereunder.
29
<PAGE>
Without limiting the generality of the foregoing, any Lender may assign or
otherwise transfer all or any portion of its rights and obligations under any
Credit Document in accordance with the terms thereof (including, without
limitation, any portion of the Facilities owing to it), to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to such Lender herein or otherwise.
18. GOVERNING LAW; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND ALL OTHER
DOCUMENTS CONTEMPLATED HEREBY, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE OTHER DOCUMENTS SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. TO THE FULLEST EXTENT ALLOWED BY LAW, THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE COMPANY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.
(c) THE COMPANY HEREBY IRREVOCABLY DESIGNATES THE CT CORPORATION, ATLANTA,
GEORGIA, AS ITS DESIGNEE, APPOINTEE AND LOCAL AGENT TO RECEIVE, FOR AND ON
BEHALF OF THE COMPANY, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE NOTES OR
ANY DOCUMENT RELATED THERETO. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS
SERVED ON SUCH LOCAL AGENT WILL BE PROMPTLY FORWARDED BY SUCH LOCAL AGENT AND BY
THE SERVER OF SUCH PROCESS BY MAIL TO THE COMPANY AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, BUT THE FAILURE OF THE COMPANY TO RECEIVE SUCH
COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. THE COMPANY
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS 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 THE COMPANY AT ITS
SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 3 DAYS AFTER SUCH MAILING.
30
<PAGE>
(d) Nothing herein shall affect the right of the Collateral Agent and the
other Secured Parties to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against the Company in any
other jurisdiction.
19. Indemnity. The Company shall protect, indemnify and save harmless the
Collateral Agent and the other Secured Parties, their officers, directors,
employees, representatives and agents (each, an "Indemnified Party") from, and
hold each of them harmless against, any and all costs, losses, liabilities,
claims, damages or expenses actually incurred by any of them (whether or not any
of them is designated a party thereto) arising out of or by reason of any
investigation, litigation or other proceeding related to this Agreement or any
transaction contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation, litigation or other proceeding. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be responsible to any
Indemnified Party for any losses, damages, liabilities or expenses which result
from such Indemnified Party's gross negligence or willful misconduct. The
Company's obligations under this Section shall survive any termination of this
Agreement.
20. Payment of Expenses, Etc. The Company shall:
(a) whether or not the transactions hereby contemplated are consummated,
pay all reasonable, out-of-pocket costs and expenses of the Collateral Agent and
the other Secured Parties in the administration (both before and after the
execution hereof and including reasonable expenses actually incurred relating to
advice of counsel as to the rights and duties of the Collateral Agent and the
other Secured Parties with respect thereto) of, and in connection with the
preparation, execution and delivery of, preservation of rights under,
enforcement of, and, after a Default or Event of Default, refinancing,
renegotiation or restructuring of, this Agreement and the other Credit Documents
and the documents and instruments referred to therein, and any amendment, waiver
or consent relating thereto (including, without limitation, the reasonable fees
actually incurred and disbursements of counsel for the Collateral Agent), and in
the case of enforcement of this Agreement or any Credit Document after an Event
of Default, all such reasonable, out-of-pocket costs and expenses (including,
without limitation, the reasonable fees actually incurred and disbursements of
counsel), of the Collateral Agent or any of the other Secured Parties; and
31
<PAGE>
(b) pay and hold the Collateral Agent and the other Secured Parties
harmless from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Notes and any other
Credit Documents, any collateral described therein, or any payments due
thereunder, and save each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
Taxes.
21. Security Interest Absolute. All rights of the Collateral Agent and
security interests hereunder, and all obligations of the Company hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of the Credit Documents, the
other Security Documents or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations, or any other amendment or waiver of or
any consent to any departure from the Credit Documents, including, without
limitation, any increase in the Secured Obligations resulting from the extension
of additional credit to the Company or any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to all or
any of the Secured Obligations, or any manner of sale or other disposition of
any collateral for all or any part of the Secured Obligations or any other
assets of the Company or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate structure or
existence of the Company or any of its Subsidiaries; or
(f) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, the Company or a third party pledgor.
