UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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.............333-18755............................
..............................Pluma, Inc.................
(Exact name of registrant as specified in its charter)
North Carolina 56-1541893
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
...................................................................
(Address of principal executive offices)
(Zip Code)
.....................801 Fieldcrest Road, Eden, North Carolina 27289.........
(Registrant's telephone number, including area code)
...............................(336) 635-4000.................................
(Former name, former address and former fiscal year,
if changed since lastreport)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes...X... No.......
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date 8,109,152 shares of common
stock, no par value, as of August 11, 1998.
1
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PLUMA, INC.
INDEX TO FORM 10-Q
- ------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheets - June 30, 1998 and December 31, 1997 3
Statements of Operations - Three Months and Six Months
Ended June 30, 1998 and 1997 4
Statements of Cash Flows - Six Months Ended June 30, 1998
and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLUMA, INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
(UNAUDITED)
JUNE 30, DECEMBER 31,
1998 1997
ASSETS
Current assets:
Cash $ 1,234,256 $ 1,875,992
Accounts receivable (less allowance -
1998, $2,358,044; 1997, $2,353,577) 38,196,397 32,001,332
Refundable income taxes 2,578,844 1,952,796
Other receivables - 1,906,178
Deferred income taxes 1,259,461 1,539,385
Inventories 64,280,472 51,177,900
Other current assets 920,479 1,168,663
-------------- ------------
Total current assets 108,469,909 91,622,246
-------------- ------------
Property, plant and equipment:
Land 929,689 929,689
Land improvements 719,699 719,699
Buildings and improvements 16,737,550 16,663,608
Machinery and equipment 39,199,987 36,420,561
Construction in process 9,897,381 4,762,235
-------------- -------------
Total property, plant and equipment 67,484,306 59,495,792
Less accumulated depreciation 23,481,000 21,496,857
-------------- -------------
Property, plant and equipment, net 44,003,306 37,998,935
-------------- -------------
Other assets:
Goodwill (less accumulated amortization -
1998, $898,112; 1997, $26,655 33,960,189 34,831,646
Other 2,451,949 1,533,840
-------------- -------------
Total other assets 36,412,138 36,365,486
-------------- -------------
Total $ 188,885,353 $ 165,986,667
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt 100,727,000 44,117,982
Accounts payable 18,809,426 12,057,069
Accrued expenses 4,390,334 2,472,458
-------------- -------------
Total current liabilities 123,926,760 58,647,509
-------------- -------------
Long-term debt - 40,000,000
-------------- -------------
Deferred income taxes 3,890,715 3,671,301
-------------- -------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value, 1,000,000
shares authorized
Common stock, no par value, 15,000,000
shares authorized, shares issued and
outstanding - 1998, 8,109,152;
1997, 8,109,152 36,849,127 36,849,127
Retained earnings 24,218,751 26,818,730
-------------- -------------
Total shareholders' equity 61,067,878 63,667,857
-------------- -------------
Total $ 188,885,353 $ 165,986,667
============== =============
The accompanying notes are an integral part of these statements.
3
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<TABLE>
<CAPTION>
PLUMA, INC.
STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $ 51,059,701 $ 33,226,268 $ 90,256,136 $ 60,511,998
Cost of goods sold 46,428,171 28,053,506 81,610,435 50,646,665
------------- ------------- ------------- -----------
Gross profit 4,631,530 5,172,762 8,645,701 9,865,333
Selling, general and administrative expenses 5,185,240 2,531,845 9,018,065 5,305,472
------------- ------------- ------------- -----------
Income (loss) from operations (553,710) 2,640,917 (372,364) 4,559,861
------------- ------------- ------------- -----------
Other income (expenses):
Interest expense (1,862,555) (500,193) (3,330,837) (1,178,172)
Amortization of goodwill (435,729) - (871,457) -
Other income, net 150,270 122,925 486,640 249,739
------------- ------------- ------------- -----------
Total other expenses, net (2,148,014) (377,268) (3,715,654) (928,433)
------------- ------------- ------------- -----------
Income (loss) before income taxes (2,701,724) 2,263,649 (4,088,018) 3,631,428
------------- ------------- ------------- -----------
Income taxes (benefit) (983,428) 833,022 (1,488,039) 1,336,366
------------- ------------- ------------- -----------
Net income (loss) $ (1,718,296) $ 1,430,627 $ (2,599,979) $ 2,295,062
============= ============ ============= ===========
Earnings (loss) per common share -
basic and diluted $ (.21) $ .18 $ (.32) $ .33
============= ============ ============= ===========
Weighted average number of shares outstanding 8,109,152 8,067,252 8,109,152 6,989,208
============= ============ ============= ===========
The accompanying notes are an integral part of this statement.
</TABLE>
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<TABLE>
<CAPTION>
PLUMA, INC.
STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,599,979) $ 2,295,062
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Provision for depreciation 2,142,293 2,005,474
Provision for amortization 921,459 -
Other, net 9,622 (1,162)
Increase in accounts receivable (6,195,065) (10,269,022)
Decrease in other receivables 1,906,178 -
Increase (decrease) in deferred income taxes 499,338 (169,050)
Increase in inventories (13,102,572) (6,259,414)
(Increase) decrease in other current assets 248,184 471,845
Increase in accounts payable 6,752,357 2,349,832
(Increase) decrease in refundable income taxes (626,048) (547,584)
Increase in accrued expenses 1,917,876 1,018,742
------------ -----------
Net cash used in operating activities (8,126,357) (9,105,277)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (8,156,286) (5,475,838)
Other, net (968,111) (145,569)
------------ -----------
Net cash used in investing activities (9,124,397) (5,621,407)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (849,640) (849,640)
Proceeds from issuance of long-term debt 58,727,000 326,155
Net repayments of revolving loan (41,268,342) (14,431,768)
Net proceeds from sale of common stock - 29,663,978
Payment of dividends - (144,451)
------------ -----------
Net cash provided by financing activities 16,609,018 14,564,274
------------ -----------
Net decrease in cash (641,736) (162,410)
Cash, beginning of period 1,875,992 291,488
------------ -----------
Cash, end of period $ 1,234,256 $ 129,078
============ ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 2,591,774 $ 1,448,773
Income taxes 57,500 2,053,000
Cash received during the period for:
Income taxes $ 1,400,829 -
The accompanying notes are an integral part of these statements.
</TABLE>
5
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PLUMA, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED) JUNE 30, 1998
- --------------------------------------------------------------------------------
1. ACCOUNTING POLICIES
The accompanying unaudited financial statements of Pluma, Inc. (the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim periods.
In the opinion of management, these financial statements include all
adjustments, including all normal recurring accruals, necessary for a fair
presentation of the financial position at June 30, 1998 and December 31,
1997, the results of operations for the three months and six months ended
June 30, 1998 and 1997 and cash flows for the six months ended June 30, 1998
and 1997.
The operating results for the three months and six months ended June 30,
1998 are not necessarily indicative of the results to be expected for the
full year ending December 31, 1998.
In December 1997, the Company purchased certain assets and assumed certain
liabilities of Stardust Corporation ("Stardust") and Frank L. Robinson
Company ("FLR"). The acquisitions have been accounted for as purchases.
Accordingly, the assets, liabilities, revenues and expenses of the acquired
businesses are included in the financial statements as of December 31, 1997,
and for the three months and six months ended June 30, 1998.
2. INVENTORIES
Inventories consist of the following:
(UNAUDITED)
JUNE 30, DECEMBER 31
1998 1997
At FIFO cost:
Raw materials $ 1,633,508 $ 1,429,371
Work-in-progress 8,804,563 6,077,538
Finished goods 56,746,004 45,885,484
Production supplies 1,268,780 953,147
---------- -----------
68,452,855 54,345,540
Excess of FIFO over LIFO cost (2,394,616) (1,846,435)
=========== ===========
66,058,239 52,499,105
Excess of cost over market (1,777,767) (1,321,205)
----------- -----------
$64,280,472 $51,177,900
=========== ===========
3. CAPITAL STOCK
On January 28, 1997, the Board of Directors declared a 0.736-for-one reverse
common stock split for shareholders of record on February 3, 1997. All
references in the accompanying financial statements to the number of common
shares and per share amounts reflect the reverse stock split.
6
<PAGE>
In March 1997, the Company completed its initial public offering of
2,500,000 shares of Common Stock at $12.00 per share. The $26,416,906 net
proceeds were used to reduce debt.
In April 1997, the Underwriters' over-allotment option for 293,300 shares of
Common Stock at $12.00 per share was exercised. The $3,209,671 net proceeds
were used to reduce debt.
4. STOCK OPTIONS
In May 1995, the Company adopted the 1995 Stock Option Plan in which 515,200
shares of the Company's Common Stock may be issued. The exercise price of
the options may not be less than the fair value of the Common Stock on the
date of grant. The options granted become exercisable at such time or times
as shall be determined by the Compensation Committee of the Board of
Directors (the "Committee"). The Committee may at any time accelerate the
exercisability of all or any portion of any stock option. These options
expire, if not exercised, ten years from the date of grant. Participants in
the Plan may be independent contractors or employees of independent
contractors, full or part-time officers and other employees of the Company,
or independent directors of the Company.
In April 1996 and October 1995, the Company granted 32,384 and 379,776
options, respectively, to purchase Common Stock at an exercise price of
$13.077 per share of which 181,352 and 180,763 options are exercisable as of
June 30, 1998 and December 31, 1997, respectively. Forfeited options were
40,627 as of June 30, 1998 and 31,795 as of December 31, 1997. Expired
options were 6,477 shares as of June 30, 1998 and 589 shares as of December
31, 1997. The remaining 183,704 options become exercisable on the
anniversary dates of the grants as follows:
YEAR SHARES
1998 54,759
1999 61,236
2000 61,234
2001 6,475
-------
Total 183,704
=======
The Company applies APB Opinion No. 25 and related interpretations in
accounting for the 1995 Stock Option Plan. Accordingly, no compensation cost
has been recognized since the exercise price approximates the fair value of
the stock price at the grant dates. Had compensation cost been determined
based on the fair value at the grant date consistent with the method of
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," the Company's net income and earnings per common
share would have been effected for the three months ended March 31, 1998 and
1997 as indicated below:
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
Net Income:
As reported $(1,718,296) $1,430,627 $(2,599,979) $2,295,062
Pro forma $(1,746,466) $1,379,313 $(2,658,740) $2,192,435
Earnings per Share:
7
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As reported $ (.21) $ .18 $ (.32) $ .33
Pro forma $ (.22) $ .17 $ (.33) $ .31
5. EARNINGS PER COMMON SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128")
which changes the method of computing and presenting earnings per share.
SFAS 128 requires the presentation of basic earnings per share and diluted
earnings per share ("EPS") on the face of the income statement for all
entities with complex capital structures and requires a reconciliation of
the numerator and denominator of the basic EPS computation to the numerator
and denominator of the diluted EPS computation. Basic earnings per share is
computed by dividing the net income available to common shareholders by the
weighted average shares of outstanding common stock. The calculation of
diluted earnings per share is similar to basic earnings per share except
that the denominator includes dilutive common stock equivalents such as
stock options and warrants. SFAS 128 is effective for financial statements
for periods ending after December 15, 1997 and early adoption is not
permitted.
Outstanding options to purchase shares of common stock were not included in
the computation of diluted EPS because the options' exercise prices were
greater than the average market prices of the common shares during the three
months and six months ended June 30, 1998 and 1997. Accordingly, there were
no differences in the numerators and denominators used in the basic EPS and
diluted EPS computations.
6. LONG-TERM DEBT
In April 1998, the Company replaced its existing debt with a $115.0 million
syndicated credit facility (the "Syndicated Credit Facility"). The
Syndicated Credit Facility permits revolving loans of up to $70.0 million
(the "Revolving Loans") and term loans of up to $45.0 million (the "Term
Loans"). Any amounts outstanding under the Revolving Loans mature in April,
2003. Term Loan borrowings will be due in specified quarterly installments
beginning in April, 1999 with a final maturity in January, 2003.
Among the various provisions, limitations and restrictions contained in the
Syndicated Credit Facility, the Company must meet specified consolidated net
worth, leverage ratio, fixed charge coverage ratio, funded debt to total
capitalization ratio and consolidated earnings before the effect of interest
expense, income taxes depreciation and amortization requirements. Under the
Syndicated Credit Facility, the Company is restricted in the amount of its
capital expenditures, indebtedness to certain other parties, payment of
dividends, or redemption of its stock that would create an event of default.
In the event of default, unless a waiver is obtained, any unpaid principal
and accrued interest may be declared immediately due and payable. The
Syndicated Credit Facility may be terminated at any time upon the occurrence
of an event of default. The Company retains the right to remedy certain
events of default within 30 days after notice. The Company was not in
compliance with certain covenants and had not obtained the respective
waivers as of June 30, 1998. Accordingly, all debt as of June 30, 1998 has
been classified as current.
7. NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Comprehensive Income" ("SFAS 130"),
which established standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. This statement divides comprehensive income into net income and
other comprehensive income. For the three months and six months ended June
30, 1998 and 1997, the Company had no items of other comprehensive income.
In June 1997, SFAS No. 131 "Disclosures about Segments of an Enterprise and
Related Information," was issued, establishing standards for the way public
enterprises report information about operating segments in annual financial
statements. This statement also requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. The Company will be required to apply the provisions
of this statement beginning with the annual report issued for the year
ending December 31, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
8
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GENERAL
The following discussion and analysis should be read in conjunction with the
financial statements and related notes of this Quarterly Report on Form 10-Q
and should be read in conjunction with the Company's 1997 Annual Report.
RESULTS OF OPERATIONS
The following table presents the major components of the Company's Statement
of Operations as a percentage of net sales:
(UNAUDITED) (UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 90.9 84.5 90.4 83.7
------ ------- ------- -------
Gross profit 9.1 15.5 9.6 16.3
Selling, general and
administrative expenses 10.1 7.6 10.0 8.7
------ ------- ------- -------
Income (loss) from operations (1.0) 7.9 (.4) 7.6
Other expenses, net (4.2) (1.1) (4.1) (1.5)
------ ------- ------- -------
Income (loss) before income taxes (5.2) 6.8 (4.5) 6.1
Income taxes (benefit) (1.9) 2.5 (1.6) 2.2
------ ------- ------- -------
Net income (loss) (3.3)% 4.3% (2.9)% 3.9%
====== ======= ======= =======
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 ("1998"), COMPARED TO THREE
MONTHS AND SIX MONTHS ENDED JUNE 30, 1997 ("1997")
NET SALES
Net sales for the six months ended June 30, 1998 were $90.3 million, an
increase of $29.8 million, or 49.2%, over net sales of $60.5 million for the
first six months of 1997. This increase in net sales was attributable to the
inclusion of sales from FLR and Stardust which were acquired by the Company
in December of 1997. However, sales from these divisions were lower than
anticipated due to a temporary disruption of inventory supply to them.
GROSS MARGINS Gross Margins declined to 9.1% and 9.6% for the second quarter
and first six months of 1998, respectively, from 15.5% and 16.3% in the
comparable periods of 1997. The decline was the result of higher than
anticipated manufacturing expenses including lower fabric yield, a shift in
product mix, and an increase in supplies expense. Fabric yield was adversely
impacted due to problems associated with system design and procedural
aspects of the SAP management information system which is currently being
implemented by the Company resulting in excess waste. Steps have been or are
being taken to correct this problem. Orders for product shifted to a higher
percentage of larger sized goods during the second quarter of 1998 relative
to the same period in 1997. Due to a competitive market environment, the
Company is not always able to offset the higher production costs associated
with larger sized product with higher selling prices. In addition, the
Company sold a higher percentage of jersey relative to fleece product during
the first six months of 1998 compared to the same period of 1997. Jersey
product, on average, provides a lower gross profit percentage than fleece
product. Supplies expense increased as the Company provided
9
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manufacturing and shipping supplies to a greater number of outside
contractors during the second quarter of 1998 than had been utilized in
the same period of 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A")
For the first six months, SG&A expenses increased 69.8% to $9.0 million in
1998 from $5.3 million in 1997. SG&A as a percentage of sales for 1998 was
10.0% compared to 8.7% in 1997. This increase in SG&A expense is primarily
attributable to the inclusion of expenses from FLR and Stardust in the first
six months of 1998.
OTHER EXPENSES, NET
Other expenses, net, increased 425% to $2.1 million in the second quarter of
1998 and 311.1% to $3.7 million in the first six months of 1998. This
increase was due to an increase in interest expense and amortization expense
associated with the acquisitions made in December of 1997.
INCOME TAXES
The effective tax rate was 36.4% in 1998 and 36.8% in 1997.
LIQUIDITY AND CAPITAL RESOURCES
PRINCIPAL SOURCES OF LIQUIDITY
Principal sources of liquidity have been net proceeds from the Company's
initial public offering and bank financing. In March 1997, the Company
completed its initial public offering of 2,500,000 shares of common stock at
$12.00 per share. Upon the exercise of an overallotment option in April
1997, the Company issued an additional 293,300 shares at $12.00 per share.
The 29.6 million in net proceeds from the issuance of Common Stock was used
to reduce debt.
The Company entered into a $115.0 million syndicated credit facility (the
"Syndicated Credit Facility") in April, 1998. The Syndicated Credit Facility
permits revolving loans of up to $70.0 million (the "Revolving Loans") and
term loans of up to $45.0 million (the "Term Loans"). Any amounts
outstanding under the Revolving Loans mature in April, 2003. Term Loan
borrowings will be due in specified quarterly installments beginning in
April, 1999 with a final maturity in January, 2003.
Among the various provisions, limitations and restrictions contained in the
Syndicated Credit Facility, the Company must meet specified consolidated net
worth, leverage ratio, fixed charge coverage ratio, funded debt to total
capitalization ratio and consolidated earnings before the effect of interest
expense, income taxes, depreciation and amortization requirements. Under the
Syndicated Credit Facility, the Company is restricted in the amount of its
capital expenditures, indebtedness to certain other parties, payment of
dividends, or redemption of its stock that would create an event of default.
In the event of default, unless a waiver is obtained, any unpaid principal
and accrued interest may be declared immediately due and payable. the
Syndicated Credit Facility may be terminated at any time upon the occurrence
of an event of default. The Company retains the right to remedy certain
events of default within 30 days after notice.
The Company was not in compliance with certain covenants and had not
obtained the respective waivers as of June 30, 1998. As of June 30, 1998,
the Company was required to have a consolidated net worth greater than or
equal to $62.5 million, a fixed charge coverage ratio less than or equal to
1.25, and consolidated earnings before the effect of interest expense,
income taxes, depreciation and amortization greater than or equal to $15
million. As of June 30, 1998, the Company had a consolidated net worth of
$61.1 million, a fixed charge coverage ratio of(0.23), and consolidated
earnings before the effect of interest expense, income taxes, depreciation
and amortization of $8.4 million. Although the Company has requested these
waivers, there can be no assurance that these waivers will be obtained.
CASH FLOWS FROM OPERATING ACTIVITIES
For the six months ended June 30, 1998 and 1997, net cash used in operating
activities totaled $8.1 million and $9.1 million, respectively. Accounts
receivable, net increased $6.2 million from December 31, 1997 to June 30,
1998 due to increased sales volume and the seasonality of activewear
shipments. Inventories increased $13.1 million from December 31, 1997 to
June 30, 1998 in order to support shipments due in the last six months of
the year. These uses of cash were offset primarily by an increase in
accounts payable of $6.8 million.
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures were $8.2 million for the six months ended June 30,
1997. These capital expenditures were primarily to enhance manufacturing and
management information systems capabilities.
CASH FLOWS FROM FINANCING ACTIVITIES
For the six months ended June 30, 1998, the Company had net borrowings of
$16.6 million to help meet working capital and capital expenditure financing
needs.
10
<PAGE>
FORWARD LOOKING STATEMENTS
Information in this Form 10-Q may contain certain forward looking
statements. These statements involve risks and uncertainties that could
cause actual results to differ materially, including without limitation, the
actual costs of operating the Company's business, actual operating
performance, the ability to maintain large client contracts or to enter into
new contracts and the level of demand for the Company's product. Additional
factors that could cause actual results to differ are discussed in the
Company's recent filings with the Securities Exchange Commission.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On January 28, 1997, the Board of Directors declared a 0.736-for-one
reverse Common Stock split for shareholders of record on February 3, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
An annual meeting of the Shareholders was held on June 2, 1998, in Bassett,
Virginia. Two matters were submitted to a vote on that date. The first
matter was a recommendation by the Company's Board of Directors to elect R.
Duke Ferrell, Jr., Barry A. Bowles and R. Stephens Pannill as directors to
hold office until the Annual Meeting of Shareholders to be held in 2001 and
until their successors are elected and qualified. The Board of Directors
currently consists of eleven members which are divided into three classes,
each class serving a three year term. George G. Wade, G. Walker Box, C.
Monroe Light, Ronald A. Norelli, J. Robert Philpott, William K. Mileski,
John D. Adams and Kemp D. Box continued as Directors of the Company.
The second matter submitted to a vote of the Shareholders was the
ratification of Deloitte & Touche LLP to serve as independent auditors of
the Company for the fiscal year ending December 31, 1998.
The number of votes cast for these matters are summarized below:
AUTHORITY BROKER
DIRECTOR FOR WITHHELD ABSTAIN NON-VOTES
R. Duke Ferrell Jr. 7,237,447 19,700 0
Barry A. Bowles 7,225,447 31,700 0
R. Stephens Pannill 7,220,627 36,520 0
INDEPENDENT AUTHORITY BROKER
ACCOUNTANT FOR WITHHELD ABSTAIN NON-VOTES
Deloitte & Touche LLP 7,202,585 49,512 5,050 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
Exhibit
Number Filed Herewith (*)
------
10.1 Credit Agreement dated April 23, 1998 *
11.1 Computation of Earnings per Share *
b. Reports on Form 8-K
None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Pluma, Inc.
-----------------------------------
R. Duke Ferrell, Jr.
President, Chief Executive Officer
and Director
-----------------------------------
Forrest H. Truitt II
Executive Vice President, Treasurer
and Chief Financial Officer
13
CREDIT AGREEMENT
Dated as of April 23, 1998
among
PLUMA, INC.,
as Borrower,
AND
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N. A.,
as Agent
<PAGE>
TABLE OF CONTENTS
SECTION 1 DEFINITIONS.......................................................1
1.1 Definitions........................................................1
1.2 Computation of Time Periods.......................................27
1.3 Accounting Terms..................................................27
SECTION 2 CREDIT FACILITIES................................................28
2.1 Revolving Loans...................................................28
2.2 Letter of Credit Subfacility......................................30
2.3 Term Loan.........................................................35
2.4 Swingline Loans...................................................36
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES...................38
3.1 Default Rate......................................................38
3.2 Extension and Conversion..........................................38
3.3 Prepayments.......................................................39
3.4 Voluntary Reduction of Revolving Committed Amount.................41
3.5 Fees..............................................................41
3.6 Capital Adequacy..................................................42
3.7 Limitation on Eurodollar Loans....................................42
3.8 Illegality........................................................43
3.9 Requirements of Law...............................................43
3.10 Treatment of Affected Loans......................................44
3.11 Taxes............................................................45
3.12 Compensation.....................................................47
3.13 Pro Rata Treatment...............................................47
3.14 Sharing of Payments..............................................48
3.15 Payments, Computations, Etc......................................49
3.16 Evidence of Debt.................................................51
SECTION 4 GUARANTY 51
4.1 The Guaranty......................................................51
4.2 Obligations Unconditional.........................................52
4.3 Reinstatement.....................................................53
4.4 Certain Additional Waivers........................................53
4.5 Remedies..........................................................53
4.6 Rights of Contribution............................................54
4.7 Continuing Guarantee..............................................55
SECTION 5 CONDITIONS.......................................................55
5.1 Closing Conditions................................................55
5.2 Conditions to all Extensions of Credit............................60
SECTION 6 REPRESENTATIONS AND WARRANTIES...................................60
6.1 Financial Condition...............................................60
<PAGE> i
6.2 No Material Change................................................61
6.3 Organization and Good Standing....................................61
6.4 Power; Authorization; Enforceable Obligations.....................61
6.5 No Conflicts......................................................62
6.6 No Default........................................................62
6.7 Ownership.........................................................62
6.8 Litigation........................................................62
6.9 Taxes.............................................................62
6.10 Compliance with Law..............................................63
6.11 ERISA............................................................63
6.12 Subsidiaries.....................................................64
6.13 Governmental Regulations, Etc....................................64
6.14 Purpose of Loans and Letters of Credit...........................65
6.15 Environmental Matters............................................65
6.16 Intellectual Property............................................66
6.17 Solvency.........................................................67
6.18 Investments......................................................67
6.19 Location of Collateral...........................................67
6.20 Disclosure.......................................................67
6.21 No Burdensome Restrictions.......................................67
6.22 First Priority Lien..............................................67
6.23 Receivables Warranties and Representations.......................68
6.24 Inventory Warranties and Representations.........................68
SECTION 7 AFFIRMATIVE COVENANTS............................................69
7.1 Information Covenants.............................................69
7.2 Preservation of Existence and Franchises..........................72
7.3 Books and Records.................................................73
7.4 Compliance with Law...............................................73
7.5 Payment of Taxes and Other Indebtedness...........................73
7.6 Insurance.........................................................73
7.7 Maintenance of Property...........................................74
7.8 Performance of Obligations........................................74
7.9 Use of Proceeds...................................................74
7.10 Audits/Inspections...............................................75
7.11 Financial Covenants..............................................75
7.12 Additional Credit Parties........................................76
7.13 Interest Rate Protection Agreements..............................77
7.14 Environmental Laws...............................................77
7.15 Collateral.......................................................78
7.16 Records and Schedules of Inventory...............................78
7.17 Assignments, Records and Schedules of Receivables................78
7.18 Year 2000 Compatibility..........................................78
SECTION 8 NEGATIVE COVENANTS...............................................79
8.1 Indebtedness......................................................79
<PAGE> ii
8.2 Liens.............................................................79
8.3 Nature of Business................................................80
8.4 Consolidation, Merger, Dissolution, etc...........................80
8.5 Investments.......................................................80
8.6 Restricted Payments...............................................80
8.7 Prepayments of Indebtedness, etc..................................80
8.8 Transactions with Affiliates......................................81
8.9 Fiscal Year; Organizational Documents.............................81
8.10 Limitation on Restricted Actions.................................81
8.11 Ownership of Subsidiaries; Limitations on Borrower...............81
8.12 Sale Leasebacks..................................................82
8.13 Asset Dispositions...............................................82
SECTION 9 EVENTS OF DEFAULT................................................82
9.1 Events of Default.................................................82
9.2 Acceleration; Remedies............................................85
SECTION 10 AGENCY PROVISIONS...............................................86
10.1 Appointment, Powers and Immunities...............................86
10.2 Reliance by Agent................................................86
10.3 Defaults.........................................................87
10.4 Rights as a Lender...............................................87
10.5 Indemnification..................................................87
10.6 Non-Reliance on Agent and Other Lenders..........................88
10.7 Successor Agent..................................................88
SECTION 11 MISCELLANEOUS...................................................89
11.1 Notices..........................................................89
11.2 Right of Set-Off; Adjustments....................................90
11.3 Benefit of Agreement.............................................90
11.4 No Waiver; Remedies Cumulative...................................92
11.5 Expenses; Indemnification........................................92
11.6 Amendments, Waivers and Consents.................................93
11.7 Counterparts.....................................................95
11.8 Headings.........................................................95
11.9 Survival.........................................................95
11.10 Governing Law; Submission to Jurisdiction; Venue................95
11.11 Severability....................................................96
11.12 Entirety........................................................96
11.13 Binding Effect; Termination.....................................96
11.14 Conflict........................................................97
11.15 Confidentiality.................................................97
<PAGE> iii
SCHEDULES
Schedule 1.1(a) Investments
Schedule 1.1(b) Liens
Schedule 1.3 Proforma Calculation
Schedule 2.1(a) Lenders and Commitments
Schedule 6.12 Subsidiaries
Schedule 6.16 Intellectual Property
Schedule 6.19(a) Mortgaged Properties
Schedule 6.19(b) Collateral Locations
Schedule 6.19(c) Chief Executive Offices/Principal Places of Business
Schedule 7.6 Insurance
Schedule 7.11 Calculation Method
Schedule 7.14(b)(ii) Environmental Assessments
Schedule 7.14(b)(ii)(A) Recommendation Letter
Schedule 8.1 Indebtedness
EXHIBITS
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 2.2(b) Form of Notice of Request for Letter of Credit
Exhibit 2.3(e) Form of Term Note
Exhibit 2.4(d) Form of Swingline Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(d) Form of Officer's Compliance Certificate
Exhibit 7.1(e) Form of Borrowing Base Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
<PAGE> iv
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of April 23, 1998, (as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"), is by and
among PLUMA, INC., a North Carolina corporation (the "Borrower"), the Guarantors
(as defined herein), the Lenders (as defined herein) and NATIONSBANK, N. A., as
Agent for the Lenders (in such capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide a
$115,000,000 credit facility for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facility
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition" means the acquisition by any Person of all of the
Capital Stock or all or substantially all of the Property of another
Person, whether or not involving a merger or consolidation with such
Person.