32
<PAGE>
22. Entire Agreement. This Agreement and the other Credit Documents
executed and delivered contemporaneously herewith, together with the exhibits
and schedules attached hereto and thereto, constitute the entire understanding
of the parties with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect thereto. The
execution of this Agreement and the other Credit Documents by the Company was
not based upon any facts or materials provided by the Collateral Agent or any of
the Secured Parties, nor was the Company induced to execute this Agreement or
any other Credit Document by any representation, statement or analysis made by
the Collateral Agent or any other Secured Party.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
executed and delivered by its duly authorized officers on the date first set
forth above.
ONEITA INDUSTRIES, INC.,
a Delaware corporation
Address: 4130 Faber Place Drive By: /s/ James L. Ford
Suite 200 Name: James L. Ford
Charleston, SC 29405 Title: Executive Vice President
and Chief Financial Officer
Attn: James Ford
Telecopier No.: 803-529-5120
Attest: /s/ Edward I. Kramer
Name: Edward I. Kramer
Title: Secretary
<PAGE>
SCHEDULE 1
TO
SECURITY AGREEMENT
Locations of Inventory and Status
Location Owned, Leased, Bailment
- -------- -----------------------
Conifer Street Owned
Andrews, South Carolina 29510
Georgetown County
Airport Industrial Park Owned
Andrews, South Carolina 29510
Georgetown County
Outlet Store Leased
2 West Main Street
Andrews, South Carolina 29510
Georgetown County
1335 Old Norcross Road Leased
Lawrenceville, Georgia 30245
Gwinnett County
Old Hanceville Road Owned
Cullman, Alabama 35055
Cullman County
1015 Temple Avenue S. Leased
Fayette, Alabama 35555
Fayette County
207 15th Street SW Leased
Fayette, Alabama 35555
Fayette County
Oneita-Kinston Corp. Bailment
Hwy 11 & Cunningham Rd.
Kinston, North Carolina 28502
Lenoir County
33
<PAGE>
Oneita Mexicana SA de CV Bailment
Amapolas #3804 Alta Vista
Ciudad Juarez
Chihuahua, Mexico
Oneita-Strathleven Limited Bailment
Guinep Way
Montego Bay, Jamaica
Oneita Freeport Limited Bailment
Montego Bay, Freezone
Montego Bay, Jamaica
Acro Tex, Inc. Bailment
1025 Central Avenue
Trion, Georgia 30753
Big Sur S.A. de C.V.
Perifarico PTE Casaliesq Blvd.
Culosio, Int. Parque Octillo Bailment
Hermosillo, Sonora, Mexico
Attn: Sergio Gluschankoff
Classic Manufacturing Bailment
P.O. Box 349
Montego Bay, Jamaica
Contract Apparel Bailment
11216 Armour Drive
El Paso, Texas 79935
Daugherty Manufacturing Bailment
842 Barbrow Lane
Knoxville, Tennessee 27932
Daun Ray Bailment
c/o All Seasons Sportswear
120 West Main
Waverly, TN 37185
Down East Fabrics Bailment
1018-A W. Vernon Avenue
Kinston, NC 28502
34
<PAGE>
JRF Enterprises Bailment
2094D Alabama Hwy 79
Scottsboro, Alabama 35768
Major League Bailment
c/o Four D's
122 Payne Loop
Telico Plains, TN 37385
Maquilas Kino S.A. de C.V. Bailment
Paqua De Negocios Octillo
Hermosillo, Sonora, Mexico
Multitex S.A. de C.V. Bailment
8th Avenue 11-49
Zona 1
Guatemala City, Guatemala
Peace Textiles, Inc. Bailment
1605 S. Guignard Pkwy
Sumter, SC 29151
Pottesville Bleach & Dye Company Bailment
250 Route 61 South
Schuylkill Haven, PA 17972
Quality Mills Bailment
P.O. Box 1580
Pilot Mountain, NC 27041
Standard Warehouse Distribution Center Bailment
1355 Old Norcross Road
Lawrenceville, Georgia 30753
Gwinnett County
Texfi, Inc. Bailment
P.O. Box 819
Haw River, NC 27258
Tifton Textiles, Inc. Bailment
Route 2, Box 433-H
Tifton, Ga 31794
35
<PAGE>
Whitwell Sportwear Bailment
1 Industrial Park
Whitwell, Tennessee 37397
<PAGE>
SCHEDULE 2
TO
SECURITY AGREEMENT
Locations of Books and Records
4130 Faber Place Drive
Suite 200
Ashley Corporate Center
Charleston, South Carolina 29405
Charleston County
Conifer Street
Andrews, South Carolina 29510
Georgetown County
<PAGE>
SCHEDULE 3
TO
SECURITY AGREEMENT
Previous Company Names and Tradenames
Acquisition of certain assets of Montego Bay Traders Corporation, a Cayman
Island corporation, by Oneita Industries, Inc. on June 30, 1995
Mars Bluff Industries, Inc., a South Carolina corporation, manufacturing
facility closed and sold. Corporation liquidated into Oneita, its parent, in
1994
<PAGE>
SCHEDULE 4
TO
SECURITY AGREEMENT
UCC Financing Statements
(1) Alabama
Secretary of State, Alabama
(2) Georgia
Gwinnett County, Georgia
(3) North Carolina
Secretary of State, North Carolina
Lenoir County, North Carolina
(4) South Carolina
Secretary of State, South Carolina
(5) Pennsylvania
Secretary of State, Pennsylvania
(6) Tennessee
Secretary of State, Tennessee
(7) Texas
Secretary of State, Texas
<PAGE>
SCHEDULE 6
TO
SECURITY AGREEMENT
Supplemental Documents
1. Supplement to Security Agreement (Guarantor) (as defined in the
Credit Agreement)
2. Supplement to Guaranty Agreements
3. Lien Search Results in such locations as the Secured Parties shall
require
4. UCC Financing Statements in such locations as the Secured Parties
shall require
5. Opinions of Counsel as the Secured Parties shall require
6. Corporate Authority Documents (article of incorporation, bylaws,
resolutions of the Board of Directors, incumbency)
7. Such other documents, instruments and certificates as the Secured
Parties shall reasonably require consistent with the Credit
Agreement
<PAGE>
EXHIBIT A
[FORM OF LANDLORD AGREEMENT]
THIS LANDLORD'S AGREEMENT ("Agreement") is made and entered by the
undersigned landlord (the "Landlord") in favor of SUNTRUST BANK, ATLANTA, a
Georgia banking corporation ("SunTrust") in its capacity as collateral agent (in
such capacity the "Agent") for itself and certain other "Lenders" (as defined
below).
W I T N E S S E T H:
RECITALS:
(a) Landlord is the landlord and Oneita Kinston Corp. ("Company") is the
tenant under a lease, sublease or similar agreement, a copy of which is attached
hereto as Exhibit "A" (the "Lease"). The business premises (the "Premises")
described in the Lease are used by Company for the the manufacture of goods and
storage of inventory.
(b) Company has entered into, and contemplates that it will enter into,
certain financing arrangements (the "Financing Arrangements") with SunTrust and
certain other lenders (collectively the "Lenders") for whom SunTrust will act as
Agent. Pursuant to the Financing Arrangements, the Lenders have made and will
make certain loans and other financial accommodations to Oneita Industries,
Inc., which owns 100% of the Company, which loans and other accommodations have
been guaranteed by the Company.
(c) Company will secure its obligations to Lenders under the Financing
Arrangements by granting to the Agent, for the benefit of Lenders, a security
interest in, among other property, all of its inventory (the "Collateral"), some
of which are or hereafter may be located on the Premises.
(d) In connection therewith and pursuant to Lenders' request, Company has
requested that Landlord execute this Agreement in favor of the Agent, for the
benefit of Lenders.
(e) Landlord has agreed, at Company's request and as an accommodation to
Company, to execute this Agreement.
36
<PAGE>
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, Landlord certifies to and agrees as follows in favor of
the Agent, for the benefit of Lenders:
(i) Valid Lease. The Lease is a valid and subsisting lease for the terms
set forth therein, and no modifications or amendments to the Lease have been
entered into by the parties subsequent to their execution thereof.
(ii) No Default. No event has occurred as of the date hereof which
constitutes a default under the Lease, or would constitute such a default either
with passage of time or the giving of any required notice.
(iii) Lien Subordination. Landlord acknowledges and agrees that: (a) the
lien and security interest of the Agent (for the benefit of Lenders) in the
Collateral shall be superior to any lien, right, title, claim or interest which
Landlord may now or hereafter have therein; (b) Landlord shall not assert as
against the Agent's interest therein any statutory, contractual or possessory
lien, right, title, claim or interest in the Collateral, including without
limitation, rights of levy or distraint for rent, all of which it hereby
subordinates to the Agent's lien and security interest for the term of this
Agreement; (c) the Agent and Lenders shall have access to the Collateral and the
Premises at all times hereafter during regular business hours to remove the
Collateral therefrom should the Agent or Lenders elect to enforce the Agent's
security interest in the Collateral, without hindrance or delay by Landlord and
(d) all Collateral now or hereafter situated on the Premises shall remain the
property of Company notwithstanding the mode or manner of its affixation to the
Premises.