"Additional Credit Party" means each Person that becomes a Guarantor
after the Closing Date by execution of a Joinder Agreement.
"Adjusted Base Rate" means the Base Rate plus the Applicable
Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate plus the
Applicable Percentage.
"Affiliate" means, with respect to any Person, any other Person (i)
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the equity interest in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of
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such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Agency Services Address" means NationsBank, N.A., NC1-001-15-04,
101 North Tryon Street, Charlotte, North Carolina 28255 or such other
address as may be identified by written notice from the Agent to the
Borrower.
"Agent" shall have the meaning assigned to such term in the heading
hereof, together with any successors or assigns.
"Agent's Fee Letter" means that certain letter agreement, dated as
of March 6, 1998, between the Agent and the Borrower, as amended,
modified, restated or supplemented from time to time.
"Agent's Fees" shall have the meaning assigned to such term in
Section 3.5(c).
"Applicable Lending Office" means, for each Lender, the office of
such Lender (or of an Affiliate of such Lender) as such Lender may from
time to time specify to the Agent and the Borrower by written notice as
the office by which its Eurodollar Loans are made and maintained.
"Applicable Percentage" means, for purposes of calculating the
applicable interest rate for any day for any Revolving Loan, any Term
Loan, the applicable rate of the Unused Fee for any day for purposes of
Section 3.5(b) and the applicable rate of the Letter of Credit Fee for any
day, the appropriate applicable percentage corresponding to the Funded
Indebtedness to Capitalization Ratio in effect as of the most recent
Calculation Date:
<TABLE>
<CAPTION>
Applicable
Pricing Funded Indebtedness to Applicable Percentage Applicable Percentage Applicable Percentage For Percentage
Level Capitalization Ratio For Eurodollar Loans For Base Rate Loans Letter of Credit Fees For Unused Fees
- ------ --------------------------------
<S> <C> <C> <C> <C> <C>
I < 0.35 to 1.0 .75% 0.0% .75% .20%
II < 0.40 to 1.0 but > 0.35 to 1.0 1.00% 0.0% 1.00% .25%
III < 0.45 to 1.0 but > 0.40 to 1.0 1.25% 0.0% 1.25% .30%
IV < 0.50 to 1.0 but > 0.45 to 1.0 1.50% 0.0% 1.50% .30%
V < 0.55 to 1.0 but > 0.50 to 1.0 1.75% .25% 1.75% .375%
VI > 0.55 to 1.0 2.00% .50% 2.00% .375%
</TABLE>
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<PAGE>
The Applicable Percentages shall be determined and adjusted quarterly on
the date (each a "Calculation Date") five Business Days after the date by
which the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(d) for the most recently
ended fiscal quarter of the Consolidated Parties; provided, however, that
(i) the initial Applicable Percentages shall be based on Pricing Level VI
(as shown above) and shall remain at Pricing Level VI until the first
Calculation Date occurring subsequent to December 31, 1998 and,
thereafter, the Applicable Percentage shall be determined by the Funded
Indebtedness to Capitalization Ratio as of the last day of the most
recently ended fiscal quarter of the Consolidated Parties preceding the
applicable Calculation Date, and (ii) if the Borrower fails to provide the
officer's certificate to the Agency Services Address as required by
Section 7.1(d) for the last day of the most recently ended fiscal quarter
of the Consolidated Parties preceding the applicable Calculation Date, the
Applicable Percentage from such Calculation Date shall be based on Pricing
Level VI until such time as an appropriate officer's certificate is
provided, whereupon the Applicable Percentage shall be determined by the
Funded Indebtedness to Capitalization Ratio as of the last day of the most
recently ended fiscal quarter of the Consolidated Parties preceding such
Calculation Date. Each Applicable Percentage shall be effective from one
Calculation Date until the next Calculation Date. Any adjustment in the
Applicable Percentages shall be applicable to all existing Loans as well
as any new Loans made or issued.
"Asset Disposition" means the disposition of any or all of the
assets of any Consolidated Party, whether by sale, lease, transfer or
otherwise unless such disposition is permitted by the terms of Section
8.13(i) or (ii) hereof.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the
United States Code, as amended, modified, succeeded or replaced from time
to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to
the entry of an order for relief in an involuntary case under any such
law, or consent to the appointment or taking possession by a receiver,
3
<PAGE>
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or
make any general assignment for the benefit of creditors; or (iv) such
Person shall be unable to, or shall admit in writing its inability to, pay
its debts generally as they become due.
"Base Rate" means, for any day, the rate per annum equal to the
higher of (a) the Federal Funds Rate for such day plus one-half of one
percent (.5%) and (b) the Prime Rate for such day. Any change in the Base
Rate due to a change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime Rate or
Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the heading
hereof, together with any permitted successors and assigns.
"Borrowing Base" means, as of any day, the sum of (a) 85% of
Eligible Receivables and (b) 60% of Eligible Inventory, in each case as
set forth in the most recent Borrowing Base Certificate delivered to the
Agent and the Lenders in accordance with the terms of Section 7.1(e).
"Business Day" means a day other than a Saturday, Sunday or other
day on which commercial banks in Charlotte, North Carolina are authorized
or required by law to close, except that, when used in connection with a
Eurodollar Loan, such day shall also be a day on which dealings between
banks are carried on in U.S. dollar deposits in London, England.
"Calculation Date" has the meaning set forth in the definition of
"Applicable Percentage" set forth in this Section 1.1.
"Capital Lease" means, as applied to any Person, any lease of any
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a partnership,
partnership interests (whether general or limited), (iv) in the case of a
limited liability company, membership interests and (v) any other interest
or participation that confers on a Person the right to receive a share of
the profits and losses of, or distributions of assets of, the issuing
Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
4
<PAGE>
instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof) having maturities
of not more than twelve months from the date of acquisition, (b) U.S.
dollar denominated time deposits and certificates of deposit of (i) any
Lender, (ii) any domestic commercial bank of recognized standing having
capital and surplus in excess of $500,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with
maturities of not more than 270 days from the date of acquisition, (c)
commercial paper and variable or fixed rate notes issued by any Lender or
any Approved Bank (or by the parent company thereof) or any variable rate
notes issued by, or guaranteed by, any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the equivalent
thereof) or better by Moody's and maturing within six months of the date
of acquisition, (d) repurchase agreements with a bank or trust company
(including any of the Lenders) or recognized securities dealer having
capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of America in which any
Credit Party shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a
fair market value of at least 100% of the amount of the repurchase
obligations and (e) Investments, classified in accordance with GAAP as
current assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are administered by
reputable financial institutions having capital of at least $500,000,000
and the portfolios of which are limited to Investments of the character
described in the foregoing subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the following
events: (i) any Person or two or more Persons acting in concert shall have
acquired "beneficial ownership," directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its or their
acquisition of, control over, Voting Stock of the Borrower (or other
securities convertible into such Voting Stock) representing 35% or more of
the combined voting power of all Voting Stock of the Borrower, or (ii)
during any period of up to 24 consecutive months, commencing after the
Closing Date, individuals who at the beginning of such 24 month period
were directors of the Borrower (together with any new director whose
election by the Borrower's Board of Directors or whose nomination for
election by the Borrower's shareholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors of the Borrower then in office. As used herein,
"beneficial ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
5
<PAGE>
to sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the collateral which is
identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Documents" means a collective reference to the Security
Agreement, the Mortgage Instruments and such other documents executed and
delivered in connection with the attachment and perfection of the Agent's
security interests in the assets of the Credit Parties, including without
limitation, UCC financing statements and patent and trademark filings.
"Commitment" means (i) with respect to each Lender, the Revolving
Commitment of such Lender, the Term Loan Commitment of such Lender, (ii)
with respect to the Issuing Lender, the LOC Commitment, and (iii) with
respect to the Swingline Lender, the Swingline Commitment.
"Consolidated Capital Expenditures" means, for any period, all
capital expenditures of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP.
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period, plus (ii) an amount which, in the
determination of Consolidated Net Income for such period, has been
deducted for (A) Consolidated Interest Expense for such period, (B) total
federal, state, local and foreign income, value added and similar taxes
for such period and (C) depreciation and amortization expense for such
period, all as determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, interest
expense (including the interest component under Capital Leases and the
implied interest component under Synthetic Leases) of the Consolidated
Parties on a consolidated basis for such period, as determined in
accordance with GAAP.
"Consolidated Net Income" means, for any period, net income
(excluding extraordinary items) after taxes for such period of the
Consolidated Parties on a consolidated basis, as determined in accordance
with GAAP.
"Consolidated Net Worth" means, as of any date, shareholders' equity
or net worth of the Consolidated Parties on a consolidated basis, as
determined in accordance with GAAP.
"Consolidated Parties" means a collective reference to the Borrower
and its Subsidiaries, and "Consolidated Party" means any one of them.
6
<PAGE>
"Consolidated Rent Expense" means, for any period, the total rental
expense for Operating Leases of the Consolidated Parties (whether a lease
of real property, personal property or mixed), as determined in accordance
with GAAP.
"Consolidated Scheduled Funded Debt Payments" means, as of the end
of each fiscal quarter of the Consolidated Parties, for the Consolidated
Parties on a consolidated basis, the sum of all scheduled payments of
principal on Funded Indebtedness for the applicable period ending on such
date (including the principal component of payments due on Capital Leases
during the applicable period ending on such date); it being understood
that Consolidated Scheduled Funded Debt Payments shall not include
voluntary prepayments or the mandatory prepayments required pursuant to
Section 3.3.
"Credit Documents" means a collective reference to this Credit
Agreement, the Notes, the LOC Documents, each Joinder Agreement, the
Agent's Fee Letter, the Collateral Documents and all other related
agreements and documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto (in each case as the same may be amended,
modified, restated, supplemented, extended, renewed or replaced from time
to time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the Borrower and
the Guarantors, and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication, (i) all of
the obligations of the Credit Parties to the Lenders (including the
Issuing Lender and Swingline Lender) and the Agent, whenever arising,
under this Credit Agreement, the Notes, the Collateral Documents or any of
the other Credit Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with respect to any
Credit Party, regardless of whether such interest is an allowed claim
under the Bankruptcy Code) and (ii) all liabilities and obligations,
whenever arising, owing from the Borrower to any Lender, or any Affiliate
of a Lender, arising under any Hedging Agreement.
"Default" means any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has
failed to make a Loan or purchase a Participation Interest required
pursuant to the term of this Credit Agreement within one Business Day of
when due, (b) other than as set forth in (a) above, has failed to pay to
the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement within one Business Day of when due, unless
such amount is subject to a good faith dispute or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency proceeding
or with respect to which (or with respect to any of assets of which) a
receiver, trustee or similar official has been appointed.
"Dollars" and "$" means dollars in lawful currency of the United
States of America.
7
<PAGE>
"Domestic Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is incorporated or organized under the
laws of any State of the United States or the District of Columbia.
"Effective Date" means the date on which the conditions set forth in
Section 5.1 shall have been fulfilled (or waived in the sole discretion of
the Lenders).
"Eligible Assets" means another business or any substantial part of
another business or other long-term assets, in each case, in, or used or
useful in, the same or a similar line of business as the Consolidated
Parties were engaged in on the Closing Date or any reasonable extensions
or expansions thereof.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a
Lender; and (iii) any other Person approved by the Agent (such approval
not to be unreasonably withheld or delayed) and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 11.3, the Borrower (such approval not
to be unreasonably withheld or delayed by the Borrower and such approval
to be deemed given by the Borrower if no objection is received by the
assigning Lender and the Agent from the Borrower within two Business Days
after notice of such proposed assignment has been provided by the
assigning Lender to the Borrower); provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as an Eligible
Assignee.
"Eligible Inventory" means all Inventory, calculated on the basis of
the lower of cost or market, with cost calculated on a first in, first-out
basis, created or acquired by the Borrower in the ordinary course of its
business presently conducted, which the Agent, in its sole discretion,
deems to be Eligible Inventory. The Agent may determine, on a daily basis,
whether any Inventory constitutes and continues to constitute Eligible
Inventory. If Eligible Inventory subsequently becomes ineligible for
failure to continue to satisfy each of the below listed requirements, its
ineligibility shall become effective immediately. If Eligible Inventory
subsequently becomes ineligible even though it satisfies each of the below
listed requirements, its ineligibility shall become effective upon five
days notice from the Agent to the Borrower. In making its determination of
Eligible Inventory, the Agent will consider whether Inventory satisfies
and continues to satisfy the following requirements:
(a) The Inventory consists of raw materials or finished goods
Inventory created or acquired by the Borrower in the ordinary course of
its business located at the Borrower's places of business specified on
Schedule 6.19(b) hereto, or consists of dyed fabric and greige cloth on
rolls located at the Borrower's main manufacturing plant specified on
Schedule 6.19(b) hereto, but excluding in any event, supplies, containers,
work in process (other than the dyed fabric and greige cloth on rolls
located at the Borrower's main manufacturing plant specified on Schedule
6.19(b)) and lot fabric;
8
<PAGE>
(b) The Inventory is deemed by the Agent in its sole
discretion to be in good saleable condition, not deteriorating in quality
or obsolete and subject to satisfactory internal control and management
procedures;
(c) The Inventory is in good condition, meets all standards
imposed by any governmental agency, or department or division thereof,
having regulatory authority over such Inventory, its use or sale and is
either currently usable or currently saleable in the normal course of the
Borrower's business;
(d) The Inventory is not subject to any lien or security
interest whatsoever, except for the Agent's first priority security
interest and Permitted Liens, and a currently effective UCC financing
statement filed by the Agent against the Borrower covering such Inventory
is on file in all appropriate filing locations where such Inventory is
located;
(e) The Inventory is not consigned Inventory;
(f) The Agent shall have received a landlord's waiver
satisfactory to the Agent for Inventory located at a leased location
(other than the leased location of the Borrower located in Commerce,
California);
(g) If any Inventory is subject to a license agreement, (i)
such license agreement is in full force and effect and (ii) the Agent
shall have received (x) a collateral assignment of such license agreement
and (y) a consent to such collateral assignment from all parties to such
license agreement, in a form satisfactory to the Agent; and
(h) Each of the warranties and representations set forth in
Section 6.24 hereof has been reaffirmed with respect thereto at the time
the most recent Schedule of Inventory was provided to the Agent.
"Eligible Receivables" means the aggregate book value of all
Receivables created or acquired by the Borrower in the ordinary course of
its business as presently conducted, which the Agent, in its sole
discretion, deems to be Eligible Receivables. The Agent may determine, on
a daily basis, whether any Receivable constitutes and continues to
constitute an Eligible Receivable. If an Eligible Receivable subsequently
becomes ineligible for failure to continue to satisfy each of the below
listed requirements, its ineligibility shall become effective immediately.
If an Eligible Receivable subsequently becomes ineligible even though it
satisfies each of the below listed requirements, its ineligibility shall
become effective upon five days notice from the Agent to the Borrower.
Unless the Agent shall determine otherwise in its sole discretion, in
order to be an Eligible Receivable, a Receivable must satisfy and continue
to satisfy the following requirements:
(a) The Receivable is a bona fide existing obligation of the
named account debtor arising from the sale and delivery of merchandise or
the rendering of services to such account debtor in the ordinary course of
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the Borrower's business and is actually and absolutely owing to the
Borrower and is not contingent for any reason;
(b) The subject merchandise has been shipped or delivered on
open account to the named account debtor on an absolute sale basis and not
on consignment, on approval or on a sale or return basis or subject to any
other repurchase or return agreement and no material part of the subject
goods has been returned;
(c) The Receivable is not evidenced by chattel paper or an
instrument of any kind, unless such chattel paper or instrument is duly
endorsed to and is in the possession of the Agent;
(d) If the account debtor is located outside the United States
(including its territories and possessions), the Receivable is payable in
the full amount of the face value of the Receivable in Dollars and is
supported by an irrevocable letter of credit issued by a United States
financial institution satisfactory to the Agent and the letter of credit
and all documents required to draw thereon have been delivered to the
Agent;
(e) The Receivable is a valid, legally enforceable obligation
of the account debtor and no offset or other defense on the part of such
account debtor or to any claim on the part of such account debtor denying
liability thereunder has been asserted; provided, however, that, if the
Receivable is subject to any such offset, defense or claim, or any
Inventory related thereto has been returned, such Receivable shall not be
an Eligible Receivable only to the extent of the maximum amount of such
offset, defense, claim or return and the balance of such Receivable, if it
represents a valid, uncontested and legally enforceable obligation of the
account debtor and meets all of the other criteria for eligibility set
forth herein, shall be considered an Eligible Receivable;
(f) The Receivable is not subject to any lien or security
interest whatsoever, except for the Agent's first priority security
interest and Permitted Liens, and a currently effective UCC financing
statement filed by the Agent against the Borrower covering such Receivable
is on file in all appropriate filing locations for all of the Borrower's
places of business and records concerning such Receivable;
(g) The Receivable is evidenced by an invoice in form
acceptable to the Agent and has not remained unpaid for a period exceeding
ninety (90) days (or, in the case of a Receivable owing by an account
debtor located outside the United States and which meets all of the other
criteria for eligibility, such longer period of time as may be acceptable
to the Agent) after the due date of such invoice or one hundred twenty
(120) days after the date of such invoice;
(h) The account debtor is not located in the State of New
Jersey or, if the account debtor is located in the State of New Jersey,
the Borrower has either qualified as a foreign corporation authorized to
transact business in the State of New Jersey or has filed a Notice of
Business Activities report with the New Jersey Division of Taxation for
the then current year;
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(i) The account debtor is Solvent and not the subject of any
bankruptcy or insolvency proceeding of any kind and the creditworthiness
of the account debtor is, in all other respects, acceptable to the Agent,
in its sole discretion, at the time in question;
(j) The Receivable does not arise out of transactions with an
employee, officer, agent, director, stockholder or Affiliate of Borrower;
(k) The Receivable is not due from an account debtor whose
indebtedness to the Borrower on Receivables which are more than ninety
(90) days after the invoice due date of the respective invoices exceeds
fifty percent (50%) of such account debtor's total indebtedness to the
Borrower;
(l) The Receivable does not arise out of a contract with the
United States of America, or any department, agency, subdivision or
instrumentality thereof, or if so, the Borrower has complied with all
requirements of the Federal Assignment of Claims Act relative to the
assignment of such Receivable to the Agent;
(m) There are no material regulatory administrative or
judicial obstacles to the Agent's direct enforcement of the Receivable
against the account debtor or to the Agent's intervention in any
enforcement action which might be brought by the Borrower with respect
thereto and the Agent shall not be subjected to any material adverse tax
consequences (other than taxes measured by the income of the Agent) as a
result of taking such enforcement action or lending against such
Receivable; and
(n) Each of the warranties and representations set forth in
Section 6.23 has been reaffirmed with respect thereto at the time the most
recent Schedule of Receivables was provided to the Agent.
"Environmental Laws" means any and all lawful and applicable
Federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental restrictions
relating to the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment including,
without limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
"Equity Issuance" means any issuance by any Consolidated Party to
any Person which is not a Credit Party of (a) shares of its Capital Stock,
(b) any shares of its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to the conversion
of any debt securities to equity.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute thereto, as interpreted by the rules
and regulations thereunder, all as the same may be in effect from time to
time. References to sections of ERISA shall be construed also to refer to
any successor sections.
"ERISA Affiliate" means an entity which is under common control with
any Credit Party within the meaning of Section 4001(a)(14) of ERISA, or is
a member of a group which includes the Borrower and which is treated as a
single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the occurrence of
a Reportable Event or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (ii) the withdrawal by any
Consolidated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination of a Multiple
Employer Plan; (iii) the distribution of a notice of intent to terminate
or the actual termination of a Plan pursuant to Section 4041(a)(2) or
4041A of ERISA; (iv) the institution of proceedings to terminate or the
actual termination of a Plan by the PBGC under Section 4042 of ERISA; (v)
any event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial withdrawal of any
Consolidated Party or any ERISA Affiliate from a Multiemployer Plan; (vii)
the conditions for imposition of a lien under Section 302(f) of ERISA
exist with respect to any Plan; or (vii) the adoption of an amendment to
any Plan requiring the provision of security to such Plan pursuant to
Section 307 of ERISA.
"Eurodollar Loan" means any Loan that bears interest at a rate based
upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Agent to be equal to the quotient
obtained by dividing (a) the Interbank Offered Rate for such Eurodollar
Loan for such Interest Period by (b) 1 minus the Eurodollar Reserve
Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum
rate at which reserves (including, without limitation, any marginal,
special, supplemental, or emergency reserves) are required to be
maintained under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) by member banks
of the Federal Reserve System against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to
(i) any category of liabilities which includes deposits by reference to
which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar
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Loans. The Adjusted Eurodollar Rate shall be adjusted automatically on and
as of the effective date of any change in the Eurodollar Reserve
Requirement.
"Event of Default" means such term as defined in Section 9.1.
"Excess Cash Flow" means, with respect to any fiscal year period of
the Consolidated Parties on a consolidated basis, an amount equal to (a)
Consolidated EBITDA for such period minus (b) Consolidated Capital
Expenditures for such period minus (c) Consolidated Interest Expense for
such period minus (d) Federal, state and other income taxes actually paid
by the Consolidated Parties on a consolidated basis during such period
minus (e) Consolidated Scheduled Funded Debt Payments made during such
period.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so published
on such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means, as of the end of each fiscal
quarter of the Borrower for the twelve month period ending on such date,
the ratio of (a) Consolidated EBITDA for the applicable period plus
Consolidated Rent Expense for applicable period minus Consolidated Capital
Expenditures for applicable period to (b) the sum of Consolidated Interest
Expense for the applicable period plus Consolidated Scheduled Funded Debt
Payments for the applicable period plus Consolidated Rent Expense for the
applicable period.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is not a Domestic Subsidiary of such
Person.
"Funded Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments, or upon which interest payments are customarily made,
(c) all obligations of such Person under conditional sale or other title
retention agreements relating to Property purchased by such Person (other
than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase
price of Property or services purchased by such Person (other than trade
debt incurred in the ordinary course of business) which would appear as
liabilities on a balance sheet of such Person, (e) the principal portion
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of all obligations of such Person under Capital Leases, (f) the maximum
amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without
duplication, all drafts drawn thereunder (to the extent unreimbursed), (g)
all preferred Capital Stock issued by such Person and required by the
terms thereof to be redeemed, or for which mandatory sinking fund payments
are due, by a fixed date, (h) the principal portion of all obligations of
such Person under Synthetic Leases, (i) all Indebtedness of another Person
of the type referred to in clause (a)-(h) above secured by (or for which
the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (j) all
Guaranty Obligations of such Person with respect to Indebtedness of the
type referred to in clauses (a)-(h) above of another Person and (k)
Indebtedness of the type referred to in clauses (a)-(h) above of any
partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with
respect thereto.
"Funded Indebtedness to Capitalization Ratio" means, with respect to
the Consolidated Parties on a consolidated basis, the ratio of (a) Funded
Indebtedness of the Consolidated Parties to (b) Total Capitalization of
the Consolidated Parties.
"GAAP" means generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means any Federal, state, local or foreign
court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantors" means each Additional Credit Party which may hereafter
execute a Joinder Agreement, together with their successors and permitted
assigns, and "Guarantor" means any one of them.