(iv) Termination of the Lease. If, after the date hereof, Landlord intends
to terminate the Lease or otherwise exercise the right to require Company to
surrender the Premises or if Landlord becomes aware that Company has abandoned
the Premises or terminated the Lease (each of the foregoing, a "Termination
Event"), Landlord agrees to notify the Agent in writing at SunTrust Bank,
Atlanta, 55 Park Place, Atlanta, Georgia 30303, Attention: David Westerfield and
Tom Matthesen, of the occurrence of such Termination Event (such notice herein,
a "Termination Notice").
(v) Use of the Premises; Continuance of the Lease. Landlord agrees that if
a Termination Event occurs the Agent or its designee may (at its option, but
without obligation): (i) within ten (10) days after the Agent's receipt of the
Termination Notice relative thereto, notify Landlord that the Agent or such
designee desires to use or have access to the Premises for up to ninety (90)
37
<PAGE>
days, after which notice the Agent or its designee shall have the right to use
or have access to the Premises for up to ninety (90) days (with the actual
number of days to be at the Agent's or its designee's option), provided that the
Agent or its designee shall pay or cause to be paid rent to Landlord at the
rental rate provided under the Lease (pro-rated on a daily basis) for the actual
number of days that the Agent or its designee has access to or is making use of
the Premises (but without incurring any other obligation under the Lease); (ii)
within such ninety (90) day period, notify Landlord that the Agent or its
designee desires to lease the Premises for the then remaining term of the Lease,
after which notice the Agent or its designee shall have the right to lease the
Premises for the then remaining term of the Lease in accordance with the terms
of the Lease, provided that the Agent or its designee performs or causes to be
performed all obligations of Company as lessee under the Lease (including,
without limitation, the obligation of Company to pay any past due rent); or
(iii) enter onto the Premises within thirty (30) days after the Agent's receipt
of the Termination Notice in order to remove the Collateral therefrom, without
charge, except for reasonable compensation for any damage to the Premises caused
by such removal, and in either such event, Landlord agrees to cooperate with the
Agent and not to hinder the Agent's actions in protecting the Collateral.
(vi) Bankruptcy. Notwithstanding anything contained herein to the contrary,
in the event that the Company is the subject of a bankruptcy or similar
proceeding, the periods described in the preceding Section 5 shall be stayed for
so long as the Agent is stayed as a result of such bankruptcy or other
proceeding from exercising its rights and remedies under the Financing
Arrangements and such periods shall commence to run only when any stay affecting
the Agent is lifted. Furthermore, the Landlord agrees that if the Lease is
rejected at any time during such bankruptcy or similar proceeding, the Landlord
will enter into an identical lease with identical terms with the Agent or its
successor or assign.
(vii) Consent of Landlord. Landlord hereby consents to the execution and
delivery by Company of a Security Agreement or similar instrument (the "Security
Agreement") in favor of the Agent, for the benefit of Lenders, securing the
Financing Arrangements and the granting thereunder by the Company of liens,
security title and security interests on or with respect to the Collateral.
Notwithstanding anything to the contrary in the Lease or any other agreement of
the Company, the execution and delivery by the Company of the Security Agreement
and the granting of liens, security title and security interests thereunder
shall not constitute a breach or default under the Lease or any other agreement
of the Company with the Landlord.
38
<PAGE>
(viii) Notice to Transferee. Landlord hereby agrees to make this Agreement
known to any transferee of the Premises and any person who may have any right or
interest in the Premises, the Lease or the Collateral.
(ix) Term. This Agreement shall remain in full force and effect until the
Financing Arrangements have been terminated, and all obligations and liabilities
of Company to Lenders and the Agent have been paid and satisfied in full.
(x) Modification; Successors and Assigns. The provisions of this Agreement
may not be modified or terminated orally, and shall be binding upon the
successors, assigns and personal representatives of Landlord, and upon any
successor owner or transferee of the Premises, and shall inure to the benefit of
the successors and assigns of the Agent and Lenders.