"Guaranty Obligations" means, with respect to any Person, without
duplication, any obligations of such Person (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the
payment or purchase of any such Indebtedness or to maintain working
capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance
agreements, comfort letters or similar agreements or arrangements) for the
benefit of any holder of Indebtedness of such other Person, (iii) to lease
or purchase Property, securities or services primarily for the purpose of
assuring the holder of such Indebtedness, or (iv) to otherwise assure or
hold harmless the holder of such Indebtedness against loss in respect
thereof. The amount of any Guaranty Obligation hereunder shall (subject to
any limitations set forth therein) be deemed to be an amount equal to the
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<PAGE>
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection agreement or
foreign currency exchange agreement between any Credit Party and any
Lender, or any Affiliate of a Lender.
"Indebtedness" of any Person means (a) all obligations of such
Person for borrowed money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon which interest
payments are customarily made, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to Property
purchased by such Person (other than customary reservations or retentions
of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed
as the deferred purchase price of Property or services purchased by such
Person (other than trade debt incurred in the ordinary course of business)
which would appear as liabilities on a balance sheet of such Person, (e)
all obligations of such Person under take-or-pay or similar arrangements
or under commodities agreements, (f) all Indebtedness of others secured by
(or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, Property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed,
(g) all Guaranty Obligations of such Person, (h) the principal portion of
all obligations of such Person under Capital Leases, (i) all obligations
of such Person under Hedging Agreements, (j) the maximum amount of all
standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k) all preferred
Capital Stock issued by such Person and required by the terms thereof to
be redeemed, or for which mandatory sinking fund payments are due, by a
fixed date (l) the principal portion of all obligations of such Person
under Synthetic Leases and (m) the Indebtedness of any partnership or
unincorporated joint venture in which such Person is a general partner or
a joint venturer.
"Interbank Offered Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all
such rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
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"Interest Payment Date" means (a) as to Base Rate Loans, the last
Business Day of each calendar month and the Maturity Date, and (b) as to
Eurodollar Loans, the last day of each applicable Interest Period and the
Maturity Date, and in addition where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the date three
months from the beginning of the Interest Period and each three months
thereafter.
"Interest Period" means as to the Eurodollar Loan which constitutes
the Term Loan, a period of three months duration and as to Eurodollar
Loans which constitute all or part of the Revolving Loans, a period of
one, two, three or six months' duration, as the Borrower may elect,
commencing, in each case, on the date of the borrowing (including
continuations and conversions thereof); provided, however, (a) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (b)
no Interest Period shall extend beyond the Maturity Date, and (c) where an
Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the Interest Period is to
end, such Interest Period shall end on the last Business Day of such
calendar month.
"Inventory" means all inventory of the Borrower wherever located,
including without limitation, all goods manufactured or acquired for sale
or lease, and any piece goods, raw materials, work in process and finished
merchandise, bindings or component materials, and all supplies, goods,
incidentals, office supplies, packaging materials and any and all items
used or consumed in the operation of the business of the Borrower or which
may contribute to the finished product or to the sale, promotion and
shipment thereof, in which the Borrower now or at any time hereafter may
have an interest, whether or not the same is in transit or in the
constructive, actual or exclusive occupancy or possession of the Borrower
or is held by the Borrower or by others for the Borrower's account.
"Investment" means (a) the acquisition (whether for cash, property,
services, assumption of Indebtedness, securities or otherwise) of assets,
shares of Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of any Person or
(b) any deposit with, or advance, loan or other extension of credit to,
any Person (other than deposits made in connection with the purchase of
equipment or other assets in the ordinary course of business) or (c) any
other capital contribution to or investment in such Person, including,
without limitation, any Guaranty Obligations (including any support for a
letter of credit issued on behalf of such Person) incurred for the benefit
of such Person.
"Issuing Lender" means NationsBank.
"Issuing Lender Fees" shall have the meaning assigned to such term
in Section 3.5(b)(ii).
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"Joinder Agreement" means a Joinder Agreement substantially in the
form of Exhibit 7.12 hereto, executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 7.12.
"Lender" means any of the Persons identified as a "Lender" on the
signature pages hereto, and any Person which may become a Lender by way of
assignment in accordance with the terms hereof, together with their
successors and permitted assigns.
"Letter of Credit" means any letter of credit issued by the Issuing
Lender for the account of the Borrower in accordance with the terms of
Section 2.2.
"Letter of Credit Fee" shall have the meaning assigned to such term
in Section 3.5(b)(i).
"Leverage Ratio" means, with respect to the Consolidated Parties on
a consolidated basis for the twelve month period ending on the last day of
any fiscal quarter, the ratio of (a) Funded Indebtedness of the
Consolidated Parties on a consolidated basis on the last day of such
period to (b) Consolidated EBITDA of the Consolidated Parties for such
period.
"Lien" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory or
otherwise), preference, priority or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction or other similar recording or notice statute, and
any lease in the nature thereof).
"Loan" or "Loans" means the Revolving Loans and/or the Term Loans
(or a portion of any Revolving Loan or Term Loan bearing interest at the
Adjusted Base Rate or the Adjusted Eurodollar Rate and referred to as a
Base Rate Loan or a Eurodollar Loan) and/or any Swingline Loans,
individually or collectively, as appropriate.
"LOC Commitment" means the commitment of the Issuing Lender to issue
Letters of Credit in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up to
the LOC Committed Amount.
"LOC Committed Amount" means TEN MILLION DOLLARS ($10,000,000).
"LOC Documents" means, with respect to any Letter of Credit, such
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for
(i) the rights and obligations of the parties concerned or at risk or (ii)
any collateral security for such obligations.
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"LOC Obligations" means, at any time, the sum of (i) the maximum
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Lender but not theretofore reimbursed by the Borrower.
"Material Adverse Effect" means a material adverse effect on (i) the
condition (financial or otherwise), operations, business, assets,
liabilities or prospects of any Consolidated Party, (ii) the ability of
any Credit Party to perform any material obligation under the Credit
Documents to which it is a party or (iii) the material rights and remedies
of the Lenders under the Credit Documents.
"Material Subsidiary" means any Subsidiary of the Borrower having
(on a subconsolidated basis, i.e., for such Subsidiary and its
Subsidiaries) either (i) total net revenues for the preceding four fiscal
quarter period equal to or greater than 5% of the total net revenues of
the Consolidated Parties on a consolidated basis for such period or (iii)
total assets, as of the last day of the preceding fiscal quarter, equal to
or greater than 5% of the total assets of the Consolidated Parties on
consolidated basis on such date, in each case, based on the Borrower's
most recent annual or quarterly financial statements delivered pursuant to
Section 7.1.
"Material Foreign Subsidiary" means any Material Subsidiary of the
Borrower which is a Foreign Subsidiary.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Maturity Date" means April 23, 2003.
"Moody's" means Moody's Investors Service, Inc., or any successor or
assignee of the business of such company in the business of rating
securities.
"Mortgage Instruments" shall have the meaning assigned such term in
Section 5.1(g).
"Mortgage Policies" shall have the meaning assigned such term in
Section 5.1(g).
"Mortgaged Properties" shall have the meaning assigned such term in
Section 5.1(g).
"Multiemployer Plan" means a Plan which is a multiemployer plan as
defined in Sections 3(37) or 4001(a)(3) of ERISA.
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"Multiple Employer Plan" means a Plan which any Consolidated Party
or any ERISA Affiliate and at least one employer other than the
Consolidated Parties or any ERISA Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N. A. and its successors.
"Net Cash Proceeds" means the aggregate cash proceeds received by a
Consolidated Party in respect of any Equity Issuance or any Asset
Disposition, net of (a) direct costs (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and
(b) taxes paid or payable as a result thereof; it being understood that
"Net Cash Proceeds" with respect to any Asset Disposition shall include,
without limitation, any cash received upon the sale or other disposition
of any non-cash consideration received by any Consolidated Party in
connection with such Asset Disposition.
"Note" or "Notes" means the Revolving Notes and/or Term Notes,
individually or collectively, as appropriate.
"Notice of Borrowing" means a written notice of borrowing in
substantially the form of Exhibit 2.1(b)(i), as required by Section
2.1(b)(i) or Section 2.3(b).
"Notice of Extension/Conversion" means the written notice of
extension or conversion in substantially the form of Exhibit 3.2, as
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the Term
Loans, the Swingline Loans and the LOC Obligations.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed)
which is not a Capital Lease other than any such lease in which that
Person is the lessor.
"Other Taxes" means such term as is defined in Section 3.11.
"Participation Interest" means a purchase by a Lender of a
participation in Letters of Credit or LOC Obligations as provided in
Section 2.2, in Swingline Loans as provided in Section 2.4(b)(iii) and in
any Loans as provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means an Acquisition by the Borrower or any
Subsidiary of the Borrower for the fair market value of the Property
acquired, provided that (i) the Property acquired in such Acquisition
relates to a line of business similar to the business of the Borrower or
any of its Subsidiaries engaged in on the Closing Date, (ii) in the case
of an Acquisition of the capital stock of another Person, (A) the board of
directors (or other comparable governing body) of such other Person shall
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have duly approved such Acquisition and (B) such Person shall become a
wholly-owned direct or indirect Subsidiary of the Borrower, (iii) the
representations and warranties made by the Credit Parties in any Credit
Document shall be true and correct in all material respects at and as if
made as of the date of such Acquisition (after giving effect thereto)
except to the extent such representations and warranties expressly relate
to an earlier date and no Default or Event of Default exists as of the
date of such Acquisition (after giving effect thereto), (iv) the Borrower
shall have delivered to the Agent a Pro Forma Compliance Certificate
demonstrating that, upon giving effect to the Acquisition on a pro forma
basis, the Credit Parties will be in compliance with all of the covenants
set forth in Section 7.11, and (v) the aggregate consideration (including
cash and non-cash consideration and any assumption of liabilities) for all
such Acquisitions occurring after the Closing Date shall not exceed
$5,000,000.
"Permitted Investments" means Investments which are either (i) cash
and Cash Equivalents; (ii) accounts receivable created, acquired or made
by any Consolidated Party in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms; (iii)
Investments consisting of Capital Stock, obligations, securities or other
property received by any Consolidated Party in settlement of accounts
receivable (created in the ordinary course of business) from bankrupt
obligors; (iv) Investments existing as of the Closing Date and set forth
in Schedule 1.1(a), (v) transactions permitted by Section 8.8, (vi)
advances or loans to agents, customers or suppliers that do not exceed
$100,000 in the aggregate at any one time outstanding for all of the
Consolidated Parties; (vii) Investments in any Credit Party, (viii)
Permitted Acquisitions and (ix) other loans, advances and investments of a
nature not contemplated in the foregoing subsections in an amount not to
exceed $1,000,000 in the aggregate at any time outstanding.
"Permitted Liens" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title
arising in the ordinary course of business, provided that such Liens
secure only amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the same or are
being contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is not yet subject
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to foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance
of tenders, statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(v) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall,
within 30 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall have been discharged within 30
days after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
(vii) Liens on Property securing purchase money Indebtedness
(including Capital Leases and Synthetic Leases) to the extent permitted
under Section 8.1(c), provided that any such Lien attaches to such
Property concurrently with or within 90 days after the acquisition
thereof;
(viii) leases or subleases granted to others not interfering in any
material respect with the business of any Consolidated Party;
(ix) any interest of title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by this
Credit Agreement;
(x) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions; and
(xi) Liens existing as of the Closing Date and set forth on Schedule
1.1(b); provided that (a) no such Lien shall at any time be extended to or
cover any Property other than the Property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured by such
Liens shall not be extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture, firm,
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
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"Plan" means any employee benefit plan (as defined in Section 3(3)
of ERISA) which is covered by ERISA and with respect to which any
Consolidated Party or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of ERISA.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its customers.
"Principal Amortization Payment" means a principal payment on the
Term Loan as set forth in Section 2.3(d).
"Principal Amortization Payment Date" means the date a Principal
Amortization Payment is due.
"Principal Office" means the principal office of NationsBank,
presently located at Charlotte, North Carolina.
"Prior Credit Agreement" means that certain Credit Agreement dated
as of December 22, 1997 between the Borrower and NationsBank, N.A., as
amended or modified from time to time.
"Pro Forma Compliance Certificate" means a certificate of an officer
of the Borrower delivered to the Agent in connection with a Permitted
Acquisition and containing reasonably detailed calculations, upon giving
effect to the applicable transaction on a pro forma basis, of the
financial covenants set forth in Section 7.11.
"Property" means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to a Swingline Loan, the rate per
annum offered by the Swingline Lender and accepted by the Borrower with
respect to such Swingline Loan.
"Receivables" means all accounts, accounts receivable, contract
rights, notes, bills, acceptances, choses in action, chattel paper,
instruments, documents, and other forms of obligations at any time owing
to the Borrower, the proceeds thereof and all of the Borrower's rights
with respect to any goods represented thereby, whether or not delivered,
goods returned by customers and all rights as an unpaid vendor or lienor,
including rights of stoppage in transit and of recovering possession by
proceedings including replevin and reclamation, together with all customer
lists, books and records, ledger and account cards, computer tapes, disks,
printouts and records, whether now in existence or hereafter created,
relating to accounts.
"Register" shall have the meaning given such term in Section
11.3(c).
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"Regulation T, U, or X" means Regulation T, U or X, respectively, of
the Board of Governors of the Federal Reserve System as from time to time
in effect and any successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping or disposing
into the environment (including the abandonment or discarding of barrels,
containers and other closed receptacles containing any Materials of
Environmental Concern).
"Reportable Event" means any of the events set forth in Section
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate more than 51% of (i) the Commitments (and
Participation Interests therein), or (ii) if the Commitments have been
terminated, the outstanding Loans and Participation Interests (including
the Participation Interests of the Issuing Lender in any Letters of
Credit).
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its material property
is subject.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of Capital Stock
of any Consolidated Party, now or hereafter outstanding, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of any Consolidated Party, now or hereafter outstanding,
(iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of Capital Stock of any Consolidated Party, now or hereafter
outstanding.
"Revolving Commitment" means, with respect to each Lender, the
commitment of such Lender in an aggregate principal amount at any time
outstanding of up to such Lender's Revolving Commitment Percentage of the
Revolving Committed Amount, (i) to make Revolving Loans in accordance with
the provisions of Section 2.1(a) and (ii) to purchase Participation
Interests in Letters of Credit in accordance with the provisions of
Section 2.2(c).
"Revolving Commitment Percentage" means, for any Lender, the
percentage identified as its Revolving Commitment Percentage on Schedule
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2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"Revolving Committed Amount" means SEVENTY MILLION DOLLARS
($70,000,000) or such lesser amount as the Revolving Committed Amount may
be reduced pursuant to Section 3.4.
"Revolving Loans" shall have the meaning assigned to such term in
Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Revolving
Loans provided pursuant to Section 2.1(e), individually or collectively,
as appropriate, as such promissory notes may be amended, modified,
restated, supplemented, extended, renewed or replaced from time to time.
"Revolving Obligations" means, collectively, Revolving Loans,
Swingline Loans and LOC Obligations.
"Robinson Assets" means those assets purchased by the Borrower
pursuant to that certain Asset Purchase Agreement among the Borrower,
Frank L. Robinson Company, Harold Robinson, Carole Robinson, Jeffrey N.
Robinson and James H. Robinson dated December 30, 1997.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc., or any successor or assignee of the business of such division
in the business of rating securities.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party,
providing for the leasing to any Consolidated Party of any Property,
whether owned by such Consolidated Party as of the Closing Date or later
acquired, which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person from whom funds
have been, or are to be, advanced by such Person on the security of such
Property.
"Schedule of Inventory" means a schedule of Inventory in the form
specified in Section 7.16 hereof.
"Schedule of Receivables" means a Schedule of Receivables in the
form specified in Section 7.17 hereof.
"Security Agreement" means the security agreement dated as of the
Closing Date executed and delivered by each of the Credit Parties in favor
of the Agent, for the benefit of the Lenders, to secure their obligations
under the Credit Documents, as amended, modified, restated or supplemented
from time to time.
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"Single Employer Plan" means any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan or a Multiple Employer
Plan.
"Solvent" or "Solvency" means, with respect to any Person as of a
particular date, that on such date (i) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations
and other commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature in their ordinary course, (iii) such Person
is not engaged in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's Property would
constitute unreasonably small capital after giving due consideration to
the prevailing practice in the industry in which such Person is engaged or
is to engage, (iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such Person and (v) the present
fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person
on its debts as they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Stardust Assets" means those assets purchased by the Borrower
pursuant to that certain Asset Purchase Agreement among the Borrower,
Stardust Corporation, John Beale and Linda Beale dated as of December 22,
1997.
"Subsidiary" means, as to any Person, (a) any corporation more than
50% of whose Capital Stock of any class or classes having by the terms
thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than 50%
equity interest at any time.
"Swingline Commitment" means the commitment of the Swingline Lender
to make Swingline Loans in an aggregate principal amount at any time
outstanding of up to the Swingline Committed Amount.
"Swingline Committed Amount" means FIVE MILLION DOLLARS
($5,000,000).
"Swingline Lender" means NationsBank, N.A.
"Swingline Loan" shall have the meaning assigned to such term in
Section 2.4(a).
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"Swingline Note" means the promissory note of the Borrower in favor
of the Swingline Lender in the original principal amount of $5,000,000, as
such promissory note may be amended, modified, restated or replaced from
time to time.
"Synthetic Leases" means any synthetic lease, tax retention
operating lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an Operating Lease in
accordance with GAAP.
"Taxes" means such term as is defined in Section 3.11.
"Term Loan" shall have the meaning assigned to such term in Section
2.3(a).
"Term Loan Commitment" means, with respect to each Lender, the
commitment of such Lender to make its portion of the Term Loan in a
principal amount equal to such Lender's Term Loan Commitment Percentage of
the Term Loan Committed Amount.
"Term Loan Commitment Percentage" means, for any Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule
2.1(a), as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 11.3.
"Term Loan Committed Amount" means FORTY-FIVE MILLION DOLLARS
($45,000,000). "Term Note" or "Term Notes" means the promissory notes of
the Borrower in favor of each of the Lenders evidencing the Term Loans
provided pursuant to Section 2.3(e), individually or collectively, as
appropriate, as such promissory notes may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time.
"Total Assets" means, as at any date, all items, which in accordance
with GAAP, would be classified as assets of the Consolidated Parties on a
consolidated basis.
"Total Capitalization" means at any date of determination calculated
for the Consolidated Parties on a consolidated basis the sum of (i)
Consolidated Net Worth plus (ii) Funded Indebtedness of the Consolidated
Parties.
"Unused Fee" shall have the meaning assigned to such term in Section
3.5(a).
"Unused Fee Calculation Period" shall have the meaning assigned to
such term in Section 3.5(a).
"Unused Revolving Committed Amount" means, for any period, the
amount by which (a) the then applicable Revolving Committed Amount exceeds
(b) the daily average sum for such period of (i) the outstanding aggregate
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principal amount of all Revolving Loans plus (ii) the outstanding
aggregate principal amount of all LOC Obligations.
"Voting Stock" means, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even though the
right so to vote has been suspended by the happening of such a
contingency.
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
whose Voting Stock or other equity interests is at the time owned by such
Person directly or indirectly through other Wholly Owned Subsidiaries.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 7.1 (or,
prior to the delivery of the first financial statements pursuant to Section 7.1,
consistent with the financial statements as at December 31, 1997); provided,
however, if (a) the Borrower shall object to determining such compliance on such
basis at the time of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 60 days after delivery of
such financial statements, then such calculations shall be made on a basis
consistent with the most recent financial statements delivered by the Borrower
to the Lenders as to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 7.11 (including without limitation for purposes of the definitions of
"Applicable Percentage" set forth in Section 1.1), so long as the Borrower shall
have provided the Agent with a Pro Forma Compliance Certificate with respect to
the applicable Permitted Acquisition, income statement items (whether positive
or negative) attributable to any Property acquired in any Permitted Acquisition
described in clause (viii) of the definition of "Permitted Investment" and any
Indebtedness incurred by the Borrower or any of its Subsidiaries in order to
consummate such Permitted Acquisition shall be included to the extent relating
to any period applicable in such calculations occurring after the date of such
Permitted Acquisition (and, notwithstanding the foregoing, during the first four
fiscal quarters following the date of such Permitted Acquisition, such Permitted
Acquisition and any Indebtedness incurred by the Borrower or any of its
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Subsidiaries in order to consummate such Permitted Acquisition (A) shall be
deemed to have occurred on the first day of the four fiscal quarter period
immediately preceding the date of such Permitted Acquisition and (B) if such
Indebtedness has a floating or formula rate, then the implied rate of interest
for such Indebtedness for the applicable period shall be determined by utilizing
the rate which is or would be in effect with respect to such Indebtedness as at
the relevant date of determination).
The calculations made for purposes of determining compliance with the financial
covenants set forth in Section 7.11 as of the fiscal quarters ending June 30,
1998 and September 30, 1998 shall be made using the information provided on
Schedule 1.3.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth herein,
each Lender severally agrees to make available to the Borrower such
Lender's Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans") from time to time
from the Effective Date until the Maturity Date, or such earlier date as
the Revolving Commitments shall have been terminated as provided herein
for the purposes hereinafter set forth; provided, however, that (i) with
regard to the Lenders collectively, the sum of the aggregate principal
amount of outstanding Revolving Loans plus LOC Obligations outstanding
plus Swingline Loans outstanding shall not exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base and (ii) with regard
to each Lender individually, such Lender's outstanding Revolving Loans
shall not exceed such Lender's Revolving Commitment Percentage of the
Revolving Committed Amount. Revolving Loans may consist of Base Rate Loans
or Eurodollar Loans, or a combination thereof, as the Borrower may
request, and may be repaid and reborrowed in accordance with the
provisions hereof; provided, however, that no more than five (5)
Eurodollar Loans shall be outstanding hereunder at any time. For purposes
hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, extensions and conversions may, in accordance
with the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new Eurodollar Loan with a single Interest Period.
Revolving Loans hereunder may be repaid and reborrowed in accordance with
the provisions hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by telephonic notice (promptly confirmed in
writing) to the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day of the requested borrowing in the
case of Base Rate Loans, and on the third Business Day prior to the
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date of the requested borrowing in the case of Eurodollar Loans.
Each such request for borrowing shall be irrevocable and shall
specify (A) that a Revolving Loan is requested, (B) the date of the
requested borrowing (which shall be a Business Day), (C) the
aggregate principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or
a combination thereof, and if Eurodollar Loans are requested, the
Interest Period(s) therefor. If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest Period in
the case of a Eurodollar Loan, then such notice shall be deemed to
be a request for an Interest Period of one month, or (II) the type
of Revolving Loan requested, then such notice shall be deemed to be
a request for a Base Rate Loan hereunder. The Agent shall give
notice to each affected Lender promptly upon receipt of each Notice
of Borrowing pursuant to this Section 2.1(b)(i), the contents
thereof and each such Lender's share of any borrowing to be made
pursuant thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan
that is a Revolving Loan shall be in a minimum aggregate principal
amount of $2,500,000 and integral multiples of $500,000 in excess
thereof (or the remaining amount of the Revolving Committed Amount,
if less).
(iii) Advances. Each Lender will make its Revolving Commitment
Percentage of each Revolving Loan borrowing available to the Agent
for the account of the Borrower as specified in Section 3.15(a), or
in such other manner as the Agent may specify in writing, by 1:00
P.M. (Charlotte, North Carolina time) on the date specified in the
applicable Notice of Borrowing in Dollars and in funds immediately
available to the Agent. Such borrowing will then be made available
to the Borrower by the Agent by crediting the account of the
Borrower on the books of such office with the aggregate of the
amounts made available to the Agent by the Lenders and in like funds
as received by the Agent.
(c) Repayment. The principal amount of all Revolving Loans shall be
due and payable in full on the Maturity Date, unless accelerated sooner
pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section 3.1,
(i) Base Rate Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Base Rate Loans, such Base
Rate Loans shall bear interest at a per annum rate equal to the
Adjusted Base Rate.
(ii) Eurodollar Loans. During such periods as Revolving Loans
shall be comprised in whole or in part of Eurodollar Loans, such
Eurodollar Loans shall bear interest at a per annum rate equal to
the Adjusted Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
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(e) Revolving Notes. The Revolving Loans made by each Lender shall
be evidenced by a duly executed promissory note of the Borrower to such
Lender in an original principal amount equal to such Lender's Revolving
Commitment Percentage of the Revolving Committed Amount and
in substantially the form of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions hereof and of the
LOC Documents, if any, and any other terms and conditions which the
Issuing Lender may reasonably require and in reliance upon the
representations and warranties set forth herein, the Issuing Lender agrees
to issue, and each Lender severally agrees to participate in the issuance
by the Issuing Lender of, standby and trade Letters of Credit in Dollars
from time to time from the Effective Date until the Maturity Date as the
Borrower may request, in a form acceptable to the Issuing Lender;
provided, however, that (i) the LOC Obligations outstanding shall not at
any time exceed the LOC Committed Amount and (ii) the sum of the aggregate
principal amount of outstanding Revolving Loans plus LOC Obligations
outstanding plus Swingline Loans shall not at any time exceed the lesser
of (A) the Revolving Committed Amount and (B) the Borrowing Base. No
Letter of Credit shall (x) have an original expiry date more than one year
from the date of issuance or (y) as originally issued or as extended, have
an expiry date extending beyond the Maturity Date. Each Letter of Credit
shall comply with the related LOC Documents. The issuance and expiry dates
of each Letter of Credit shall be a Business Day.
(b) Notice and Reports. The request for the issuance of a Letter of
Credit shall be submitted by the Borrower to the Issuing Lender at least
three (3) Business Days prior to the requested date of issuance. A form of
Notice of Request for Letter of Credit is attached as Exhibit 2.2(b). The
Issuing Lender will, at least quarterly and more frequently upon request,
disseminate to each of the Lenders a detailed report specifying the
Letters of Credit which are then issued and outstanding and any activity
with respect thereto which may have occurred since the date of the prior
report, and including therein, among other things, the beneficiary, the
face amount and the expiry date, as well as any payment or expirations
which may have occurred.
(c) Participation. Each Lender, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a Participation
Interest from the applicable Issuing Lender in such Letter of Credit and
the obligations arising thereunder and any collateral relating thereto, in
each case in an amount equal to its pro rata share of the obligations
under such Letter of Credit (based on the respective Revolving Commitment
Percentages of the Lenders) and shall absolutely, unconditionally and
irrevocably assume and be obligated to pay to the Issuing Lender and
discharge when due, its pro rata share of the obligations arising under
such Letter of Credit. Without limiting the scope and nature of each
Lender's Participation Interest in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or
under any such Letter of Credit, each such Lender shall pay to the Issuing
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Lender its pro rata share of such unreimbursed drawing in same day funds
on the day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) below. The obligation
of each Lender to so reimburse the Issuing Lender shall be absolute and
unconditional and shall not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any such reimbursement
shall not relieve or otherwise impair the obligation of the Borrower to
reimburse the Issuing Lender under any Letter of Credit, together with
interest as hereinafter provided.
(d) Reimbursement. In the event of any drawing under any Letter of
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower
intends to otherwise reimburse the Issuing Lender for such drawing, the
Borrower shall be deemed to have requested that the Lenders make a
Revolving Loan in the amount of the drawing as provided in subsection (e)
below on the related Letter of Credit, the proceeds of which will be used
to satisfy the related reimbursement obligations. The Borrower promises to
reimburse the Issuing Lender on the day of drawing under any Letter of
Credit (either with the proceeds of a Revolving Loan obtained hereunder or
otherwise) in same day funds. If the Borrower shall fail to reimburse the
Issuing Lender as provided hereinabove, the unreimbursed amount of such
drawing shall bear interest at a per annum rate equal to the Adjusted Base
Rate plus 2%. The Borrower's reimbursement obligations hereunder shall be
absolute and unconditional under all circumstances irrespective of any
rights of setoff, counterclaim or defense to payment the Borrower may
claim or have against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other Person,
including without limitation any defense based on any failure of the
Borrower or any other Credit Party to receive consideration or the
legality, validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the other Lenders of the
amount of any unreimbursed drawing and each Lender shall promptly pay to
the Agent for the account of the Issuing Lender in Dollars and in
immediately available funds, the amount of such Lender's pro rata share of
such unreimbursed drawing. Such payment shall be made on the day such
notice is received by such Lender from the Issuing Lender if such notice
is received at or before 2:00 P.M. (Charlotte, North Carolina time)
otherwise such payment shall be made at or before 12:00 Noon (Charlotte,
North Carolina time) on the Business Day next succeeding the day such
notice is received. If such Lender does not pay such amount to the Issuing
Lender in full upon such request, such Lender shall, on demand, pay to the
Agent for the account of the Issuing Lender interest on the unpaid amount
during the period from the date of such drawing until such Lender pays
such amount to the Issuing Lender in full at a rate per annum equal to, if
paid within two (2) Business Days of the date that such Lender is required
to make payments of such amount pursuant to the preceding sentence, the
Federal Funds Rate and thereafter at a rate equal to the Base Rate. Each
Lender's obligation to make such payment to the Issuing Lender, and the
right of the Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance whatsoever and
without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or
the acceleration of the obligations of the Borrower hereunder and shall be
made without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Lender to the
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Issuing Lender, such Lender shall, automatically and without any further
action on the part of the Issuing Lender or such Lender, acquire a
Participation Interest in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Issuing Lender)
in the related unreimbursed drawing portion of the LOC Obligation and in
the interest thereon and in the related LOC Documents, and shall have a
claim against the Borrower with respect thereto.
(e) Repayment with Revolving Loans. On any day on which the Borrower
shall have requested, or been deemed to have requested, a Revolving Loan
advance to reimburse a drawing under a Letter of Credit, the Agent shall
give notice to the Lenders that a Revolving Loan has been requested or
deemed requested by the Borrower to be made in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan advance comprised
of Base Rate Loans (or Eurodollar Loans to the extent the Borrower has
complied with the procedures of Section 2.1(b)(i) with respect thereto)
shall be immediately made to the Borrower by all Lenders (notwithstanding
any termination of the Commitments pursuant to Section 9.2) pro rata based
on the respective Revolving Commitment Percentages of the Lenders
(determined before giving effect to any termination of the Commitments
pursuant to Section 9.2) and the proceeds thereof shall be paid directly
to the Issuing Lender for application to the respective LOC Obligations.
Each such Lender hereby irrevocably agrees to make its pro rata share of
each such Revolving Loan immediately upon any such request or deemed
request in the amount, in the manner and on the date specified in the
preceding sentence notwithstanding (i) the amount of such borrowing may
not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in
Section 5.2 are then satisfied, (iii) whether a Default or an Event of
Default then exists, (iv) failure for any such request or deemed request
for Revolving Loan to be made by the time otherwise required hereunder,
(v) whether the date of such borrowing is a date on which Revolving Loans
are otherwise permitted to be made hereunder or (vi) any termination of
the Commitments relating thereto immediately prior to or contemporaneously
with such borrowing. In the event that any Revolving Loan cannot for any
reason be made on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then
each such Lender hereby agrees that it shall forthwith purchase (as of the
date such borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and prior to
such purchase) from the Issuing Lender such Participation Interests in the
outstanding LOC Obligations as shall be necessary to cause each such
Lender to share in such LOC Obligations ratably (based upon the respective
Revolving Commitment Percentages of the Lenders (determined before giving
effect to any termination of the Commitments pursuant to Section 9.2)),
provided that at the time any purchase of Participation Interests pursuant
to this sentence is actually made, the purchasing Lender shall be required
to pay to the Issuing Lender, to the extent not paid to the Issuing Lender
by the Borrower in accordance with the terms of subsection (d) above,
interest on the principal amount of Participation Interests purchased for
each day from and including the day upon which such borrowing would
otherwise have occurred to but excluding the date of payment for such
Participation Interests, at the rate equal to, if paid within two (2)
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Business Days of the date of the Revolving Loan advance, the Federal Funds
Rate, and thereafter at a rate equal to the Base Rate.
(f) Designation of Consolidated Parties as Account Parties.
Notwithstanding anything to the contrary set forth in this Credit
Agreement, including without limitation Section 2.2(a), a Letter of Credit
issued hereunder may contain a statement to the effect that such Letter of
Credit is issued for the account of a Consolidated Party other than the
Borrower, provided that notwithstanding such statement, the Borrower shall
be the actual account party for all purposes of this Credit Agreement for
such Letter of Credit and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such Letter of Credit.
(g) Renewal, Extension. The renewal or extension of any Letter of
Credit shall, for purposes hereof, be treated in all respects the same as
the issuance of a new Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender may have the
Letters of Credit be subject to The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue by the
International Chamber of Commerce (the "UCP"), in which case the UCP may
be incorporated therein and deemed in all respects to be a part thereof.
(i) Indemnification; Nature of Issuing Lender's Duties.
(i) In addition to its other obligations under this Section
2.2, the Borrower hereby agrees to pay, and protect, indemnify and
save each Lender harmless from and against, any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) that such Lender may incur or
be subject to as a consequence, direct or indirect, of (A) the
issuance of any Letter of Credit or (B) the failure of such Lender
to honor a drawing under a Letter of Credit as a result of any act
or omission, whether rightful or wrongful, of any present or future
de jure or de facto government or Governmental Authority (all such
acts or omissions, herein called "Government Acts").
(ii) As between the Borrower and the Lenders (including the
Issuing Lender), the Borrower shall assume all risks of the acts,
omissions or misuse of any Letter of Credit by the beneficiary
thereof. No Lender (including the Issuing Lender) shall be
responsible: (A) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party
in connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B) for the
validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, that may prove to be invalid or ineffective for any reason;
(C) for errors, omissions, interruptions or delays in transmission
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or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (D) for any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of such Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of
the specific provisions hereinabove set forth, any action taken or
omitted by any Lender (including the Issuing Lender), under or in
connection with any Letter of Credit or the related certificates, if
taken or omitted in good faith, shall not put such Lender under any
resulting liability to the Borrower or any other Credit Party. It is
the intention of the parties that this Credit Agreement shall be
construed and applied to protect and indemnify each Lender
(including the Issuing Lender) against any and all risks involved in
the issuance of the Letters of Credit, all of which risks are hereby
assumed by the Borrower (on behalf of itself and each of the other
Credit Parties), including, without limitation, any and all
Government Acts. No Lender (including the Issuing Lender) shall, in
any way, be liable for any failure by such Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control of such
Lender.
(iv) Nothing in this subsection (i) is intended to limit the
reimbursement obligations of the Borrower contained in subsection
(d) above. The obligations of the Borrower under this subsection (i)
shall survive the termination of this Credit Agreement. No act or
omissions of any current or prior beneficiary of a Letter of Credit
shall in any way affect or impair the rights of the Lenders
(including the Issuing Lender) to enforce any right, power or
benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (i), the Borrower shall have no obligation to indemnify
any Lender (including the Issuing Lender) in respect of any
liability incurred by such Lender (A) arising solely out of the
gross negligence or willful misconduct of such Lender, as determined
by a court of competent jurisdiction, or (B) caused by such Lender's
failure to pay under any Letter of Credit after presentation to it
of a request strictly complying with the terms and conditions of
such Letter of Credit, as determined by a court of competent
jurisdiction, unless such payment is prohibited by any law,
regulation, court order or decree.
(j) Responsibility of Issuing Lender. It is expressly understood and
agreed that the obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement and that the
Issuing Lender shall be entitled to assume that the conditions precedent
set forth in Section 5.2 have been satisfied unless it shall have acquired
actual knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2 shall be
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deemed to prejudice the right of any Lender to recover from the Issuing
Lender any amounts made available by such Lender to the Issuing Lender
pursuant to this Section 2.2 in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the part of
the Issuing Lender.
(k) Conflict with LOC Documents. In the event of any conflict
between this Credit Agreement and any LOC Document (including any letter
of credit application), this Credit Agreement shall control.
2.3 Term Loan.
(a) Term Commitment. Subject to the terms and conditions hereof and
in reliance upon the representations and warranties set forth herein each
Lender severally agrees to make available to the Borrower such Lender's
Term Loan Commitment Percentage of a term loan in Dollars (the "Term
Loan") in the aggregate principal amount of the Term Loan Committed Amount
for the purposes hereinafter set forth. Subject to the terms of Section
3.7, unless (i) the Term Loan must be converted to a Base Rate Loan in
accordance with the terms of Section 3.2(iv) or (ii) the Borrower
specifically requests that the Term Loan constitute a single Base Rate
Loan, the Term Loan shall consist of a separate Eurodollar Loan with a
single Interest Period of three months. Amounts repaid on the Term Loan
may not be reborrowed.
(b) Borrowing Procedures. The Borrower shall submit telephonic
notice (promptly confirmed in writing with an appropriate Notice of
Borrowing ) to the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the third Business Day prior to the date of the
requested borrowing of the Term Loan, which Notice of Borrowing shall be
irrevocable and shall specify (i) that the funding of the Term Loan is
requested and (ii) that the Term Loan shall be comprised of a Eurodollar
Loan with a single Interest Period of three months. Each Lender shall make
its Term Loan Commitment Percentage of the Term Loan available to the
Agent for the account of the Borrower at the office of the Agent specified
in Schedule 2.1(a), or at such other office as the Agent may designate in
writing, by 1:00 P.M. (Charlotte, North Carolina time) on the date of the
requested borrowing of the Term Loan in Dollars and in funds immediately
available to the Agent.
(c) Repayment of Term Loan. The principal amount of the Term Loan
shall be repaid in consecutive quarterly installments as follows, unless
accelerated sooner pursuant to Section 9.2:
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Term Loan
Principal Principal
Amortization Amortization
Payment Dates Payment
-------------------- --------------------
April 30, 1999 $2,000,000
July 30, 1999 $2,000,000
October 29, 1999 $2,000,000
January 31 , 2000 $2,000,000
April 28, 2000 $2,500,000
July 31, 2000 $2,500,000
October 31, 2000 $2,500,000
January 31, 2001 $2,500,000
April 30, 2001 $3,000,000
July 31, 2001 $3,000,000
October 31, 2001 $3,000,000
January 31, 2002 $3,000,000
April 30, 2002 $3,750,000
July 31, 2002 $3,750,000
October 31, 2002 $3,750,000
January 31, 2003 $3,750,000
Total $45,000,000
(d) Interest. Subject to the provisions of Section 3.1, the Term
Loan shall bear interest at a per annum rate equal to the Adjusted
Eurodollar Rate; provided however, if the Term Loan shall be converted to
a Base Rate Loan pursuant to the terms of Section 3.2(iv), the Term Loan
shall bear interest at a per annum rate equal to the Adjusted Base Rate.
Interest on the Term Loan shall be payable in arrears on each applicable
Interest Payment Date (or at such other times as may be specified herein).
(e) Term Notes. The portion of the Term Loan made by each Lender
shall be evidenced by a duly executed promissory note of the Borrower to
such Lender in an original principal amount equal to such Lender's Term
Loan Commitment Percentage of the Term Loan and substantially in the form
of Exhibit 2.3(e).
2.4 Swingline Loans.
(a) Swingline Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties herein set forth,
the Swingline Lender, in its individual capacity, agrees to make certain
revolving credit loans to the Borrower (each a "Swingline Loan" and,
collectively, the "Swingline Loans") from time to time from the Effective
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Date until the Maturity Date for the purposes hereinafter set forth;
provided, however, (i) the aggregate principal amount of Swingline Loans
outstanding at any time shall not exceed the Swingline Committed Amount,
and (ii) with regard to the Lenders collectively, the aggregate principal
amount of outstanding Revolving Obligations outstanding at any time shall
not exceed the lesser of (A) the Revolving Committed Amount and (B) the
Borrowing Base. Swingline Loans may be repaid and reborrowed in accordance
with the provisions hereof.
(b) Swingline Loan Advances.
(i) Notices; Disbursement. Swingline Loan advances shall be made in
accordance with the provisions of any agreement between the Swingline
Lender and the Borrower establishing an "Auto Borrow" plan for, among
other things, the automatic advance to the Borrower for deposit into an
account of the Borrower with the Swingline Lender.
(ii) Repayment of Swingline Loans. The principal amount of all
Swingline Loans shall be due and payable on the Maturity Date. The
Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Lenders, demand repayment of its Swingline
Loans by way of a Revolving Loan advance, in which case the Borrower shall
be deemed to have requested a Revolving Loan advance comprised solely of
Base Rate Loans in the amount of such Swingline Loans; provided, however,
that any such demand shall be deemed to have been given one Business Day
prior to the Maturity Date and on the date of the occurrence of any Event
of Default described in Section 9.1 and upon acceleration of the
indebtedness hereunder and the exercise of remedies in accordance with the
provisions of Section 9.2. Each Lender hereby irrevocably agrees to make
its pro rata share of each such Revolving Loan in the amount, in the
manner and on the date specified in the preceding sentence notwithstanding
(I) the amount of such borrowing may not comply with the minimum amount
for advances of Revolving Loans otherwise required hereunder, (II) whether
any conditions specified in Section 5.2 are then satisfied, (III) whether
a Default or Event of Default then exists, (IV) failure of any such
request or deemed request for Revolving Loan to be made by the time
otherwise required hereunder, (V) whether the date of such borrowing is a
date on which Revolving Loans are otherwise permitted to be made hereunder
or (VI) any termination of the Commitments relating thereto immediately
prior to or contemporaneously with such borrowing. In the event that any
Revolving Loan cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with respect to the
Borrower or any other Credit Party), then each Lender hereby agrees that
it shall forthwith purchase (as of the date such borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower on
or after such date and prior to such purchase) from the Swingline Lender
such participations in the outstanding Swingline Loans as shall be
necessary to cause each such Lender to share in such Swingline Loans
ratably based upon its Commitment Percentage of the Revolving Committed
Amount (determined before giving effect to any termination of the
Commitments pursuant to Section 3.4), provided that (A) all interest
payable on the Swingline Loans shall be for the account of the Swingline
Lender until the date as of which the respective participation is
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purchased and (B) at the time any purchase of participations pursuant to
this sentence is actually made, the purchasing Lender shall be required to
pay to the Swingline Lender by the Borrower in accordance with the terms
of subsection (c)(ii) hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate equal to the Federal Funds
Rate.
(c) Interest on Swingline Loans.
(i) Subject to the provisions of Section 3.1, each Swingline Loan
shall bear interest at a per annum rate (computed on the basis of the
actual number of days elapsed over a year of 365 days) equal to the Quoted
Rate unless the Borrower and the Swingline Lender cannot agree on the
applicable Quoted Rate in which case such Swingline Loan shall bear
interest at a per annum rate equal to the Adjusted Base Rate.
(ii) Interest on Swingline Loans shall be payable in arrears on the
dates agreed upon by the Borrower and the Swingline Lender (or at such
other times as may be specified herein).
(d) Swingline Note. The Swingline Loans shall be evidenced by a duly
executed promissory note of the Borrower to the Swingline Lender in
substantially the form of Exhibit 2.4(d).
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event of Default,
the principal of and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum equal to the Adjusted Base Rate plus
2.00%.
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have the option,
on any Business Day, to extend existing Loans into a subsequent permissible
Interest Period or to convert Loans into Loans of another interest rate type;
provided, however, that (i) except as provided in Section 3.8, Eurodollar Loans
may be converted into Base Rate Loans only on the last day of the Interest
Period applicable thereto, (ii) Eurodollar Loans may be extended, and Base Rate
Loans may be converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion, (iii) Loans
extended as, or converted into, Eurodollar Loans shall be subject to the terms
of the definition of "Interest Period" set forth in Section 1.1 and shall be in
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such minimum amounts as provided in, with respect to Revolving Loans, Section
2.1(b)(ii), (iv) the Term Loan shall be extended as a Eurodollar Loan having an
Interest Period of three months unless (a) the Borrower requests that the Term
Loan be converted to a Base Rate Loan or (b) a Default or Event of Default is in
existence on the date of extension, in which case the Term Loan shall be
converted to a Base Rate Loan, (v) no more than five (5) Eurodollar Loans shall
be outstanding hereunder at any time (it being understood that, for purposes
hereof, Eurodollar Loans with different Interest Periods shall be considered as
separate Eurodollar Loans, even if they begin on the same date, although
borrowings, extensions and conversions may, in accordance with the provisions
hereof, be combined at the end of existing Interest Periods to constitute a new
Eurodollar Loan with a single Interest Period) and (vi) except as provided in
Section 3.2(iv) above, any request for extension or conversion of a Eurodollar
Loan which shall fail to specify an Interest Period shall be deemed to be a
request for an Interest Period of one month. Each such extension or conversion
shall be effected by the Borrower by giving a Notice of Extension/Conversion (or
telephonic notice promptly confirmed in writing) to the office of the Agent
specified in Schedule 2.1(a), or at such other office as the Agent may designate
in writing, prior to 11:00 A.M. (Charlotte, North Carolina time) on the third
Business Day prior to, in the case of the conversion of a Eurodollar Loan into a
Base Rate Loan, and on the third Business Day prior to, in the case of the
extension of a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or conversion, specifying
the date of the proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be converted and, if
appropriate, the applicable Interest Periods with respect thereto. Each request
for extension or conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters specified in
subsections (b), (c), (d) and (e) of Section 5.2. In the event the Borrower
fails to request extension or conversion of any Revolving Loan which is a
Eurodollar Loan in accordance with this Section, or any such conversion or
extension is not permitted or required by this Section, then such Eurodollar
Loan shall be automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. Subject to the terms and conditions hereof,
at the end of the Interest Period applicable thereto, the Term Loan shall be
extended into a Eurodollar Loan with a single interest period of three months
unless the Borrower specifically requests that the Term Loan be converted into a
Base Rate Loan. The Agent shall give each Lender notice as promptly as
practicable of any such proposed extension or conversion affecting any Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however, (i)
that each partial prepayment of Loans (other than the Swingline Loans)
shall be in a minimum principal amount of $5,000,000 and integral
multiples of $1,000,000, (ii) Revolving Loans and Term Loans which are
Base Rate Loans may only be prepaid after telephonic notice (promptly
confirmed in writing) to the Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day of the applicable prepayment and
(iii) Revolving Loans and Term Loans which are Eurodollar Loans may only
be prepaid on three Business Days' prior notice (by telephone call
promptly confirmed in writing) to the Agent. Subject to the foregoing
terms, amounts prepaid under this Section 3.3(a) shall be applied as the
Borrower may elect; provided that if the Borrower fails to specify a
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voluntary prepayment then such prepayment shall be applied first to
Revolving Loans and then the Term Loan, in each case first to Base Rate
Loans and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(a) shall be subject to
Section 3.12.
(b) Mandatory Prepayments.
(i) If at any time, (A) the sum of the aggregate principal
amount of outstanding Revolving Loans plus LOC Obligations outstanding
plus the aggregate principal amount of outstanding Swingline Loans shall
exceed the lesser of (x) the Revolving Committed Amount and (y) the
Borrowing Base, (B) the aggregate amount of LOC Obligations outstanding
shall exceed the LOC Committed Amount or (C) the aggregate amount of
Swingline Loans outstanding shall exceed the Swingline Committed Amount,
the Borrower shall immediately make payment on the Loans and/or to cash
collateral account in respect of the LOC Obligations, in an amount
sufficient to eliminate such excess.
(ii) Excess Cash Flow. Until such time as the Borrower shall
have prepaid the principal amortization payments due with respect to the
Term Loan on October 31, 2002 and January 31, 2003 in accordance with the
terms of this Section 3.3, on the last Business Day of each April of each
fiscal year (commencing on April 30, 1999), the Borrower shall prepay the
Term Loan in an amount equal to 50% of the Excess Cash Flow earned during
the fiscal year ending prior to each such Business Day in April of each
fiscal year; provided, however, for the fiscal year ending December 31,
1998, the Borrower shall prepay the Term Loan in an amount equal to 50% of
Excess Cash Flow earned during such prior fiscal year in excess of
$5,000,000. Any payments of Excess Cash Flow shall be applied as set forth
in clause (v) below.
(iii) Issuances of Equity. Immediately upon receipt by a
Consolidated Party of proceeds from any Equity Issuance, the Borrower
shall prepay the Term Loan in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Equity Issuance to the Lenders (such prepayment to
be applied as set forth in clause (v) below).
(iv) Asset Dispositions. Immediately upon receipt by a
Consolidated Party of proceeds from any Asset Disposition, the Borrower
shall forward 100% of the Net Cash Proceeds of such Asset Disposition to
the Lenders as a prepayment of the Term Loan (such prepayment to be
applied as set forth in clause (v) below). Notwithstanding the foregoing,
the Borrower shall not be required to forward to the Lenders as a
prepayment of the Term Loan Net Cash Proceeds of Asset Dispositions which
do not exceed $1,000,000, in the aggregate, during the term of this Credit
Agreement.
(v) Application of Mandatory Prepayments. All amounts required
to be paid pursuant to this Section 3.3(b) shall be applied as follows:
(A) with respect to all amounts prepaid pursuant to Section 3.3(b)(i),
first to Revolving Loans, second to Swingline Loans and third (after all
Revolving Loans and Swingline Loans have been repaid) to a cash collateral
account in respect of LOC Obligations and (B) with respect to all amounts
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prepaid pursuant to Section 3.3(b)(ii), (iii) or (iv) to the Term Loan in
inverse order of maturity thereof. Within the parameters of the
applications set forth above, prepayments shall be applied first to Base
Rate Loans and then to Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(b) shall be subject to
Section 3.12.
3.4 Voluntary Reduction of Revolving Committed Amount.
The Borrower may from time to time permanently reduce or terminate
the Revolving Committed Amount in whole or in part (in minimum aggregate
amounts of $5,000,000 or in integral multiples of $1,000,000 in excess
thereof (or, if less, the full remaining amount of the then applicable
Revolving Committed Amount)) upon five Business Days' prior written or
telephonic notice to the Agent; provided, however, no such termination or
reduction shall be made which would cause the aggregate principal amount
of outstanding Revolving Loans plus LOC Obligations outstanding plus
Swingline Loans outstanding to exceed the lesser of (i) the Revolving
Committed Amount and (ii) the Borrowing Base, unless, concurrently with
such termination or reduction, the Revolving Loans are repaid to the
extent necessary to eliminate such excess. The Agent shall promptly notify
each affected Lender of receipt by the Agent of any notice from the
Borrower pursuant to this Section 3.4.
3.5 Fees.
(a) Unused Fee. In consideration of the Revolving Commitments of the
Lenders hereunder, the Borrower agrees to pay to the Agent for the account
of each Lender a fee (the "Unused Fee") on the Unused Revolving Committed
Amount computed at a per annum rate for each day during the applicable
Unused Fee Calculation Period (hereinafter defined) at a rate equal to the
Applicable Percentage for Unused Fees in effect from time to time. The
Unused Fee shall commence to accrue on the Effective Date and shall be due
and payable in arrears on the 15th day following the last business day of
each March, June, September and December (and any date that the Revolving
Committed Amount is reduced as provided in Section 3.4 and the Maturity
Date) for the immediately preceding calendar quarter (or portion thereof)
(each such calendar quarter or portion thereof for which the Unused Fee is
payable hereunder being herein referred to as an "Unused Fee Calculation
Period"), beginning with the first of such dates to occur after the
Closing Date. For purposes of computation of the Unused Fee, the Swingline
Loans shall not be counted toward or considered usage under the Revolving
Loan facility.
(b) Letter of Credit Fees.
(i) Letter of Credit Issuance Fee. In consideration of the
issuance of Letters of Credit hereunder, the Borrower promises to
pay to the Agent for the account of each Lender a fee (the "Letter
of Credit Fee") on such Lender's Revolving Commitment Percentage of
the average daily maximum amount available to be drawn under each
such Letter of Credit computed at a per annum rate for each day from
the date of issuance to the date of expiration equal to the
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Applicable Percentage for Letter of Credit Fees in effect from time
to time. The Letter of Credit Fee will be payable quarterly in
arrears on the last Business Day of each March, June, September and
December for the immediately preceding quarter (or a portion
thereof).