IN WITNESS WHEREOF, Landlord has caused this Agreement to be executed, by
its duly authorized officer, agent or other representative as of the _____ day
of ______, ___.
Signed and delivered LANDLORD:
in the presence of:
------------------------
Notary Public
---------------------------------
My Commission Expires: By:
- ---------------------
- ---------------------
(NOTARY SEAL) Landlord's Address for Notices:
<PAGE>
ACKNOWLEDGED AND
AGREED TO:
ONEITA INDUSTRIES, INC.
By:_________________________
Name:____________________
Title:___________________
SUNTRUST BANK, ATLANTA,
as Agent
By:_________________________
Name:____________________
Title:___________________
By:_________________________
Name:____________________
Title:___________________
<PAGE>
Schedule 1 to the Landlord Agreement
[Attach Copy of Lease]
<PAGE>
EXHIBIT B
[FORM OF BAILEE LETTER]
[Date]
[Name of Bailee]
[Address of Bailee]
Re: Oneita Industries, Inc.
Ladies and Gentlemen:
Pursuant to Section 9-305 of the Uniform Commercial Code as in effect in
the State of Georgia and the State of [insert state where bailee is located], we
hereby notify you that Oneita Industries, Inc., a Delaware corporation (the
"Company"), will enter into that certain Security Agreement, dated as of January
__, 26, 1996, in favor of SunTrust Bank, Atlanta as collateral agent (the
"Collateral Agent") for itself, First Union National Bank of South Carolina,
NatWest Bank, N.A., The Prudential Life Insurance Company of America and their
respective successors and assigns (as hereafter amended, restated, supplemented
or otherwise modified from time to time, the "Security Agreement".
Pursuant to the Security Agreement, the Company will grant a security
interest in the collateral described therein (the "Collateral"), including,
without limitation, all of its Inventory, as defined therein, some of which
Inventory is in your possession. Upon receipt of this notice by you, you will be
effectively appointed as the bailee of the Collateral Agent and the security
interest in the Collateral granted pursuant to the Security Agreement will be
perfected under the Uniform Commercial Code as in effect in the States of
Georgia and [state where bailee is located]. By its signed confirmation below,
the Company joins in this notification.
We request that you countersign below to evidence your acknowledgment that
(1) you are the bailee for the Collateral Agent, (2) you will notify the
Collateral Agent at the address provided below upon your receipt of any
notification by any other party of a lien, security interest or encumbrance on
any of the Inventory of the Company in your possession and (3) you do not
39
<PAGE>
currently have, nor will you accept at any time in the future, any lien,
security interest or other encumbrance on any of the Inventory of the Company in
your possession.
Very truly yours,
SUNTRUST BANK, ATLANTA
By:
Name:
Title:
By:
Name:
Title:
Agreed and Confirmed:
ONEITA INDUSTRIES, INC.
By:
Name:
Title:
We hereby acknowledge that (1) we are the bailee for the Collateral Agent,
(2) we will notify the Collateral Agent upon our receipt of any notification by
any other party of a lien, security interest or encumbrance on any of the
Inventory of the Company in our possession and (3) we do not currently have, nor
will we accept at any time in the future, any lien, security interest or other
encumbrance on any of the Inventory of the Company in our possession.
[NAME OF BAILEE]
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
condensed consolidated financial statements for the quarter ended December
30, 1995 and is qualified in its entirety by reference to such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1995
<PERIOD-END> DEC-30-1995
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 29,249
<ALLOWANCES> 982
<INVENTORY> 83,725
<CURRENT-ASSETS> 117,258
<PP&E> 73,291
<DEPRECIATION> 28,461
<TOTAL-ASSETS> 163,734
<CURRENT-LIABILITIES> 50,441
<BONDS> 35,453
<COMMON> 1,750
0
0
<OTHER-SE> 72,716
<TOTAL-LIABILITY-AND-EQUITY> 163,734
<SALES> 35,187
<TOTAL-REVENUES> 35,187
<CGS> 34,633
<TOTAL-COSTS> 34,633
<OTHER-EXPENSES> 4,693
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,300
<INCOME-PRETAX> (5,439)
<INCOME-TAX> (2,065)
<INCOME-CONTINUING> (3,374)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,374)
<EPS-PRIMARY> (0.49)
<EPS-DILUTED> (0.49)
</TABLE>