(ii) Issuing Lender Fees. In addition to the Letter of Credit
Fee payable pursuant to clause (i) above, the Borrower promises to
pay to the Issuing Lender for its own account without sharing by the
other Lenders upon the issuance of any Letter of Credit hereunder a
fee equal to one-eighth of one percent (.125%) of the face amount of
such Letter of Credit and the customary charges from time to time of
the Issuing Lender with respect to the issuance, amendment,
transfer, administration, cancellation and conversion of, and
drawings under, such Letters of Credit (collectively, the "Issuing
Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to the Agent,
for its own account and NationsBanc Montgomery Securities LLC, as
applicable, the fees referred to in the Agent's Fee Letter (collectively,
the "Agent's Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any
applicable law, rule or regulation regarding capital adequacy, or compliance by
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on such
Lender's capital or assets as a consequence of its commitments or obligations
hereunder to a level below that which such Lender could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then, upon notice from
such Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Agent determines (which determination shall be conclusive)
that by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Agent that the Eurodollar Rate will not
adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
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then the Agent shall give the Borrower prompt notice thereof, and so long as
such condition remains in effect, the Lenders shall be under no obligation to
make additional Eurodollar Loans, continue Eurodollar Loans, or to convert Base
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Eurodollar Loans or convert such Eurodollar Loans into Base Rate
Loans in accordance with the terms of this Credit Agreement.
3.8 Illegality.
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender or its Applicable Lending Office to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
continue Eurodollar Loans and to convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 Requirements of Law.
(a) If, after the date hereof, the adoption of any applicable law, rule,
or regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending Office)
to any tax, duty, or other charge with respect to any Eurodollar Loans,
its Notes, or its obligation to make Eurodollar Loans, or change the basis
of taxation of any amounts payable to such Lender (or its Applicable
Lending Office) under this Credit Agreement or its Notes in respect of any
Eurodollar Loans (other than taxes imposed on the overall net income of
such Lender by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve, special
deposit, assessment, or similar requirement (other than the Eurodollar
Reserve Requirement utilized in the determination of the Adjusted
Eurodollar Rate) relating to any extensions of credit or other assets of,
or any deposits with or other liabilities or commitments of, such Lender
(or its Applicable Lending Office), including the Commitment of such
Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the United States market for certificates of deposit or the
London interbank market any other condition affecting this Credit
Agreement or its Notes or any of such extensions of credit or liabilities
or commitments;
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and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, converting into, continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction with respect to such Eurodollar Loans. If any
Lender requests compensation by the Borrower under this Section 3.9(a), the
Borrower may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or continue Eurodollar Loans, or to convert
Base Rate Loans into Eurodollar Loans, until the event or condition giving rise
to such request ceases to be in effect (in which case the provisions of Section
3.10 shall be applicable); provided that such suspension shall not affect the
right of such Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that the
adoption of any applicable law, rule, or regulation regarding capital adequacy
or any change therein or in the interpretation or administration thereof by any
Governmental Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency, has or would have
the effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such Lender's
obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section 3.9 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section 3.9 shall furnish to the Borrower and the Agent
a statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods.
3.10 Treatment of Affected Loans.
If the obligation of any Lender to make any Eurodollar Loan or to
continue, or to convert Base Rate Loans into, Eurodollar Loans shall be
suspended pursuant to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans
shall be automatically converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such Eurodollar Loans (or, in the case of a
conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 3.8 or 3.9 hereof that gave rise to such conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or continued by such
Lender as Eurodollar Loans shall be made or continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 3.8 or 3.9 hereof that gave rise to the
conversion of such Lender's Eurodollar Loans pursuant to this Section 3.10 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other Lenders are
outstanding, such Lender's Base Rate Loans shall be automatically converted, on
the first day(s) of the next succeeding Interest Period(s) for such outstanding
Eurodollar Loans, to the extent necessary so that, after giving effect thereto,
all Loans held by the Lenders holding Eurodollar Loans and by such Lender are
held pro rata (as to principal amounts, interest rate basis, and Interest
Periods) in accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by the Borrower to or for the account of
any Lender or the Agent hereunder or under any other Credit Document shall
be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which
such Lender (or its Applicable Lending Office) or the Agent (as the case
may be) is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings, and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable under this Credit Agreement or any other Credit
Document to any Lender or the Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 3.11) such Lender or the Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law, and (iv) the Borrower shall furnish to the
Agent, at its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes
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or charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 3.11) paid by such Lender or the Agent
(as the case may be) and any liability (including penalties, interest, and
expenses) arising therefrom or with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside
the United States, on or prior to the date of its execution and delivery
of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide the Borrower
and the Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Lender is entitled to benefits under an
income tax treaty to which the United States is a party which reduces the
rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Credit Agreement is effectively
connected with the conduct of a trade or business in the United States,
(ii) Internal Revenue Service Form W-8 or W-9, as appropriate, or any
successor form prescribed by the Internal Revenue Service, and (iii) any
other form or certificate required by any taxing authority (including any
certificate required by Sections 871(h) and 881(c) of the Internal Revenue
Code), certifying that such Lender is entitled to an exemption from or a
reduced rate of tax on payments pursuant to this Credit Agreement or any
of the other Credit Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Agent with the appropriate form pursuant to
Section 3.11(d) (unless such failure is due to a change in treaty, law, or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to
indemnification under Section 3.11(a) or 3.11(b) with respect to Taxes
imposed by the United States; provided, however, that should a Lender,
which is otherwise exempt from or subject to a reduced rate of withholding
tax, become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section 3.11, then such Lender
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the judgment of
such Lender, is not otherwise disadvantageous to such Lender.
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(g) Within thirty (30) days after the date of any payment of Taxes,
the Borrower shall furnish to the Agent the original or a certified copy
of a receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 3.11 shall survive the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.12 Compensation.
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.2) on a date other than the last day of the Interest
Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Section 5
to be satisfied) to borrow, convert, continue, or prepay a Eurodollar Loan
on the date for such borrowing, conversion, continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, continuation,
or conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, convert or continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. The covenants of
the Borrower set forth in this Section 3.12 shall survive the repayment of the
Loans, LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Loan, each payment or (subject to the terms of
Section 3.3) prepayment of principal of any Loan or reimbursement
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obligations arising from drawings under Letters of Credit, each payment of
interest on the Loans or reimbursement obligations arising from drawings
under Letters of Credit, each payment of Unused Fees, each payment of the
Letter of Credit Fee, each reduction of the Revolving Committed Amount and
each conversion or extension of any Loan, shall be allocated pro rata
among the Lenders in accordance with the respective principal amounts of
their outstanding Loans and Participation Interests.
(b) Advances. No Lender shall be responsible for the failure or
delay by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other Lender of
its obligations hereunder. Unless the Agent shall have been notified by
any Lender prior to the date of any requested borrowing that such Lender
does not intend to make available to the Agent its ratable share of such
borrowing to be made on such date, the Agent may assume that such Lender
has made such amount available to the Agent on the date of such borrowing,
and the Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent
will promptly notify the Borrower, and the Borrower shall immediately pay
such corresponding amount to the Agent. The Agent shall also be entitled
to recover from the Lender or the Borrower, as the case may be, interest
on such corresponding amount in respect of each day from the date such
corresponding amount was made available by the Agent to the Borrower to
the date such corresponding amount is recovered by the Agent at a per
annum rate equal to (i) from the Borrower at the applicable rate for the
applicable borrowing pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate.
3.14 Sharing of Payments.
The Lenders agree among themselves that, in the event that any Lender
shall obtain payment in respect of any Loan, LOC Obligations or any other
obligation owing to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant to a secured
claim under Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, in excess of its pro rata share of such
payment as provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such Loans, LOC
Obligations and other obligations in such amounts, and make such other
adjustments from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through the
exercise of a right of setoff, banker's lien, counterclaim or other event as
aforesaid shall be rescinded or must otherwise be restored, each Lender which
shall have shared the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that benefit
(together with its share of any accrued interest payable with respect thereto)
to each Lender whose payment shall have been rescinded or otherwise restored.
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The Borrower agrees that any Lender so purchasing such a Participation Interest
may, to the fullest extent permitted by law, exercise all rights of payment,
including setoff, banker's lien or counterclaim, with respect to such
Participation Interest as fully as if such Lender were a holder of such Loan,
LOC Obligations or other obligation in the amount of such Participation
Interest. Except as otherwise expressly provided in this Credit Agreement, if
any Lender or the Agent shall fail to remit to the Agent or any other Lender an
amount payable by such Lender or the Agent to the Agent or such other Lender
pursuant to this Credit Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Lender at a rate per annum equal to the Federal Funds Rate. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section 3.14 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders under this
Section 3.14 to share in the benefits of any recovery on such secured claim.
3.15 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein, all payments
hereunder shall be made to the Agent in dollars in immediately available
funds, without offset, deduction, counterclaim or withholding of any kind,
at the Agent's office specified in Schedule 2.1(a) not later than 2:00
P.M. (Charlotte, North Carolina time) on the date when due. Payments
received after such time shall be deemed to have been received on the next
succeeding Business Day. The Agent may (but shall not be obligated to)
debit the amount of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the Agent (with
notice to the Borrower). The Borrower shall, at the time it makes any
payment under this Credit Agreement, specify to the Agent the Loans, LOC
Obligations, Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the
terms hereof, the Agent shall distribute such payment to the Lenders in
such manner as the Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the terms of
Section 3.13(a)). The Agent will distribute such payments to such Lenders,
if any such payment is received prior to 12:00 Noon (Charlotte, North
Carolina time) on a Business Day in like funds as received prior to the
end of such Business Day and otherwise the Agent will distribute such
payment to such Lenders on the next succeeding Business Day. Whenever any
payment hereunder shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next
succeeding Business Day (subject to accrual of interest and Fees for the
period of such extension), except that in the case of Eurodollar Loans, if
the extension would cause the payment to be made in the next following
calendar month, then such payment shall instead be made on the next
preceding Business Day. Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis of actual
number of days elapsed over a year of 360 days, except with respect to
computation of interest on Base Rate Loans which (unless the Base Rate is
determined by reference to the Federal Funds Rate) shall be calculated
based on a year of 365 or 366 days, as appropriate. Interest shall accrue
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from and include the date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account of the Credit
Party Obligations or any other amounts outstanding under any of the Credit
Documents or in respect of the Collateral shall be paid over or delivered
as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of the
Agent in connection with enforcing the rights of the Lenders under the
Credit Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders in connection with enforcing its rights under the
Credit Documents or otherwise with respect to the Credit Party Obligations
owing to such Lender;
FOURTH, to the payment of all of the Credit Party Obligations
consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal amount of the
Credit Party Obligations (including the payment or cash collateralization
of the outstanding LOC Obligations);
SIXTH, to all other Credit Party Obligations and other obligations
which shall have become due and payable under the Credit Documents or
otherwise and not repaid pursuant to clauses "FIRST" through "FIFTH"
above; and
SEVENTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category; (ii) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then
outstanding Loans and LOC Obligations held by such Lender bears to the
aggregate then outstanding Loans and LOC Obligations) of amounts available
to be applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and "SIXTH"
above; and (iii) to the extent that any amounts available for distribution
pursuant to clause "FIFTH" above are attributable to the issued but
undrawn amount of outstanding Letters of Credit, such amounts shall be
held by the Agent in a cash collateral account and applied (A) first, to
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reimburse the Issuing Lender from time to time for any drawings under such
Letters of Credit and (B) then, following the expiration of all Letters of
Credit, to all other obligations of the types described in clauses "FIFTH"
and "SIXTH" above in the manner provided in this Section 3.15(b).
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts evidencing
each Loan made by such Lender to the Borrower from time to time, including
the amounts of principal and interest payable and paid to such Lender from
time to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to
promptly update its account or accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to Section
11.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the Agent
hereunder from or for the account of the Borrower and each Lender's share
thereof. The Agent will make reasonable efforts to maintain the accuracy
of the subaccounts referred to in the preceding sentence and to promptly
update such subaccounts from time to time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Agent, subsection (a)) shall be prima
facie evidence of the existence and amounts of the obligations of the
Borrower therein recorded; provided, however, that the failure of any
Lender or the Agent to maintain any such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Loans made by such
Lender in accordance with the terms hereof.
SECTION 4
GUARANTY
4.1 The Guaranty.
Each of the Guarantors hereby jointly and severally guarantees to each
Lender, each Affiliate of a Lender that enters into a Hedging Agreement, and the
Agent as hereinafter provided the prompt payment of the Credit Party Obligations
in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise) strictly in
accordance with the terms thereof. The Guarantors hereby further agree that if
any of the Credit Party Obligations are not paid in full when due (whether at
stated maturity, as a mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and severally,
promptly pay the same, without any demand or notice whatsoever, and that in the
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case of any extension of time of payment or renewal of any of the Credit Party
Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration, as a mandatory
cash collateralization or otherwise) in accordance with the terms of such
extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any
other of the Credit Documents or Hedging Agreements, the obligations of each
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 are joint and several,
absolute and unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or Hedging
Agreements, or any other agreement or instrument referred to therein, or any
substitution, release, impairment or exchange of any other guarantee of or
security for any of the Credit Party Obligations, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor, it being the intent of this Section 4.2 that the
obligations of the Guarantors hereunder shall be absolute and unconditional
under any and all circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor of the Credit Party Obligations for amounts
paid under this Section 4 until such time as the Lenders (and any Affiliates of
Lenders entering into Hedging Agreements) have been paid in full, all
Commitments under this Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return or
reimbursement of funds from the Lenders in connection with monies received under
the Credit Documents or Hedging Agreements. Without limiting the generality of
the foregoing, it is agreed that, to the fullest extent permitted by law, the
occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute and
unconditional as described above:
(a) at any time or from time to time, without notice to any
Guarantor, the time for any performance of or compliance with any of the
Credit Party Obligations shall be extended, or such performance or
compliance shall be waived;
(b) any of the acts mentioned in any of the provisions of any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be done or omitted;
(c) the maturity of any of the Credit Party Obligations shall be
accelerated, or any of the Credit Party Obligations shall be modified,
supplemented or amended in any respect, or any right under any of the
Credit Documents, any Hedging Agreement or any other agreement or
instrument referred to in the Credit Documents or Hedging Agreements shall
be waived or any other guarantee of any of the Credit Party Obligations or
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any security therefor shall be released, impaired or exchanged in whole or
in part or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or any Lender or
Lenders as security for any of the Credit Party Obligations shall fail to
attach or be perfected; or
(e) any of the Credit Party Obligations shall be determined to be
void or voidable (including, without limitation, for the benefit of any
creditor of any Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any Guarantor).
With respect to its obligations hereunder, each Guarantor hereby expressly
waives diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that the Agent or any Lender exhaust any right,
power or remedy or proceed against any Person under any of the Credit Documents,
any Hedging Agreement or any other agreement or instrument referred to in the
Credit Documents or Hedging Agreements, or against any other Person under any
other guarantee of, or security for, any of the Credit Party Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any payment by
or on behalf of any Person in respect of the Credit Party Obligations is
rescinded or must be otherwise restored by any holder of any of the Credit Party
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it will indemnify
the Agent and each Lender on demand for all reasonable costs and expenses
(including, without limitation, fees and expenses of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending against any claim
alleging that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this Section 4, each
Guarantor hereby specifically waives the benefits of N.C. Gen. Stat. ss.ss. 26-7
through 26-9, inclusive, to the extent applicable. Each Guarantor further agrees
that such Guarantor shall have no right of recourse to security for the Credit
Party Obligations, except through the exercise of rights of subrogation pursuant
to Section 4.2 and through the exercise of rights of contribution pursuant to
Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as
between the Guarantors, on the one hand, and the Agent and the Lenders, on the
other hand, the Credit Party Obligations may be declared to be forthwith due and
payable as provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction or other
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prohibition preventing such declaration (or preventing the Credit Party
Obligations from becoming automatically due and payable) as against any other
Person and that, in the event of such declaration (or the Credit Party
Obligations being deemed to have become automatically due and payable), the
Credit Party Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for purposes of Section
4.1.
4.6 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any Guarantor
shall make an Excess Payment (as defined below), such Guarantor shall have a
right of contribution from each other Guarantor in an amount equal to such other
Guarantor's Contribution Share (as defined below) of such Excess Payment. The
payment obligations of any Guarantor under this Section 4.6 shall be subordinate
and subject in right of payment to the prior payment in full to the Agent and
the Lenders of the Guaranteed Obligations, and none of the Guarantors shall
exercise any right or remedy under this Section 4.6 against any other Guarantor
until payment and satisfaction in full of all of such Guaranteed Obligations.
For purposes of this Section 4.6, (a) "Guaranteed Obligations" shall mean any
obligations arising under the other provisions of this Section 4; (b) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of its Pro Rata
Share of any Guaranteed Obligations; (c) "Pro Rata Share" shall mean, for any
Guarantor in respect of any payment of Guaranteed Obligations, the ratio
(expressed as a percentage) as of the date of such payment of Guaranteed
Obligations of (i) the amount by which the aggregate present fair salable value
of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured,
and unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair salable value
of all assets and other properties of the Borrower and all of the Guarantors
exceeds the amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding the
obligations of the Borrower and the Guarantors hereunder) of the Borrower and
all of the Guarantors; provided, however, that, for purposes of calculating the
Pro Rata Shares of the Guarantors in respect of any payment of Guaranteed
Obligations, any Guarantor that became a Guarantor subsequent to the date of any
such payment shall be deemed to have been a Guarantor on the date of such
payment and the financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor in connection
with such payment; and (d) "Contribution Share" shall mean, for any Guarantor in
respect of any Excess Payment made by any other Guarantor, the ratio (expressed
as a percentage) as of the date of such Excess Payment of (i) the amount by
which the aggregate present fair salable value of all of its assets and
properties exceeds the amount of all debts and liabilities of such Guarantor
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Guarantor hereunder) to (ii) the amount by
which the aggregate present fair salable value of all assets and other
properties of the Borrower and all of the Guarantors other than the maker of
such Excess Payment exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of the Borrower and the Guarantors hereunder) of
the Borrower and all of the Guarantors other than the maker of such Excess
Payment; provided, however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any Guarantor that
became a Guarantor subsequent to the date of any such Excess Payment shall be
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deemed to have been a Guarantor on the date of such Excess Payment and the
financial information for such Guarantor as of the date such Guarantor became a
Guarantor shall be utilized for such Guarantor in connection with such Excess
Payment. This Section 4.6 shall not be deemed to affect any right of
subrogation, indemnity, reimbursement or contribution that any Guarantor may
have under applicable law against the Borrower in respect of any payment of
Guaranteed Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after such time, if
ever, that such Guarantor shall be relieved of its obligations pursuant to
Section 8.4.
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee, and shall apply
to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit Agreement and to
make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Agent of duly executed
copies of: (i) this Credit Agreement; (ii) the Notes; (iii) the Swingline
Note; (iv) the Collateral Documents and (v) all other Credit Documents,
each in form and substance acceptable to the Lenders in their sole
discretion.
(b) Corporate Documents. Receipt by the Agent of the following:
(i) Charter Documents. Copies of the articles or certificates
of incorporation or other charter documents of each Credit Party
certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a secretary or
assistant secretary of such Credit Party to be true and correct as
of the Closing Date.
(ii) Bylaws. A copy of the bylaws of each Credit Party
certified by a secretary or assistant secretary of such Credit Party
to be true and correct as of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
Directors of each Credit Party approving and adopting the Credit
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Documents to which it is a party, the transactions contemplated
therein and authorizing execution and delivery thereof, certified by
a secretary or assistant secretary of such Credit Party to be true
and correct and in force and effect as of the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good
standing, existence or its equivalent with respect to each Credit
Party certified as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of incorporation and
each other jurisdiction in which the failure to so qualify and be in
good standing could have a Material Adverse Effect and (B) to the
extent available, a certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the appropriate
governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Credit Party
certified by a secretary or assistant secretary to be true and
correct as of the Closing Date.
(c) Financial Statements. Receipt by the Agent and the Lenders of
(i) the audited consolidated financial statements of the Borrower and its
Subsidiaries, including balance sheets and income and cash flow statements
for the fiscal years 1995, 1996 and 1997, (ii) interim quarterly financial
statements and quarterly working capital detail for the first projected
year and (iii) such other information relating to the Borrower and its
Subsidiaries as the Agent may reasonably require in connection with the
structuring and syndication of credit facilities of the type described
herein.
(d) Opinions of Counsel. The Agent shall have received a legal
opinion in form and substance reasonably satisfactory to the Lenders dated
as of the Closing Date from counsel to the Credit Parties.
(e) Environmental Reports. Receipt by the Agent in form and
substance satisfactory to it of environmental assessment reports and
related documents of a recent date with respect to all Mortgaged
Properties.
(f) Personal Property Collateral. The Agent shall have received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of each Credit Party and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Agent's security
interest in the Collateral, copies of the financing statements on
file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Agent's sole
discretion, to perfect the Agent's security interest in the
Collateral;
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(iii) searches of ownership of intellectual property in the
appropriate governmental offices and such patent/trademark/copyright
filings as requested by the Agent in order to perfect the Agent's
security interest in the Collateral;
(iv) all instruments and chattel paper in the possession of
any of the Credit Parties, together with allonges or assignments as
may be necessary or appropriate to perfect the Agent's security
interest in the Collateral; and
(v) duly executed consents as are necessary, in the Agent's
sole discretion, to perfect the Lenders' security interest in the
Collateral.
(g) Real Property Collateral. The Agent shall have received, in form
and substance reasonably satisfactory to the Agent:
(i) fully executed and notarized mortgages, deeds of trust or
deeds to secure debt (each, as the same may be amended, modified,
restated or supplemented from time to time, a "Mortgage Instrument"
and collectively the "Mortgage Instruments") encumbering the fee
interest of any Credit Party in each real property asset identified
on Schedule 6.19(a) (each a "Mortgaged Property" and collectively
the "Mortgaged Properties");
(ii) ALTA mortgagee title insurance policies (the "Mortgage
Policies") issued by title insurers satisfactory to the Agent (the
"Title Insurance Company") in an amount satisfactory to the Agent,
assuring the Agent that each of the Mortgage Instruments creates a
valid and enforceable first priority mortgage lien on the applicable
Mortgaged Property in form and substance satisfactory to the Agent.
(iii) an as-built survey of each of the Mortgaged Properties
certified to the Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date satisfactory to the Agent and the
Title Insurance Company by an independent professional licensed land
surveyor reasonably satisfactory to the Agent and the Title
Insurance Company, which the surveys shall be made in accordance
with the Minimum Standard Detail Requirements for Land Title Surveys
jointly established and adopted by the American Land Title
Association and the American Congress on Surveying and Mapping in
1992 (or such alternative standards as are satisfactory to the Agent
and the Title Insurance Company);
(iv) a current certification from a registered engineer or
land surveyor or other evidence acceptable to the Agent with respect
to each Mortgaged Property as to whether any of the improvements on
such Mortgaged Property are located within any area designated by
the Director of the Federal Emergency Management Agency as a
"special flood hazard" area and if any improvements on the Mortgaged
Properties are located within a "special flood hazard" area,
evidence of a flood insurance policy from a company and in an amount
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satisfactory to the Agent for the applicable portion of the
premises, naming the Agent, as mortgagee;
(v) a current appraisal of each Mortgaged Property prepared
for the benefit of the Agent by a qualified appraiser satisfactory
to the Agent and dated a date satisfactory to the Agent, which shall
indicate a fair market value for each Mortgaged Property acceptable
to the Agent and which shall otherwise be in form and substance
satisfactory to the Agent; and
(vi) evidence satisfactory to the Agent that each Mortgaged
Property, and the uses of each Mortgaged Property, are in compliance
in all material respects with all applicable laws, regulations and
ordinances.
(h) Priority of Liens. The Agent shall have received satisfactory
evidence that (i) the Agent, on behalf of the Lenders, holds a perfected,
first priority Lien on all Collateral and (ii) none of the Collateral is
subject to any other Liens other than Permitted Liens.
(i) Evidence of Insurance. Receipt by the Agent of copies of
insurance policies or certificates of insurance of the Consolidated
Parties evidencing liability and casualty insurance meeting the
requirements set forth in the Credit Documents, including, but not limited
to, naming the Agent as sole loss payee on behalf of the Lenders.
(j) Material Adverse Effect. No material adverse change shall have
occurred since December 31, 1997 in the condition (financial or
otherwise), business, management or prospects of the Consolidated Parties
taken as a whole.
(k) Litigation. There shall not exist any pending or threatened
action, suit, investigation or proceeding in any court or before any
arbitrator or Governmental Authority against a Consolidated Party that
could have a Material Adverse Effect.
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(l) Officer's Certificates. The Agent shall have received a
certificate or certificates executed by an authorized officer of the
Borrower as of the Closing Date stating that (A) each Consolidated Party
is in compliance with all existing financial obligations, (B) all
governmental, shareholder and third party consents and approvals, if any,
with respect to the Credit Documents and the transactions contemplated
thereby have been obtained, (C) no action, suit, investigation or
proceeding is pending or threatened in any court or before any arbitrator
or governmental instrumentality that purports to affect any Consolidated
Party or any transaction contemplated by the Credit Documents, if such
action, suit, investigation or proceeding could have a Material Adverse
Effect, and (D) immediately after giving effect to this Credit Agreement,
the other Credit Documents and all the transactions contemplated therein
to occur on such date, (1) each of the Consolidated Parties is Solvent,
(2) no Default or Event of Default exists, (3) all representations and
warranties contained herein and in the other Credit Documents are true and
correct, and (4) the Credit Parties are in compliance with each of the
financial covenants set forth in Section 7.11.
(m) Business Audit. Receipt by the Agent of a satisfactory written
business audit of the accounts receivable, inventory, payables, Synthetic
Leases and systems of the Borrower and its Subsidiaries.
(n) Asset Appraisal Reports. Receipt by the Agent of satisfactory
written asset appraisal reports with respect to all Property (real and
personal) owned by Borrower and its Subsidiaries.
(o) Fees and Expenses. Payment by the Credit Parties of all fees and
expenses owed by them to the Lenders and the Agent, including, without
limitation, payment to the Agent of the fees set forth in the Agent's Fee
Letter.
(p) Opening Borrowing Base Certificate. Receipt by the Agent of a
Borrowing Base Certificate as of March 31, 1998, substantially in the form
of Exhibit 7.1(e) and certified by the chief financial officer of the
Borrower to be true and correct as of March 31, 1998.
(q) Repayment of Indebtedness. Receipt by the Agent of evidence that
prior to or substantially simultaneously with the making of the initial
Loans, all obligations of the Borrower under the Prior Credit Agreement
have been paid in full.
(r) Other. Receipt by the Lenders of such other documents,
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership and contingent liabilities of the Consolidated Parties.
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5.2 Conditions to all Extensions of Credit.
The obligations of each Lender to make, convert or extend any Loan and of
the Issuing Lender to issue or extend any Letter of Credit (including the
initial Loans and the initial Letter of Credit) are subject to satisfaction of
the following conditions in addition to satisfaction on the Closing Date of the
conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) in the case of any
Revolving Loan, an appropriate Notice of Borrowing or Notice of
Extension/Conversion or (ii) in the case of any Letter of Credit, the
Issuing Lender shall have received an appropriate request for issuance in
accordance with the provisions of Section 2.2(b);
(b) The representations and warranties set forth in Section 6 shall,
subject to the limitations set forth therein, be true and correct in all
material respects as of such date (except for those which expressly relate
to an earlier date);
(c) No Default or Event of Default shall exist and be continuing
either prior to or after giving effect thereto;
(d) No circumstances, events or conditions shall have occurred since
December 31, 1997 which has had or could have a Material Adverse Effect.
(e) Immediately after giving effect to the making of such Loan (and
the application of the proceeds thereof) or to the issuance of such Letter
of Credit, as the case may be, (i) the sum of the aggregate principal
amount of outstanding Revolving Loans plus Swingline Loans outstanding
plus LOC Obligations outstanding shall not exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base and (ii) the LOC
Obligations shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of Extension/Conversion
and each request for a Letter of Credit pursuant to Section 2.2(b) shall
constitute a representation and warranty by the Borrower of the correctness of
the matters specified in subsections (b), (c), (d) and (e).
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each Lender that:
6.1 Financial Condition.
The financial statements delivered to the Lenders pursuant to Section
5.1(c) and Section 7.1(a) and (b), (i) have been prepared in accordance with
GAAP and (ii) present fairly (on the basis disclosed in the footnotes to such
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financial statements) the consolidated and consolidating financial condition,
results of operations and cash flows of the Consolidated Parties as of such date
and for such periods.
6.2 No Material Change.
Since December 31, 1997, (a) there has been no development or event
relating to or affecting a Consolidated Party which has had or could have a
Material Adverse Effect and (b) except as otherwise permitted under this Credit
Agreement, no dividends or other distributions have been declared, paid or made
upon the Capital Stock in a Consolidated Party nor has any of the Capital Stock
in a Consolidated Party been redeemed, retired, purchased or otherwise acquired
for value.
6.3 Organization and Good Standing.
Each of the Consolidated Parties (a) is duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its incorporation
or organization, (b) has the corporate or other necessary power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged
and (c) is duly qualified as a foreign entity and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good standing could
have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other necessary power and
authority, and the legal right, to make, deliver and perform the Credit
Documents to which it is a party, and in the case of the Borrower, to obtain
extensions of credit hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the terms and
conditions of this Credit Agreement and to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other similar act by or in respect
of, any Governmental Authority or any other Person is required to be obtained or
made by or on behalf of any Credit Party in connection with the borrowings or
other extensions of credit hereunder or with the execution, delivery,
performance, validity or enforceability of the Credit Documents to which such
Credit Party is a party, except for filings to perfect the Liens created by the
Collateral Documents. This Credit Agreement has been, and each other Credit
Document to which any Credit Party is a party will be, duly executed and
delivered on behalf of the Credit Parties. This Credit Agreement constitutes,
and each other Credit Document to which any Credit Party is a party when
executed and delivered will constitute, a legal, valid and binding obligation of
such Credit Party enforceable against such party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
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6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor the
consummation of the transactions contemplated therein, nor performance of and
compliance with the terms and provisions thereof by such Credit Party will (a)
violate or conflict with any provision of its articles or certificate of
incorporation or bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any Requirement of
Law or any other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit applicable to
it, (c) violate, contravene or conflict with contractual provisions of, or cause
an event of default under, any indenture, loan agreement, mortgage, deed of
trust, contract or other agreement or instrument to which it is a party or by
which it may be bound, the violation of which could have a Material Adverse
Effect, or (d) result in or require the creation of any Lien (other than those
contemplated in or created in connection with the Credit Documents) upon or with
respect to its properties.
6.6 No Default.
No Consolidated Party is in default in any respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound which default could have a Material Adverse Effect. No Default or Event
of Default has occurred or exists except as previously disclosed in writing to
the Lenders.
6.7 Ownership.
Each Consolidated Party is the owner of, and has good and marketable title
to, all of its respective assets and none of such assets is subject to any Lien
other than Permitted Liens.
6.8 Litigation.
There are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Consolidated Party which might have a Material Adverse
Effect.
6.9 Taxes.
Each Consolidated Party has filed, or caused to be filed, all tax returns
(federal, state, local and foreign) required to be filed and paid (a) all
amounts of taxes shown thereon to be due (including interest and penalties) and
(b) all other taxes, fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing
by it, except for such taxes (i) which are not yet delinquent or (ii) that are
being contested in good faith and by proper proceedings, and against which
adequate reserves are being maintained in accordance with GAAP. No Credit Party
is aware as of the Closing Date of any proposed tax assessments against it or
any other Consolidated Party.
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6.10 Compliance with Law.
Each Consolidated Party is in compliance with all Requirements of Law and
all other laws, rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its properties, unless
such failure to comply could not have a Material Adverse Effect.
6.11 ERISA.
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred,
and, to the best knowledge of the Credit Parties, no event or condition
has occurred or exists as a result of which any ERISA Event could
reasonably be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in Section 302
of ERISA and Section 412 of the Code, whether or not waived, has occurred
with respect to any Plan; (iii) each Plan has been maintained, operated,
and funded in compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, and any other applicable federal
or state laws; and (iv) no lien in favor of the PBGC or a Plan has arisen
or is reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA), whether or not vested, under
each Single Employer Plan, as of the last annual valuation date prior to
the date on which this representation is made or deemed made (determined,
in each case, utilizing the actuarial assumptions used in such Plan's most
recent actuarial valuation report), did not exceed as of such valuation
date the fair market value of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be
reasonably expected to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither any Consolidated
Party nor any ERISA Affiliate would become subject to any withdrawal
liability under ERISA if any Consolidated Party or any ERISA Affiliate
were to withdraw completely from all Multiemployer Plans and Multiple
Employer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. Neither any Consolidated
Party nor any ERISA Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning of Section
4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title IV of ERISA),
and no Multiemployer Plan is, to the best knowledge of the Credit Parties,
reasonably expected to be in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary responsibility
has occurred with respect to a Plan which has subjected or may subject any
Consolidated Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code, or under
any agreement or other instrument pursuant to which any Consolidated Party
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or any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability.
(e) Neither any Consolidated Party nor any ERISA Affiliates has any
material liability with respect to "expected post-retirement benefit
obligations" within the meaning of the Financial Accounting Standards
Board Statement 106.
6.12 Subsidiaries.
Set forth on Schedule 6.12 is a complete and accurate list of all
Subsidiaries of each Consolidated Party. Information on Schedule 6.12 includes
jurisdiction of incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding shares of each class
owned (directly or indirectly) by such Consolidated Party; and the number and
effect, if exercised, of all outstanding options, warrants, rights of conversion
or purchase and all other similar rights with respect thereto. The outstanding
Capital Stock of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned by each such Consolidated Party, directly or
indirectly, free and clear of all Liens (other than those arising under or
contemplated in connection with the Credit Documents). Other than as set forth
in Schedule 6.12, no Consolidated Party has outstanding any securities
convertible into or exchangeable for its Capital Stock nor does any such Person
have outstanding any rights to subscribe for or to purchase or any options for
the purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, commitments or claims of any character relating to
its Capital Stock. Schedule 6.12 may be updated from time to time by the
Borrower by giving written notice thereof to the Agent.
6.13 Governmental Regulations, Etc.
(a) No part of the Letters of Credit or proceeds of the Loans will
be used, directly or indirectly, for the purpose of purchasing or carrying
any "margin stock" within the meaning of Regulation U, or for the purpose
of purchasing or carrying or trading in any securities. If requested by
any Lender or the Agent, the Borrower will furnish to the Agent and each
Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in Regulation U. No indebtedness
being reduced or retired out of the proceeds of the Loans was or will be
incurred for the purpose of purchasing or carrying any margin stock within
the meaning of Regulation U or any "margin security" within the meaning of
Regulation T. "Margin stock" within the meaning of Regulation U does not
constitute more than 25% of the value of the consolidated assets of the
Consolidated Parties. None of the transactions contemplated by this Credit
Agreement (including, without limitation, the direct or indirect use of
the proceeds of the Loans) will violate or result in a violation of the
Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, or regulations issued pursuant thereto, or Regulation T,
U or X.
(b) No Consolidated Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the
Investment Company Act of 1940, each as amended. In addition, no
Consolidated Party is (i) an "investment company" registered or required
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to be registered under the Investment Company Act of 1940, as amended, and
is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a
"holding company" or of a "subsidiary" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of any
Consolidated Party is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director",
"executive officer" and "principal shareholder" (when used with reference
to any Lender) have the respective meanings assigned thereto in Regulation
O issued by the Board of Governors of the Federal Reserve System.
(d) Each Consolidated Party has obtained and holds in full force and
effect, all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the ownership of its
respective Property and to the conduct of its respective businesses as
presently conducted.
(e) No Consolidated Party is in violation of any applicable statute,
regulation or ordinance of the United States of America, or of any state,
city, town, municipality, county or any other jurisdiction, or of any
agency thereof (including without limitation, environmental laws and
regulations), which violation could have a Material Adverse Effect.
(f) Each Consolidated Party is current with all material reports and
documents, if any, required to be filed with any state or federal
securities commission or similar agency and is in full compliance in all
material respects with all applicable rules and regulations of such
commissions.
6.14 Purpose of Loans and Letters of Credit.
The proceeds of the Loans hereunder shall be used solely by the Borrower
for (i) working capital; (ii) payment of fees and expenses incurred in
connection herewith, (iii) refinancing existing Indebtedness of the Borrower,
(iv) capital expenditures and (v) general corporate purposes. The Letters of
Credit shall be used only for or in connection with appeal bonds, reimbursement
obligations arising in connection with surety and reclamation bonds,
reinsurance, domestic or international trade transactions and obligations not
otherwise aforementioned relating to transactions entered into by the applicable
account party in the ordinary course of business.
6.15 Environmental Matters.
(a) To the best of its knowledge, each of the facilities and
properties owned, leased or operated by the Consolidated Parties (the
"Properties") and all operations at the Properties are in compliance with
all applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Properties or the businesses
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operated by the Consolidated Parties (the "Businesses"), and there are no
conditions relating to the Businesses or Properties that could give rise
to liability under any applicable Environmental Laws.
(b) To the best of its knowledge, none of the Properties contains,
or has previously contained, any Materials of Environmental Concern at, on
or under the Properties in amounts or concentrations that constitute or
constituted a violation of, or could give rise to liability under,
Environmental Laws.
(c) No Consolidated Party has received any written or verbal notice
of, or inquiry from any Governmental Authority regarding, any violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Businesses, nor does any
Consolidated Party have knowledge or reason to believe that any such
notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties, or generated, treated, stored or disposed
of at, on or under any of the Properties or any other location, in each
case by or on behalf of any Consolidated Party in violation of, or in a
manner that could give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the best knowledge of any Credit Party, threatened,
under any Environmental Law to which any Consolidated Party is or will be
named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to the Consolidated Parties, the Properties
or the Businesses.
(f) There has been no release or, threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or
related to the operations (including, without limitation, disposal) of any
Consolidated Party in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in amounts or in a
manner that could give rise to liability under Environmental Laws.
6.16 Intellectual Property.
Each Consolidated Party owns, or has the legal right to use, (subject to
the common law rights of another user) all trademarks, tradenames, copyrights,
technology, know-how and processes (the "Intellectual Property") necessary for
each of them to conduct its business as currently conducted except for those the
failure to own or have such legal right to use could not have a Material Adverse
Effect. Set forth on Schedule 6.16 (i) is a list of all Intellectual Property
owned by each Consolidated Party or that any Consolidated Party has the right to
use and (ii) a list of all license agreements to which a Consolidated Party is a
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party relating to the Intellectual Property. Except as provided on Schedule
6.16, no claim has been asserted and is pending by any Person challenging or
questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does any Credit Party know
of any such claim, and to the Credit Parties' knowledge the use of such
Intellectual Property by any Consolidated Party does not infringe on the rights
of any Person, except for such claims and infringements that in the aggregate,
could not have a Material Adverse Effect. Schedule 6.16 may be updated from time
to time by the Borrower by giving written notice thereof to the Agent.
6.17 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.18 Investments.
All Investments of each Consolidated Party are Permitted Investments.
6.19 Location of Collateral.
Set forth on Schedule 6.19(a) is a list of all Mortgaged Properties with
street address, county and state where located. Set forth on Schedule 6.19(b) is
a list of all locations where any tangible personal property of a Consolidated
Party is located, including county and state where located. Set forth on
Schedule 6.19(c) is the chief executive office and principal place of business
of each Consolidated Party. Schedule 6.19(a), 6.19(b) and 6.19(c) may be updated
from time to time by the Borrower giving written notice thereof to the Agent.
6.20 Disclosure.
Neither this Credit Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to the
Lenders by or on behalf of any Consolidated Party in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained therein or herein not misleading.
6.21 No Burdensome Restrictions.
No Consolidated Party is a party to any agreement or instrument or subject
to any other obligation or any charter or corporate restriction or any provision
of any applicable law, rule or regulation which, individually or in the
aggregate, could have a Material Adverse Effect.
6.22 First Priority Lien.
The Agent on behalf of the Lenders holds a first priority lien, subject to
no other Liens other than Permitted Liens in the Collateral.
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6.23 Receivables Warranties and Representations.
With respect to the Borrower's Receivables, the Credit Parties represent
and warrant to the Agent that the Agent may rely, in determining which
Receivables listed on any Schedule of Receivables are Eligible Receivables, on
all statements or representations made by the Borrower on or with respect to any
such Schedule of Receivables, and, unless otherwise indicated in writing by the
Borrower, that each Receivable listed on the Schedule of Receivables: (a) will
cover a bona fide sale and delivery of Inventory usually dealt in by the
Borrower, or the rendition by the Borrower of services, to an account debtor in
the ordinary course of business; (b) will be genuine and in all respects what it
purports to be, will not be evidenced by an instrument or document, or if so,
will be only evidenced by one original instrument or document which has been
duly delivered to the Agent; (c) will be for a liquidated amount maturing as
stated in the Schedule of Receivables and in the duplicate invoice covering said
sale; (d) the Agent's security interest therein will not be subject to any
offset, deduction, counterclaim, lien or other adverse condition; (e) to the
best knowledge of each of the Credit Parties, there are no discounts,
allowances, claims, setoffs, counterclaims or disputes of any kind or
description existing or asserted with respect thereto except as may be stated in
the Schedule of Receivables and in the duplicate invoice covering said sale; (f)
is not subject to any facts, events or occurrences which would in any way impair
the validity or enforcement thereof; (g) the goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any lien, claim,
encumbrance or security interest except those held by the Agent and Permitted
Liens; and (h) to the Borrower's knowledge, each person obligated on a
Receivable is Solvent and will continue to be fully able to pay all Receivables
on which it is obligated in full when due. If any warranty is breached as to any
Receivable, or if any Receivable is not paid in full within ninety (90) days
after its due date or one hundred twenty (120) days after its invoice date, then
the Agent may deem such Receivable to be an ineligible Receivable, but the Agent
shall retain its security interest in all Receivables, eligible and ineligible.
6.24 Inventory Warranties and Representations.
With respect to the Borrower's Inventory, the Credit Parties represent and
warrant to the Agent that the Agent may rely on all statements or
representations made by the Borrower on or with respect to any such Schedule of
Inventory, and, unless otherwise indicated in writing by the Borrower and
consented to by the Agent that all Inventory listed on the Schedule of
Inventory: (a) will be located on the premises listed in Schedule 6.19(b)
attached hereto; (b) shall not at any time be stored with a bailee, warehouseman
or similar party without the Agent's prior written consent, and if the Agent
gives such consent, the Borrower will concurrently therewith cause any such
bailee, warehouseman or similar party to issue and deliver to the Agent in form
and substance acceptable to the Agent, warehouse receipts therefor in the
Agent's name; and (c) will be new Inventory of good and merchantable quality,
substantially free from defects. If the requirements set forth in paragraphs
(a), (b) and (c) of this Section 6.24 are not met, then the Agent may deem
ineligible such Inventory, but the Agent shall retain its security interest in
all Inventory, eligible or ineligible.
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SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the Agent and each
of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the
Consolidated Parties, (i) a consolidated balance sheet and income
statement of the Consolidated Parties, as of the end of such fiscal year,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal year, setting forth in
comparative form consolidated figures for the preceding fiscal year and
(ii) a consolidating balance sheet and income statement of the Borrower
and its Material Subsidiaries, as of the end of such fiscal year, together
with related consolidating statements of operations and retained earnings
and of cash flows for such fiscal year, setting forth in comparative form
consolidating figures for the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
audited by independent certified public accountants of recognized national
standing reasonably acceptable to the Agent and whose opinion shall be to
the effect that such financial statements have been prepared in accordance
with GAAP (except for changes with which such accountants concur) and
shall not be limited as to the scope of the audit or qualified in any
manner.
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the close of each fiscal quarter of the
Consolidated Parties (i) a consolidated balance sheet and income statement
of the Consolidated Parties, as of the end of such fiscal quarter,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal quarter in each case setting
forth in comparative form consolidated figures for the corresponding
period of the preceding fiscal year and (ii) a consolidating balance sheet
and income statement of the Borrower and its Material Subsidiaries, as of
the end of such fiscal quarter, together with related consolidating
statements of operations and retained earnings and of cash flows for such
fiscal quarter, in each case setting forth in comparative form
consolidating figures for the corresponding period of the preceding fiscal
year, all such financial information described above to be in reasonable
form and detail and reasonably acceptable to the Agent, and accompanied by
a certificate of the chief financial officer of the Borrower to the effect
that such quarterly financial statements fairly present in all material
respects the financial condition of the Consolidated Parties or the
Borrower and its Material Subsidiaries, as applicable, and have been
prepared in accordance with GAAP, subject to changes resulting from audit
and normal year-end audit adjustments.
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(c) Division Numbers. As soon as available, and in any event within
45 days after the close of each fiscal quarter of the Borrower ending on
or before December 31, 1998 (other than the fiscal quarter ending on
December 31, 1998, in which case 90 days after the end thereof), a
consolidating balance sheet and income statement for each of (A) the Frank
L. Robinson division of the Borrower and (B) the Stardust division of the
Borrower, as of the end of such fiscal quarter, together with related
consolidating statements of operations and retained earnings and of cash
flows for such quarter, all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the Agent,
and accompanied by a certificate of the chief financial officer of the
Borrower to the effect that such financial statements fairly present in
all material respects the financial condition of such divisions and have
been prepared in accordance with GAAP, subject to changes resulting from
audit and normal year-end audit adjustments.
(d) Officer's Certificate. At the time of delivery of the financial
statements provided for in Sections 7.1(a), 7.1(b) and 7.1(c) above, a
certificate of the chief financial officer of the Borrower substantially
in the form of Exhibit 7.1(d), (i) demonstrating compliance with the
financial covenants contained in Section 7.11 by calculation thereof as of
the end of each such fiscal period and (ii) stating that no Default or
Event of Default exists, or if any Default or Event of Default does exist,
specifying the nature and extent thereof and what action the Credit
Parties propose to take with respect thereto.
(e) Borrowing Base Certificate. Within 20 days after the end of each
calendar month, a Borrowing Base Certificate as of the end of the
immediately preceding month, substantially in the form of Exhibit 7.1(e)
and certified by the chief financial officer of the Borrower to be true
and correct as of the date thereof, together with (i) an aging of all then
existing Receivables, specifying the names, face value and due dates of
each account debtor obligated on a Receivable listed therein, (ii) a
schedule of Inventory owned by the Borrower and (iii) such other
information about the Receivables or the Inventory as the Agent may
reasonably request.
(f) Annual Business Plan and Budgets. At least 30 days prior to the
end of each fiscal year of the Borrower, beginning with the fiscal year
ending December 31, 1998, an annual business plan and budget of the
Consolidated Parties containing, among other things, pro forma financial
statements for the next fiscal year.
(g) Compliance with Certain Provisions of the Credit Agreement.
Within 90 days after the end of each fiscal year of the Borrower, a
certificate containing information regarding (i) the calculation of Excess
Cash Flow and (ii) the amount of all Equity Issuances that were made
during the prior fiscal year.
(h) Accountant's Certificate. Within the period for delivery of the
annual financial statements provided in Section 7.1(a), a certificate of
the accountants conducting the annual audit stating that they have
reviewed this Credit Agreement and stating further whether, in the course
of their audit, they have become aware of any Default or Event of Default
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and, if any such Default or Event of Default exists, specifying the nature
and extent thereof.
(i) Auditor's Reports. Promptly upon receipt thereof, a copy of any
other report or "management letter" submitted by independent accountants
to any Consolidated Party in connection with any annual, interim or
special audit of the books of such Person.
(j) Reports. Promptly upon transmission or receipt thereof, (i)
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as any
Consolidated Party shall send to its shareholders or to a holder of any
Indebtedness owed by any Consolidated Party in its capacity as such a
holder and (ii) upon the request of the Agent, all reports and written
information to and from the United States Environmental Protection Agency,
or any state or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration, or any state
or local agency responsible for health and safety matters, or any
successor agencies or authorities concerning environmental, health or
safety matters.
(k) Notices. Upon obtaining knowledge thereof, the Borrower will
give written notice to the Agent immediately of (i) the occurrence of an
event or condition consisting of a Default or Event of Default, specifying
the nature and existence thereof and what action the Credit Parties
propose to take with respect thereto, and (ii) the occurrence of any of
the following with respect to any Consolidated Party (A) the pendency or
commencement of any litigation, arbitral or governmental proceeding
against such Person which if adversely determined is likely to have a
Material Adverse Effect, (B) the institution of any proceedings against
such Person with respect to, or the receipt of notice by such Person of
potential liability or responsibility for violation, or alleged violation
of any federal, state or local law, rule or regulation, including but not
limited to, Environmental Laws, the violation of which could have a
Material Adverse Effect, or (C) any notice or determination concerning the
imposition of any withdrawal liability by a Multiemployer Plan against
such Person or any ERISA Affiliate, the determination that a Multiemployer
Plan is, or is expected to be, in reorganization within the meaning of
Title IV of ERISA or the termination of any Plan.
(l) ERISA. Upon obtaining knowledge thereof, the Borrower will give
written notice to the Agent promptly (and in any event within five
business days) of: (i) of any event or condition, including, but not
limited to, any Reportable Event, that constitutes, or might reasonably
lead to, an ERISA Event; (ii) with respect to any Multiemployer Plan, the
receipt of notice as prescribed in ERISA or otherwise of any withdrawal
liability assessed against the Borrower or any of its ERISA Affiliates, or
of a determination that any Multiemployer Plan is in reorganization or
insolvent (both within the meaning of Title IV of ERISA); (iii) the
failure to make full payment on or before the due date (including
extensions) thereof of all amounts which any Consolidated Party or any
ERISA Affiliate is required to contribute to each Plan pursuant to its
terms and as required to meet the minimum funding standard set forth in
ERISA and the Code with respect thereto; or (iv) any change in the funding
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status of any Plan that could have a Material Adverse Effect, together
with a description of any such event or condition or a copy of any such
notice and a statement by the chief financial officer of the Borrower
briefly setting forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being taken or is
proposed to be taken by the Credit Parties with respect thereto. Promptly
upon request, the Credit Parties shall furnish the Agent and the Lenders
with such additional information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each annual
report/return (Form 5500 series), as well as all schedules and attachments
thereto required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the Code, respectively, for
each "plan year" (within the meaning of Section 3(39) of ERISA).
(m) Environmental.
(i) Upon the reasonable written request of the Agent, the
Credit Parties will furnish or cause to be furnished to the Agent,
at the Borrower's expense, a report of an environmental assessment
of reasonable scope, form and depth, (including, where appropriate,
invasive soil or groundwater sampling) by a consultant reasonably
acceptable to the Agent as to the nature and extent of the presence
of any Materials of Environmental Concern on any Properties (as
defined in Section 6.16) and as to the compliance by any
Consolidated Party with Environmental Laws at such Properties. If
the Credit Parties fail to deliver such an environmental report
within seventy-five (75) days after receipt of such written request
then the Agent may arrange for same, and the Consolidated Parties
hereby grant to the Agent and their representatives access to the
Properties to reasonably undertake such an assessment (including,
where appropriate, invasive soil or groundwater sampling). The
reasonable cost of any assessment arranged for by the Agent pursuant
to this provision will be payable by the Borrower on demand and
added to the obligations secured by the Collateral Documents.
(ii) The Consolidated Parties will conduct and complete all
investigations, studies, sampling, and testing and all remedial,
removal, and other actions necessary to address all Materials of
Environmental Concern on, from or affecting any of the Properties to
the extent necessary to be in compliance with all Environmental Laws
and with the validly issued orders and directives of all
Governmental Authorities with jurisdiction over such Properties to
the extent any failure could have a Material Adverse Effect.
(n) Other Information. With reasonable promptness upon any such
request, such other information regarding the business, properties or
financial condition of any Consolidated Party as the Agent or the Required
Lenders may reasonably request.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 8.4, each Credit Party will,
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and will cause each of its Subsidiaries to, do all things necessary to preserve
and keep in full force and effect its existence, rights, franchises and
authority.
7.3 Books and Records.
Each Credit Party will, and will cause each of its Subsidiaries to, keep
complete and accurate books and records of its transactions in accordance with
good accounting practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will, and will cause each of its Subsidiaries to, comply
with all laws, rules, regulations and orders, and all applicable restrictions
imposed by all Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or restriction could
have a Material Adverse Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will, and will cause each of its Subsidiaries to, pay
and discharge (a) all taxes, assessments and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of its properties,
before they shall become delinquent, (b) all lawful claims (including claims for
labor, materials and supplies) which, if unpaid, might give rise to a Lien upon
any of its properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that no Consolidated
Party shall be required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate proceedings
and as to which adequate reserves therefor have been established in accordance
with GAAP, unless the failure to make any such payment (i) could give rise to an
immediate right to foreclose on a Lien securing such amounts or (ii) could have
a Material Adverse Effect.
7.6 Insurance.
(a) Each Credit Party will, and will cause each of its Subsidiaries
to, at all times maintain in full force and effect insurance (including worker's
compensation insurance, liability insurance, casualty insurance, business
interruption insurance and credit insurance) in such amounts, covering such
risks and liabilities and with such deductibles or self-insurance retentions as
are in accordance with normal industry practice (or as otherwise required by the
Collateral Documents). The Agent shall be named as loss payee or mortgagee, as
its interest may appear, and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral, and each provider of
any such insurance shall agree, by endorsement upon the policy or policies
issued by it or by independent instruments furnished to the Agent, that it will
give the Agent thirty (30) days prior written notice before any such policy or
policies shall be altered or canceled, and that no act or default of any
Consolidated Party or any other Person shall affect the rights of the Agent or
the Lenders under such policy or policies. The present insurance coverage of the
Consolidated Parties is outlined as to carrier, policy number, expiration date,
type and amount on Schedule 7.6.
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(b) In case of any material loss, damage to or destruction of the
Collateral of any Credit Party or any part thereof, such Credit Party shall
promptly give written notice thereof to the Agent generally describing the
nature and extent of such damage or destruction. In case of any loss, damage to
or destruction of the Collateral of any Credit Party or any part thereof, such
Credit Party, whether or not the insurance proceeds, if any, received on account
of such damage or destruction shall be sufficient for that purpose, at such
Credit Party's cost and expense, will promptly repair or replace the Collateral
of such Credit Party so lost, damaged or destroyed; provided, however, that such
Credit Party need not repair or replace the Collateral of such Credit Party so
lost, damaged or destroyed to the extent the failure to make such repair or
replacement (i) is desirable to the proper conduct of the business of such
Credit Party in the ordinary course and otherwise in the best interest of such
Credit Party; and (ii) would not materially impair the rights and benefits of
the Agent or the Lenders under the Collateral Documents, any other Credit
Document or any Hedging Agreement. In the event a Credit Party shall receive any
proceeds of such insurance in a net amount in excess of $100,000, such Credit
Party will immediately pay over such proceeds to the Agent, for payment on the
Credit Party Obligations; provided, however, that the Agent agrees to release
such insurance proceeds to such Credit Party for replacement or restoration of
the portion of the Collateral of such Credit Party lost, damaged or destroyed
if, but only if, (A) no Default or Event of Default shall have occurred and be
continuing at the time of release, (B) written application for such release is
received by the Agent from such Credit Party within 30 days of receipt of such
proceeds and (C) the Agent has received evidence reasonably satisfactory to it
that the Collateral lost, damaged or destroyed has been or will be replaced or
restored to its condition immediately prior to the loss, destruction or other
event giving rise to the payment of such insurance proceeds.
7.7 Maintenance of Property.
Each Credit Party will, and will cause each of its Subsidiaries to,
maintain and preserve its properties and equipment material to the conduct of
its business in good repair, working order and condition, normal wear and tear
and casualty and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto as may
be needed or proper, to the extent and in the manner customary for companies in
similar businesses.
7.8 Performance of Obligations.
Each Credit Party will, and will cause each of its Subsidiaries to,
perform in all material respects all of its obligations under the terms of all
material agreements, indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.
7.9 Use of Proceeds.
The Borrower will use the proceeds of the Loans and will use the Letters
of Credit solely for the purposes set forth in Section 6.14.
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7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours, each Credit Party
will, and will cause each of its Subsidiaries to, permit representatives
appointed by the Agent, including, without limitation, independent accountants,
agents, attorneys, and appraisers to visit and inspect its property, including
its books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and to
write down and record any information such representative obtains and shall
permit the Agent or its representatives to investigate and verify the accuracy
of information provided to the Agent and to discuss all such matters with the
officers, employees and representatives of such Person. The Credit Parties agree
that the Agent, and its representatives, may conduct an annual audit of the
Collateral, at the expense of the Borrower.
7.11 Financial Covenants.
(a) Funded Indebtedness to Capitalization Ratio. The Funded
Indebtedness to Capitalization Ratio, as of the last day of each fiscal
quarter of the Consolidated Parties, shall not be greater than:
From Effective Date through December 31, 1998 0.65 to 1.0
From January 1, 1999 through December 31, 1999 0.60 to 1.0
From January 1, 2000 and thereafter 0.55 to 1.0
(b) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio, as
of the last day of each fiscal quarter of the Consolidated Parties, shall
be greater than or equal to:
From the Effective Date through June 30, 1998 1.25 to 1.0
From July 1, 1998 and thereafter 1.50 to 1.0
(c) Leverage Ratio. The Leverage Ratio, as of the last day of each
fiscal quarter of the Consolidated Parties, shall be less than or equal
to:
From December 31, 1998 through December 30, 1999 3.75 to 1.0
From December 31, 1999 and thereafter 3.0 to 1.0
(d) Consolidated Net Worth. At all times the Consolidated Net Worth
of the Consolidated Parties shall be greater than or equal to the sum of
$62,500,000, increased on a cumulative basis as of the end of each fiscal
quarter of the Consolidated Parties, commencing with the fiscal quarter
ending March 31, 1998 by an amount equal to 75% of Consolidated Net Income
(to the extent positive) for the fiscal quarter then ended plus 100% of
the Net Cash Proceeds from any Equity Issuance occurring after the Closing
Date.
(e) Consolidated EBITDA. Consolidated EBITDA of the Consolidated
Parties on a consolidated basis, for the twelve month period ending on the
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last day of any fiscal quarter, shall be greater than or equal to (i) for
the fiscal quarter ending June 30, 1998, $15,000,000 and (ii) for the
fiscal quarter ending September 30, 1998, $20,000,000.
(f) Calculation Method. For purposes of calculating Consolidated
EBITDA for the fiscal quarters ending June 30, 1998 and September 30,
1998, such calculations shall be made using the relevant information
prepared by Deloitte & Touche LLP on behalf of the Borrower (a summary of
which is attached hereto as Schedule 7.11) with respect to the Robinson
Assets and the Stardust Assets. Therefore, (i) for the fiscal quarter
ending June 30, 1998, Consolidated EBITDA attributed to the Robinson
Assets for the period from July 1, 1997 through December 31, 1997 shall be
$363,904 and Consolidated EBITDA attributed to the Stardust Assets for the
period from July 1, 1997 through December 31, 1997 shall be $2,580,564,
and (ii) for the fiscal quarter ending September 30, 1998, Consolidated
EBITDA attributed to the Robinson Assets for the period from October 1,
1997 through December 31, 1997 shall be $181,952 and Consolidated EBITDA
attributed to the Stardust Assets for the period from October 1, 1997
through December 31, 1997 shall be $1,290,282.
7.12 Additional Credit Parties.
As soon as practicable and in any event within 30 days after any Person
becomes a Subsidiary of any Credit Party, the Borrower shall provide the Agent
with written notice thereof setting forth information in reasonable detail
describing all of the assets of such Person and shall (a) if such Person is a
Domestic Subsidiary of a Credit Party, cause such Person to execute a Joinder
Agreement in substantially the same form as Exhibit 7.12, (b) cause 100% (if
such Person is a Domestic Subsidiary of a Credit Party) or 66% (if such Person
is a direct Material Foreign Subsidiary of a Credit Party) of the Capital Stock
of such Person to be delivered to the Agent (together with undated stock powers,
if any, signed in blank) and pledged to the Agent pursuant to an appropriate
pledge agreement(s) in substantially the form of the Pledge Agreement and
otherwise in form acceptable to the Agent and (c) cause such Person to (i) if
such Person is a Domestic Subsidiary, to pledge all of its assets to the Agent
pursuant to a security agreement in substantially the form of Security Agreement
and otherwise in a form acceptable to the Agent, (d) if such Person has any
Subsidiaries (i) deliver all of the Capital Stock of such Domestic Subsidiaries
and 66% of the Capital Stock of such Material Foreign Subsidiaries (together
with undated stock powers signed in blank) to the Agent and (ii) execute a
pledge agreement in substantially the form of the Pledge Agreement and otherwise
in a form acceptable to the Agent and (e) if such Person owns or leases any real
property in the United States of America execute any and all necessary
mortgages, deeds of trust, deeds to secure debt, leasehold mortgages, collateral
assignments or other appropriate real estate collateral documentation in a form,
content and scope satisfactory to the Agent and (ii) deliver such other
documentation as the Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate UCC-1 financing
statements, real estate title insurance policies, environmental reports,
landlord's waivers, certified resolutions and other organizational and
authorizing documents of such Person, favorable opinions of counsel to such
Person (which shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above and the
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perfection of the Agent's liens thereunder), all in form, content and scope
reasonably satisfactory to the Agent.
7.13 Interest Rate Protection Agreements.
The Borrower shall, within 60 days of the Closing Date, enter into
interest rate protection agreements, in form and substance satisfactory to the
Agent, protecting against fluctuations in interest rates, which agreements shall
provide coverage in an original principal amount equal to at least $45,000,000
with a final maturity of at least three (3) years.
7.14 Environmental Laws.
(a) The Consolidated Parties shall comply in all material respects
with, and take reasonable actions to ensure compliance in all material
respects by all tenants and subtenants, if any, with, all applicable
Environmental Laws and obtain and comply in all material respects with and
maintain, and take reasonable actions to ensure that all tenants and
subtenants obtain and comply in all material respects with and maintain,
any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except to the extent that
failure to do so would not reasonably be expected to have a Material
Adverse Effect;
(b) The Consolidated Parties shall (i) conduct and complete all
investigations, studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws and promptly comply in
all material respects with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws except to the extent
that the same are being contested in good faith by appropriate proceedings
and the failure to do or the pendency of such proceedings would not
reasonably be expected to have a Material Adverse Effect and (ii)(A)
conduct a Phase II environmental site assessment at each of the Mortgaged
Properties identified on Schedule 7.14(b)(ii) within 45 days of the
Closing Date in order to investigate the concerns specified in the letter
dated April 24, 1998 prepared by Trigon Engineering Consultants, Inc. (a
copy of which is attached hereto as Schedule 7.14(b)(ii)(A)) and (B) after
completion of the Phase II environmental site assessments referenced
above, promptly and diligently undertake to complete and perform any
remediation, removal or other action at such Mortgaged Properties which
are (I) recommended by such Phase II environmental site assessments and
(II) deemed necessary by any Lender in its reasonable discretion in
accordance with all applicable laws and regulations; and
(c) The Consolidated Parties shall defend, indemnify and hold
harmless the Agent and the Lenders, and their respective employees,
agents, officers and directors, from and against any and all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to
the operations of the Borrower or any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
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attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor. The agreements
in this paragraph shall survive repayment of the Loans and all other
amounts payable hereunder, and termination of the Commitments.
7.15 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire or
lease any real property or (b) acquire any intellectual property, securities
instruments, chattel paper or other personal property required to be delivered
to the Agent as Collateral hereunder or under any of the Collateral Documents,
the Borrower shall notify the Agent of same in each case as soon as practicable
after the acquisition thereof or execution of such lease agreement, as
appropriate. Each Credit Party shall take such action as requested by the Agent
and at its own expense, to ensure that the Agent have a first priority perfected
Lien in all owned real property (and in such leased real property as requested
by the Agent or the Required Lenders) and all personal property of the Credit
Parties (whether now owned or hereafter acquired), subject only to Permitted
Liens.
7.16 Records and Schedules of Inventory.
The Borrower will keep correct and accurate daily records, itemizing and
describing the kind, type, location, quality and quantity of Inventory, the
Borrower's standard cost therefor and selling prices thereof, and the daily
withdrawals therefrom and additions thereto, and shall furnish to the Agent from
time to time at reasonable intervals designated by the Agent, a current Schedule
of Inventory based upon its most recent physical inventory and its inventory
records. The Borrower will conduct a physical inventory no less frequently than
annually, and more often if reasonably requested by the Agent, and shall furnish
to the Agent such other documents and reports as the Agent shall request with
respect to the Inventory, including, without limitation, copies of invoices
relating to the Borrower's purchase of Inventory. The Borrower shall keep its
inventory records on a perpetual basis for all inventory other than dyes, yarns
and supplies.
7.17 Assignments, Records and Schedules of Receivables.
From time to time at intervals designated by the Agent, the Borrower will
provide the Agent with Schedules of Receivables describing all Receivables
created or acquired by the Borrower. If requested by the Agent, the Borrower
shall furnish the Agent with copies of proof of delivery and the original copy
of all documents, including, without limitation, repayment histories and present
status reports, relating to the Receivables so scheduled and such other matter
and information relating to the status of then existing Receivables as the Agent
shall reasonably request.
7.18 Year 2000 Compatibility.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, take all action necessary to assure that its computer based
systems are able to operate and effectively process data including dates on and
after January 1, 2000, and, at the reasonable request of the Agent or the
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Required Lenders, the Credit Parties will provide evidence to the Lenders of
such year 2000 compatibility.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long as this Credit
Agreement is in effect or any amounts payable hereunder or under any other
Credit Document shall remain outstanding, and until all of the Commitments
hereunder shall have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower and its Subsidiaries set forth in
Schedule 8.1;
(c) purchase money Indebtedness (including Capital Leases) or
Synthetic Leases hereafter incurred by the Borrower or any of its
Subsidiaries to finance the purchase of fixed assets provided that (i) the
total of all such Indebtedness for all such Persons taken together shall
not exceed an aggregate principal amount of $1,000,000 at any one time
outstanding (including any such Indebtedness referred to in subsection (b)
above); (ii) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed; and (iii) no such Indebtedness shall be
refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its Subsidiaries in
respect of Hedging Agreements entered into in order to manage existing or
anticipated interest rate or exchange rate risks and not for speculative
purposes; and
(e) other unsecured Indebtedness of the Borrower and its
Subsidiaries in an amount not to exceed $2,000,000 in the aggregate at any
one time.
8.2 Liens.
The Credit Parties will not permit any Consolidated Party to contract,
create, incur, assume or permit to exist any Lien with respect to any of its
Property, whether now owned or after acquired, except for Permitted Liens.
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8.3 Nature of Business.
The Credit Parties will not permit any Consolidated Party to substantively
alter the character or conduct of the business conducted by such Person as of
the Closing Date.
8.4 Consolidation, Merger, Dissolution, etc.
The Credit Parties will not permit any Consolidated Party to enter into
any transaction of merger or consolidation or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution); provided that,
notwithstanding the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries provided that (i) the
Borrower shall be the continuing or surviving corporation and (ii) the Credit
Parties shall cause to be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the Credit Parties to be in
compliance with the terms hereof after giving effect to such transaction, (b)
any Credit Party other than the Borrower may merge or consolidate with any other
Credit Party other than the Borrower provided that the Credit Parties shall
cause to be executed and delivered such documents, instruments and certificates
as the Agent may request so as to cause the Credit Parties to be in compliance
with the terms hereof after giving effect to such transaction and (c) any
Wholly-Owned Subsidiary of the Borrower may dissolve, liquidate or wind up its
affairs at any time; provided that the Credit Parties shall have executed and
delivered such documents, instruments and certificates as the Agent may request
so as to cause the Credit Parties to be in compliance with the terms hereof
after giving effect to such dissolution, liquidation or wind-up.
8.5 Investments.
The Credit Parties will not permit any Consolidated Party to make
Investments in or to any Person, except for Permitted Investments.
8.6 Restricted Payments.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) to make dividends payable solely in the same class of
Capital Stock of such Person and (b) to make dividends or other distributions
payable to the Borrower (directly or indirectly through Subsidiaries).
8.7 Prepayments of Indebtedness, etc.
The Credit Parties will not permit any Consolidated Party to (a) after the
issuance thereof, amend or modify (or permit the amendment or modification of)
any of the terms of any Indebtedness if such amendment or modification would add
or change any terms in a manner adverse to the issuer of such Indebtedness, or
shorten the final maturity or average life to maturity or require any payment to
be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof or (b) make (or
give any notice with respect thereto) any voluntary or optional payment or
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prepayment or redemption or acquisition for value of (including without
limitation, by way of depositing money or securities with the trustee with
respect thereto before due for the purpose of paying when due), refund,
refinance or exchange of any other Indebtedness.
8.8 Transactions with Affiliates.
The Credit Parties will not permit any Consolidated Party to enter into or
permit to exist any transaction or series of transactions with any officer,
director, shareholder, Subsidiary or Affiliate of a Consolidated Party other
than (a) advances of working capital to any Credit Party other than the
Borrower, (b) transfers of cash and assets to any Credit Party other than the
Borrower, (c) transactions permitted by Section 8.4, Section 8.5, or Section
8.6, (d) normal compensation and reimbursement of expenses of officers and
directors, and (e) except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the ordinary course of
such Person's business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arms-length transaction
with a Person other than an officer, director, shareholder, Subsidiary or
Affiliate of a Consolidated Party.
8.9 Fiscal Year; Organizational Documents.
The Credit Parties will not permit any Consolidated Party to change its
fiscal year or amend, modify or change its articles of incorporation (or
corporate charter or other similar organizational document) or bylaws (or other
similar document) without the prior written consent of the Required Lenders.
8.10 Limitation on Restricted Actions.
The Credit Parties will not permit any Consolidated Party to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, (e) grant a lien
on its properties or assets whether now owned or hereafter acquired or (f) act
as a Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(f) above) for such
encumbrances or restrictions existing under or by reason of (i) this Credit
Agreement and the other Credit Documents, or (ii) applicable law.
8.11 Ownership of Subsidiaries; Limitations on Borrower.
Notwithstanding any other provisions of this Credit Agreement to the
contrary, the Credit Parties will not permit any Consolidated Party to (a)
permit any Person (other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower) to own any Capital Stock of any Subsidiary of the Borrower, (b) permit
any Subsidiary of the Borrower to issue Capital Stock (except to the Borrower,
to a Wholly-Owned Subsidiary of the Borrower, (c) permit, create, incur, assume
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or suffer to exist any Lien thereon, in each case except (i) to qualify
directors where required by applicable law or to satisfy other requirements of
applicable law with respect to the ownership of Capital Stock of Foreign
Subsidiaries, (ii) with respect to International Sewing S.A. of C.V., up to 40%
of the Capital Stock may be owned by G.M.S. Internacional, a S.A. de C.V., or
(iii) for Permitted Liens and (d) notwithstanding anything to the contrary
contained in clause (b) above, permit any Subsidiary of the Borrower to issue
any shares of preferred Capital Stock.
8.12 Sale Leasebacks.
Except as permitted by Section 8.1(c), the Credit Parties will not permit
any Consolidated Party to, directly or indirectly, become or remain liable as
lessee or as guarantor or other surety with respect to any lease, whether an
Operating Lease or a Capital Lease, of any Property (whether real, personal or
mixed), whether now owned or hereafter acquired, (a) which such Consolidated
Party has sold or transferred or is to sell or transfer to a Person which is not
a Consolidated Party or (b) which such Consolidated Party intends to use for
substantially the same purpose as any other Property which has been sold or is
to be sold or transferred by such Consolidated Party to another Person which is
not a Consolidated Party in connection with such lease.
8.13 Asset Dispositions.
The Credit Parties will not permit any Consolidated Party to sell, lease,
transfer or otherwise dispose of any Property (including accounts and notes
receivable, with or without recourse) other than (i) the sale of inventory in
the ordinary course of business for fair consideration, (ii) the sale or
disposition of machinery and equipment no longer used or useful in the conduct
of such Person's business and (iii) other sales of assets during any fiscal year
having an aggregate fair market value of less than an amount equal to the lesser
of (A) 5% of Total Assets of the Consolidated Parties and (B) for the most
recent fiscal year of the Borrower, 5% of Consolidated EBITDA of the
Consolidated Parties.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of the
following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
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(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings
under Letters of Credit, or of any Fees or other amounts owing
hereunder, under any of the other Credit Documents or in connection
herewith or therewith; or
(b) Representations. Any representation, warranty or statement made
or deemed to be made by any Credit Party herein, in any of the other
Credit Documents, or in any statement or certificate delivered or required
to be delivered pursuant hereto or thereto shall prove untrue in any
material respect on the date as of which it was deemed to have been made;
or
(c) Covenants. Any Credit Party shall
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(j), 7.2, 7.9, 7.11,
7.12, or 8.1 through 8.13, inclusive;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 7.1(a), (b), (c) or (d)
and such default shall continue unremedied for a period of at least
5 days after the earlier of a responsible officer of a Credit Party
becoming aware of such default or notice thereof by the Agent; or
(iii) default in the due performance or observance by it of
any term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 9.1)
contained in this Credit Agreement and such default shall continue
unremedied for a period of at least 30 days after the earlier of a
responsible officer of a Credit Party becoming aware of such default
or notice thereof by the Agent.
(d) Other Credit Documents. (i) Any Credit Party shall default in
the due performance or observance of any term, covenant or agreement in
any of the other Credit Documents (subject to applicable grace or cure
periods, if any), or (ii) any Credit Document shall fail to be in full
force and effect or to give the Agent and/or the Lenders the Liens,
rights, powers and privileges purported to be created thereby, or any
Credit Party shall so state in writing; or
(e) Guaranties. Except as the result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted under Section
8.4, the guaranty given by any Guarantor hereunder (including any
Additional Credit Party) or any provision thereof shall cease to be in
full force and effect, or any Guarantor (including any Additional Credit
Party) hereunder or any Person acting by or on behalf of such Guarantor
shall deny or disaffirm such Guarantor's obligations under such guaranty,
or any Guarantor shall default in the due performance or observance of any
term, covenant or agreement on its part to be performed or observed
pursuant to any guaranty; or
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(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect
to any Consolidated Party; or
(g) Defaults under Other Agreements.
(i) Any Consolidated Party shall default in the performance or
observance (beyond the applicable grace period with respect thereto,
if any) or any material obligation or condition of any contract or
lease material to the Consolidated Parties; or
(ii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Credit Agreement) in excess of $1,000,000 in
the aggregate for the Consolidated Parties taken as a whole, (A) any
Consolidated Party shall (1) default in any payment (beyond the
applicable grace period with respect thereto, if any) with respect
to any such Indebtedness, or (2) the occurrence and continuance of a
default in the observance or performance relating to such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event or condition shall
occur or condition exist, the effect of which default or other event
or condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse of
time is required), any such Indebtedness to become due prior to its
stated maturity; or (B) any such Indebtedness shall be declared due
and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof.
(h) Judgments. One or more judgments or decrees shall be entered
against one or more of the Consolidated Parties involving a liability of
$1,000,000 or more in the aggregate (to the extent not paid or fully
covered by insurance provided by a carrier who has acknowledged coverage
and has the ability to perform) and any such judgments or decrees shall
not have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event
or condition could have a Material Adverse Effect (i) any "accumulated
funding deficiency," as such term is defined in Section 302 of ERISA and
Section 412 of the Code, whether or not waived, shall exist with respect
to any Plan, or any lien shall arise on the assets of any Consolidated
Party or any ERISA Affiliate in favor of the PBGC or a Plan; (ii) an ERISA
Event shall occur with respect to a Single Employer Plan, which is, in the
reasonable opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (iii) an ERISA Event shall
occur with respect to a Multiemployer Plan or Multiple Employer Plan,
which is, in the reasonable opinion of the Agent, likely to result in (A)
the termination of such Plan for purposes of Title IV of ERISA, or (B) any
Consolidated Party or any ERISA Affiliate incurring any liability in
connection with a withdrawal from, reorganization of (within the meaning
of Section 4241 of ERISA), or insolvency or (within the meaning of Section
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4245 of ERISA) such Plan; or (iv) any prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility shall occur which may subject any Consolidated
Party or any ERISA Affiliate to any liability under Sections 406, 409,
502(i), or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any Consolidated Party or
any ERISA Affiliate has agreed or is required to indemnify any person
against any such liability; or
(j) Ownership. There shall occur a Change of Control.
(k) Environmental. The actual or potential cost to the Consolidated
Parties to complete the clean up, remediation, removal or other actions
(i) recommended in the Phase II environmental site assessments referenced
in Section 7.14(b)(ii) and (ii) deemed necessary by any Lender in its
reasonable discretion, shall exceed $2,000,000 in the aggregate.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 11.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 11.6), the Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Credit Parties take any of the following
actions:
(a) Termination of Commitments. Declare the Commitments terminated
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any accrued
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness
or obligations of any and every kind owing by the Borrower to the Agent
and/or any of the Lenders hereunder to be due whereupon the same shall be
immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower
agrees that upon receipt of such notice, or upon the occurrence of an
Event of Default under Section 9.1(f), it will immediately pay) to the
Agent additional cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security for the LOC
Obligations in respect of subsequent drawings under all then outstanding
Letters of Credit in an amount equal to the maximum aggregate amount which
may be drawn under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
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Notwithstanding the foregoing, if an Event of Default specified in Section
9.1(f) shall occur, then the Commitments shall automatically terminate and all
Loans, all reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid Fees and
other indebtedness or obligations owing to the Agent and/or any of the Lenders
hereunder automatically shall immediately become due and payable without the
giving of any notice or other action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the Agent to act as
its agent under this Credit Agreement and the other Credit Documents with such
powers and discretion as are specifically delegated to the Agent by the terms of
this Credit Agreement and the other Credit Documents, together with such other
powers as are reasonably incidental thereto. The Agent (which term as used in
this sentence and in Section 10.5 and the first sentence of Section 10.6 hereof
shall include its Affiliates and its own and its Affiliates' officers,
directors, employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit Agreement and
shall not be a trustee or fiduciary for any Lender; (b) shall not be responsible
to the Lenders for any recital, statement, representation, or warranty (whether
written or oral) made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or received by any
of them under, any Credit Document, or for the value, validity, effectiveness,
genuineness, enforceability, or sufficiency of any Credit Document, or any other
document referred to or provided for therein or for any failure by any Credit
Party or any other Person to perform any of its obligations thereunder; (c)
shall not be responsible for or have any duty to ascertain, inquire into, or
verify the performance or observance of any covenants or agreements by any
Credit Party or the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of its Subsidiaries
or Affiliates; (d) shall not be required to initiate or conduct any litigation
or collection proceedings under any Credit Document; and (e) shall not be
responsible for any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification, notice,
instrument, writing, or other communication (including, without limitation, any
thereof by telephone or telecopy) believed by it to be genuine and correct and
to have been signed, sent or made by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel for
any Credit Party), independent accountants, and other experts selected by the
Agent. The Agent may deem and treat the payee of any Note as the holder thereof
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for all purposes hereof unless and until the Agent receives and accepts an
Assignment and Acceptance executed in accordance with Section 11.3(b) hereof. As
to any matters not expressly provided for by this Credit Agreement, the Agent
shall not be required to exercise any discretion or take any action, but shall
be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding on all of the Lenders; provided, however,
that the Agent shall not be required to take any action that exposes the Agent
to personal liability or that is contrary to any Credit Document or applicable
law or unless it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking any such action.
10.3 Defaults.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of a Default or Event of Default unless the Agent has received
written notice from a Lender or the Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall (subject to Section 10.2 hereof) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders, provided that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interest of the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Loans made by it, NationsBank (and
any successor acting as Agent) in its capacity as a Lender hereunder shall have
the same rights and powers hereunder as any other Lender and may exercise the
same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. NationsBank (and any successor acting as Agent) and its
Affiliates may (without having to account therefor to any Lender) accept
deposits from, lend money to, make investments in, provide services to, and
generally engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it were not acting
as Agent, and NationsBank (and any successor acting as Agent) and its Affiliates
may accept fees and other consideration from any Credit Party or any of its
Subsidiaries or Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Agent (to the extent not reimbursed
under Section 11.5 hereof, but without limiting the obligations of the Borrower
under such Section) ratably in accordance with their respective Commitments, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or disbursements
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of any kind and nature whatsoever that may be imposed on, incurred by or
asserted against the Agent (including by any Lender) in any way relating to or
arising out of any Credit Document or the transactions contemplated thereby or
any action taken or omitted by the Agent under any Credit Document; provided
that no Lender shall be liable for any of the foregoing to the extent they arise
from the gross negligence or willful misconduct of the Person to be indemnified.
Without limitation of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or expenses payable by
the Borrower under Section 11.5, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements in this
Section 10.5 shall survive the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Credit Parties and their
Subsidiaries and decision to enter into this Credit Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under the Credit Documents. Except for notices, reports, and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the affairs, financial
condition, or business of any Credit Party or any of its Subsidiaries or
Affiliates that may come into the possession of the Agent or any of its
Affiliates.
10.7 Successor Agent.
The Agent may resign at any time by giving notice thereof to the Lenders
and the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized under the laws of the
United States of America having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become vested with all
the rights, powers, discretion, privileges, and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Agent.
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SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower, Guarantors and
the Agent, set forth below, and, in the case of the Lenders, set forth on
Schedule 2.1(a), or at such other address as such party may specify by written
notice to the other parties hereto:
if to the Borrower:
Pluma, Inc.
P. O. Drawer 487
Eden, North Carolina 27289-0487
Attn: Forrest H. Truitt
Telephone: (910) 635-4000
Telecopy: (910) 635-1814
if to a Guarantor:
[Name of Guarantor]
Pluma, Inc.
P. O. Drawer 487
Eden, North Carolina 27289-0487
Attn: Forrest H. Truitt
Telephone: (910) 635-4000
Telecopy: (910) 635-1814
if to the Agent:
NationsBank, N. A.
Independence Center, 15th Floor
NC1-001-15-04
101 North Tryon Street
Charlotte, North Carolina 28255
Attn: Agency Services
Telephone: (704) 386-8958
Telecopy: (704) 386-9923
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with a copy to:
NationsBank, N. A.
8 Lester Street
Martinsville, Virginia 24112
Attn: Carolyn Shough
Telephone: (540) 666-7031
Telecopy: (540) 666-7039
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender (or any
of its Affiliates) to or for the credit or the account of any Credit Party
against any and all of the obligations of such Person now or hereafter existing
under this Credit Agreement, under the Notes, under any other Credit Document or
otherwise, irrespective of whether such Lender shall have made any demand under
hereunder or thereunder and although such obligations may be unmatured. Each
Lender agrees promptly to notify any affected Credit Party after any such
set-off and application made by such Lender; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 11.2 are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that none of the Credit Parties may assign or
transfer any of its interests and obligations without prior written
consent of the Lenders; provided further that the rights of each Lender to
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 11.3.
(b) Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this
Credit Agreement, any such partial assignment shall be in an amount
at least equal to $5,000,000 (or, if less, the remaining amount of
the Commitment being assigned by such Lender) or an integral
multiple of $1,000,000 in excess thereof;
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(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations
under this Credit Agreement and the Notes; and
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the
form of Exhibit 11.3(b) hereto, together with any Note subject to
such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the
extent of such assignment, have the obligations, rights, and benefits of a
Lender hereunder and the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its obligations
under this Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state
thereof, it shall deliver to the Borrower and the Agent certification as
to exemption from deduction or withholding of Taxes in accordance with
Section 3.11.
(c) The Agent shall maintain at its address referred to in Section
11.1 a copy of each Assignment and Acceptance delivered to and accepted by
it and a register for the recordation of the names and addresses of the
Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit
11.3(b) hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations
under this Credit Agreement (including all or a portion of its Commitment
and its Loans); provided, however, that (i) such Lender's obligations
under this Credit Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be entitled to the
benefit of the yield protection provisions contained in Sections 3.7
through 3.12, inclusive, and the right of set-off contained in Section
11.2, and (iv) the Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations
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under this Credit Agreement, and such Lender shall retain the sole right
to enforce the obligations of the Borrower relating to its Loans and its
Notes and to approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments, modifications,
or waivers decreasing the amount of principal of or the rate at which
interest is payable on such Loans or Notes, extending any scheduled
principal payment date or date fixed for the payment of interest on such
Loans or Notes, or extending its Commitment).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Notes to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by
such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(g) Any Lender may furnish any information concerning the Borrower
or any of its Subsidiaries in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 11.14
hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender in exercising
any right, power or privilege hereunder or under any other Credit Document and
no course of dealing between the Agent or any Lender and any of the Credit
Parties shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
provided herein are cumulative and not exclusive of any rights or remedies which
the Agent or any Lender would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle the Borrower or any other Credit Party to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all costs and expenses of the
Agent in connection with the syndication, preparation, execution, delivery,
administration, modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and expenses of counsel for the Agent
(including the cost of internal counsel) with respect thereto and with respect
to advising the Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay on demand all costs and expenses
of the Agent and the Lenders, if any (including, without limitation, reasonable
attorneys' fees and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal proceedings, or
otherwise) of the Credit Documents and the other documents to be delivered
hereunder.
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(b) The Borrower agrees to indemnify and hold harmless the Agent and each
Lender and each of their Affiliates and their respective officers, directors,
employees, agents, and advisors (each, an "Indemnified Party") from and against
any and all claims, damages, losses (other than losses created by a Lender's
internal interest rate management policies and practices), liabilities, costs,
and expenses (including, without limitation, reasonable attorneys' fees) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding or
preparation of defense in connection therewith) the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 11.5 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against the Agent, any
Lender, any of their Affiliates, or any of their respective directors, officers,
employees, attorneys, agents, and advisers, on any theory of liability, for
special, indirect, consequential, or punitive damages arising out of or
otherwise relating to the Credit Documents, any of the transactions contemplated
herein or the actual or proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 11.5 shall survive the repayment of the Loans, LOC Obligations and
other obligations under the Credit Documents and the termination of the
Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
(a) without the consent of each Lender affected thereby, neither
this Credit Agreement nor any other Credit Document may be amended to:
(i) extend the final maturity of any Loan or the time of payment
of any reimbursement obligation, or any portion thereof, arising
from drawings under Letters of Credit, or extend or waive any
Principal Amortization Payment of any Loan, or any portion thereof;
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(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any
post-default increase in interest rates) thereon or Fees hereunder;
(iii) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit;
(iv) increase the Commitment of a Lender over the amount thereof
in effect (it being understood and agreed that a waiver of any
Default or Event of Default or mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender);
(v) release all or substantially all of the Collateral;
(vi) except as the result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted under Section 8.4,
release the Borrower, any Material Subsidiary or substantially all
of the other Credit Parties from its or their obligations under the
Credit Documents,
(vii) amend, modify or waive any provision of this Section 11.6 or
Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15(b),
9.1(a), 11.2, 11.3, 11.5 or 11.9;
(viii) reduce any percentage specified in, or otherwise modify, the
definition of Required Lenders; or
(ix) consent to the assignment or transfer by the Borrower or all
or substantially all of the other Credit Parties of any of its or
their rights and obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of Section 10 may
be amended;
(c) without the consent of the Issuing Lender, no provision of
Section 2.2 may be amended;
(d) without the consent of the Swingline Lender, no provision of
Section 2.4 may be amended; and
(e) without the consent of the Required Lenders, no mandatory
prepayment may be waived.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to vote as
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such Lender sees fit on any bankruptcy reorganization plan that affects the
Loans, and each Lender acknowledges that the provisions of Section 1126(c) of
the Bankruptcy Code supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any of
the parties hereto of an executed counterpart of this Credit Agreement shall be
as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
11.9 Survival.
All indemnities set forth herein, including, without limitation, in
Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall survive the execution and
delivery of this Credit Agreement, the making of the Loans, the issuance of the
Letters of Credit, the repayment of the Loans, LOC Obligations and other
obligations under the Credit Documents and the termination of the Commitments
hereunder, and all representations and warranties made by the Credit Parties
herein shall survive delivery of the Notes and the making of the Loans
hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA. Any legal action or proceeding with respect
to this Agreement or any other Credit Document may be brought in the
courts of the State of North Carolina in Mecklenburg County, or of the
United States for the Western District of North Carolina, and, by
execution and delivery of this Credit Agreement, each of the Credit
Parties hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive jurisdiction of
such courts. Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Credit
Party in any other jurisdiction.
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(b) Each of the Credit Parties hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
of the aforesaid actions or proceedings arising out of or in connection
with this Credit Agreement or any other Credit Document brought in the
courts referred to in subsection (a) above and hereby further irrevocably
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in an
inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT, THE LENDERS,
THE BORROWER AND THE CREDIT PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower,
the Guarantors and the Agent, and the Agent shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors, the
Agent and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding, no Letters of Credit
shall be outstanding, all of the Credit Party Obligations have been
irrevocably satisfied in full and all of the Commitments hereunder shall
have expired or been terminated.
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11.14 Conflict.
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
11.15 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the Borrower
pursuant to this Credit Agreement that is marked confidential; provided that
nothing herein shall prevent any Lending Party from disclosing such information
(a) to any other Lending Party or any affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending Party or affiliate
of any Lending Party, (b) to any other Person if reasonably incidental to the
administration of the credit facility provided herein, (c) as required by any
law, rule or regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency or authority,
(f) that is or becomes available to the public or that is or becomes available
to any Lending Party other than as a result of disclosure by any Lending Party
prohibited by this Credit Agreement, (g) in connection with any litigation to
which such Lending Party or any of its affiliates may be a party, (h) to the
extent necessary in connection with the exercise of any remedy under this Credit
Agreement or any other Credit Document, and (i) subject to provisions
substantially similar to those contained in this Section, to any actual or
proposed participant or assignee.
[Signature Page to Follow]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: PLUMA, INC.
a North Carolina corporation
By:
Name:
Title:
LENDERS: NATIONSBANK, N. A.,
individually in its capacity as a
Lender and in its capacity as Agent
By:
Name:
Title:
CENTURA BANK
By:
Name:
Title:
SUNTRUST BANK, ATLANTA
By:
Name:
Title:
FLEET NATIONAL BANK
By:
Name:
Title:
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REVOLVING NOTE
$15,217,391.30 April 23, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of CENTURA BANK, its successors
and assigns (the "Lender"), at the office of NationsBank, N.A. (the "Agent") as
set forth in that certain Credit Agreement dated as of April 23, 1998 among the
Borrower, the other Credit Parties party thereto, the Lenders named therein
(including the Lender) and the Agent (as amended, modified, extended or restated
from time to time, the "Credit Agreement"), the principal sum of $15,217,391.30
(or such lesser amount as shall equal the aggregate unpaid principal amount of
the Revolving Loans made by the Lender to the Borrower under the Credit
Agreement), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Revolving Loan, at such office, in like money and funds, for the period
commencing on the date of such Revolving Loan until such Revolving Loan shall be
paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Revolving Loans evidenced thereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3 of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PLUMA, INC.
By: Forrest H. Truitt, II
Name: Forrest H. Truitt, II
Title: EVP & CFO
<PAGE>
REVOLVING NOTE
$15,217,391.30 April 23, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of SUNTRUST BANK, ATLANTA, its
successors and assigns (the "Lender"), at the office of NationsBank, N.A. (the
"Agent") as set forth in that certain Credit Agreement dated as of April 23,
1998 among the Borrower, the other Credit Parties party thereto, the Lenders
named therein (including the Lender) and the Agent (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), the principal
sum of $15,217,391.30 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Revolving Loans evidenced thereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3 of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PLUMA, INC.
By: Forrest H. Truitt, II
Name: Forrest H. Truitt, II
Title: EVP & CFO
<PAGE>
TERM NOTE
$9,782,608.70 April 23, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of CENTURA BANK, its successors
and assigns (the "Lender"), at the office of NationsBank, N.A., as Agent (the
"Agent"), as set forth in that certain Credit Agreement dated as of April 23,
1998, among the Borrower, the other Credit Parties thereto, the Lenders named
therein (including the Lender) and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"), the principal
sum of $9,782,608.70 (or such lesser amount as shall equal the aggregate unpaid
principal of the Term Loan made by the Lender to the Borrower under the Credit
Agreement) in lawful money of the United States and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of such Term Loan
at such office, in like money and funds, for the period commencing on the date
of such Term Loan until such Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement and
evidences the Term Loan made by the Lender thereunder. Capitalized terms used in
this Term Note and not otherwise defined shall have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Term Loan evidenced by this Term Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
such Term Loan upon the terms and conditions specified therein. In the event
this Term Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Each payment made on account of the principal of the Term Loan shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Term Note in respect of the Term Loan to be evidenced by this Term Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Term Loan evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained for
such purpose by or on behalf of the Borrower as provided in Section 11.3 of the
Credit Agreement.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed
as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
T:\14929\original\8-11-98\330145.doc
T:\14929\original\8-11-98\330145.doc
TERM NOTE
$9,782,608.70 April 23, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of SUNTRUST BANK, ATLANTA, its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), as set forth in that certain Credit Agreement dated as of
April 23, 1998, among the Borrower, the other Credit Parties thereto, the
Lenders named therein (including the Lender) and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), the principal sum of $9,782,608.70 (or such lesser amount as shall
equal the aggregate unpaid principal of the Term Loan made by the Lender to the
Borrower under the Credit Agreement) in lawful money of the United States and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
such Term Loan at such office, in like money and funds, for the period
commencing on the date of such Term Loan until such Term Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement and
evidences the Term Loan made by the Lender thereunder. Capitalized terms used in
this Term Note and not otherwise defined shall have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Term Loan evidenced by this Term Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
such Term Loan upon the terms and conditions specified therein. In the event
this Term Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Each payment made on account of the principal of the Term Loan shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Term Note in respect of the Term Loan to be evidenced by this Term Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Term Loan evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained for
such purpose by or on behalf of the Borrower as provided in Section 11.3 of the
Credit Agreement.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed
as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
T:\14929\original\8-11-98\330154.doc
T:\14929\original\8-11-98\330154.doc
SWINGLINE NOTE
$5,000,000 April 23, 1998
FOR VALUE RECEIVED, Pluma, Inc. a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Swingline Lender"), at the office of NationsBank,
N.A. as Agent (the "Agent"), as set forth in that certain Credit Agreement dated
as of April 23, 1998 among the Borrower, the other Credit Parties party thereto,
the Lenders party thereto (including the Swingline Lender) and the Agent (as it
may be amended, modified, extended or restated from time to time, the "Credit
Agreement"), the principal sum of $5,000,000 (or such lesser amount as shall
equal the aggregate unpaid principal amount of the Swingline Loans made by the
Swingline Lender to the Borrower under the Credit Agreement), in lawful money of
the United States of America and in immediately available funds, as provided in
the Credit Agreement, and to pay interest on the unpaid principal amount of each
such Swingline Loan, at such office, in like money and funds, until such
Swingline Loan shall be paid in full, at the rates per annum and as provided in
the Credit Agreement.
Capitalized terms used in this Swingline Note and not otherwise defined
shall have the respective meanings assigned to them in the Credit Agreement and
the terms and conditions of the Credit Agreement are expressly incorporated
herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Swingline Loans evidenced by this Swingline Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Swingline Loans upon the terms and conditions specified therein.
In the event this Swingline Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
THIS SWINGLINE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
by its duly authorized officer as of the day and year first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
CHAR1\TMB\BANK\330126
CHAR1\TMB\BANK\330126
REVOLVING NOTE
$9,130,434.78 May 15, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of FLEET BANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A. (the
"Agent") as set forth in that certain Credit Agreement dated as of April 23,
1998 among the Borrower, the other Credit Parties party thereto, the Lenders
named therein (including the Lender) and the Agent (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), the principal
sum of $9,130,434.78 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Revolving Loans evidenced thereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3 of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
CHAR1\TMB\BANK\330151
CHAR1\TMB\BANK\\330151
TERM NOTE
$5,869,565.22 May 15, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of FLEET BANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), as set forth in that certain Credit Agreement dated as of
April 23, 1998, among the Borrower, the other Credit Parties thereto, the
Lenders named therein (including the Lender) and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), the principal sum of $5,869,565.22 (or such lesser amount as shall
equal the aggregate unpaid principal of the Term Loan made by the Lender to the
Borrower under the Credit Agreement) in lawful money of the United States and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
such Term Loan at such office, in like money and funds, for the period
commencing on the date of such Term Loan until such Term Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement and
evidences the Term Loan made by the Lender thereunder. Capitalized terms used in
this Term Note and not otherwise defined shall have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Term Loan evidenced by this Term Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
such Term Loan upon the terms and conditions specified therein. In the event
this Term Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Each payment made on account of the principal of the Term Loan shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Term Note in respect of the Term Loan to be evidenced by this Term Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Term Loan evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained for
such purpose by or on behalf of the Borrower as provided in Section 11.3 of the
Credit Agreement.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed
as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
CHAR1\TMB\BANK\402387
CHAR1\TMB\BANK\402387
REVOLVING NOTE
$9,130,434.78 May 14, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of CRESTAR BANK, its successors
and assigns (the "Lender"), at the office of NationsBank, N.A. (the "Agent") as
set forth in that certain Credit Agreement dated as of April 23, 1998 among the
Borrower, the other Credit Parties party thereto, the Lenders named therein
(including the Lender) and the Agent (as amended, modified, extended or restated
from time to time, the "Credit Agreement"), the principal sum of $9,130,434.78
(or such lesser amount as shall equal the aggregate unpaid principal amount of
the Revolving Loans made by the Lender to the Borrower under the Credit
Agreement), in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Revolving Loan, at such office, in like money and funds, for the period
commencing on the date of such Revolving Loan until such Revolving Loan shall be
paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Revolving Loans evidenced thereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3 of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
2
CHAR1\TMB\BANK\402388
CHAR1\TMB\BANK\402388
TERM NOTE
$5,869,565.22 May 14, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of CRESTAR BANK, its successors
and assigns (the "Lender"), at the office of NationsBank, N.A., as Agent (the
"Agent"), as set forth in that certain Credit Agreement dated as of April 23,
1998, among the Borrower, the other Credit Parties thereto, the Lenders named
therein (including the Lender) and the Agent (as it may be amended, modified,
extended or restated from time to time, the "Credit Agreement"), the principal
sum of $5,869,565.22 (or such lesser amount as shall equal the aggregate unpaid
principal of the Term Loan made by the Lender to the Borrower under the Credit
Agreement) in lawful money of the United States and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement, and to pay interest on the unpaid principal amount of such Term Loan
at such office, in like money and funds, for the period commencing on the date
of such Term Loan until such Term Loan shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement and
evidences the Term Loan made by the Lender thereunder. Capitalized terms used in
this Term Note and not otherwise defined shall have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Term Loan evidenced by this Term Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
such Term Loan upon the terms and conditions specified therein. In the event
this Term Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Each payment made on account of the principal of the Term Loan shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Term Note in respect of the Term Loan to be evidenced by this Term Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Term Loan evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained for
such purpose by or on behalf of the Borrower as provided in Section 11.3 of the
Credit Agreement.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed
as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
1
CHAR1\TMB\BANK\403207_ 1
REVOLVING NOTE
$12,173,913.06 May 15, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A. (the
"Agent") as set forth in that certain Credit Agreement dated as of April 23,
1998 among the Borrower, the other Credit Parties party thereto, the Lenders
named therein (including the Lender) and the Agent (as amended, modified,
extended or restated from time to time, the "Credit Agreement"), the principal
sum of $12,173,913.06 (or such lesser amount as shall equal the aggregate unpaid
principal amount of the Revolving Loans made by the Lender to the Borrower under
the Credit Agreement), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Revolving Loan, at such office, in like money and funds, for the
period commencing on the date of such Revolving Loan until such Revolving Loan
shall be paid in full, at the rates per annum and on the dates provided in the
Credit Agreement.
This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement and evidences Revolving Loans made by the Lender thereunder.
Capitalized terms used in this Revolving Note and not otherwise defined shall
have the respective meanings assigned to them in the Credit Agreement and the
terms and conditions of the Credit Agreement are expressly incorporated herein
and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Revolving Loans evidenced by this Revolving Note upon the occurrence of certain
events (and for payment of collection costs in connection therewith) and for
prepayments of Revolving Loans upon the terms and conditions specified therein.
In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorney fees.
The date, amount, type, interest rate and duration of Interest Period (if
applicable) of each Revolving Loan made by the Lender to the Borrower, and each
payment made on account of the principal thereof, shall be recorded by the
Lender on its books; provided that the failure of the Lender to make any such
recordation or endorsement shall not affect the obligations of the Borrower to
make a payment when due of any amount owing under this Revolving Note in respect
of the Revolving Loans to be evidenced by this Revolving Note, and each such
recordation or endorsement shall be conclusive and binding absent manifest
error.
This Note and the Revolving Loans evidenced thereby may be transferred in
whole or in part only by registration of such transfer on the Register
maintained for such purpose by or on behalf of the Borrower as provided in
Section 11.3 of the Credit Agreement.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
executed as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<PAGE>
1
CHAR1\TMB\BANK\403204_ 1
TERM NOTE
$7,826,086.94 May 15, 1998
FOR VALUE RECEIVED, Pluma, Inc., a North Carolina corporation (the
"Borrower"), hereby promises to pay to the order of NATIONSBANK, N.A., its
successors and assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), as set forth in that certain Credit Agreement dated as of
April 23, 1998, among the Borrower, the other Credit Parties thereto, the
Lenders named therein (including the Lender) and the Agent (as it may be
amended, modified, extended or restated from time to time, the "Credit
Agreement"), the principal sum of $7,826,086.94 (or such lesser amount as shall
equal the aggregate unpaid principal of the Term Loan made by the Lender to the
Borrower under the Credit Agreement) in lawful money of the United States and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
such Term Loan at such office, in like money and funds, for the period
commencing on the date of such Term Loan until such Term Loan shall be paid in
full, at the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Notes referred to in the Credit Agreement and
evidences the Term Loan made by the Lender thereunder. Capitalized terms used in
this Term Note and not otherwise defined shall have the respective meanings
assigned to them in the Credit Agreement and the terms and conditions of the
Credit Agreement are expressly incorporated herein and made a part hereof.
The Credit Agreement provides for the acceleration of the maturity of the
Term Loan evidenced by this Term Note upon the occurrence of certain events (and
for payment of collection costs in connection therewith) and for prepayments of
such Term Loan upon the terms and conditions specified therein. In the event
this Term Note is not paid when due at any stated or accelerated maturity, the
Borrower agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney fees.
Each payment made on account of the principal of the Term Loan shall be
recorded by the Lender on its books; provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing hereunder or under this
Term Note in respect of the Term Loan to be evidenced by this Term Note, and
each such recordation or endorsement shall be conclusive and binding absent
manifest error.
This Note and the Term Loan evidenced hereby may be transferred in whole
or in part only by registration of such transfer on the Register maintained for
such purpose by or on behalf of the Borrower as provided in Section 11.3 of the
Credit Agreement.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NORTH CAROLINA.
IN WITNESS WHEREOF, the Borrower has caused this Term Note to be executed
as of the date first above written.
PLUMA, INC.
By:
Name:
Title:
<TABLE>
<CAPTION>
EXHIBIT 11.1
PLUMA, INC.
COMPUTATION OF EARNINGS PER SHARE
- -----------------------------------------------------------------------------------------------------
(UNAUDITED) (UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
INCOME (LOSS) AVAILABLE TO COMMON
SHAREHOLDERS:
Net income (loss) available to common
shareholders $ (1,718,296) $ 1,430,627 $ (2,599,979) $ 2,295,062
============= =========== ============= ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Common shares outstanding 8,109,152 8,067,252 8,109,152 6,989,208
------------ ----------- ------------ -----------
Assumed exercise of stock options
------------ ----------- ----------- -----------
Total 8,109,152 8,067,252 8,109,152 6,989,208
============ =========== =========== ===========
EARNINGS (LOSS) PER COMMON SHARE -
BASIC AND DILUTED $ (.21) $ .18 $ (.32) $ .33
============ =========== =========== ===========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet and statements of operations for the six months ended June 30,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,234,256
<SECURITIES> 0
<RECEIVABLES> 40,554,441
<ALLOWANCES> 2,358,044
<INVENTORY> 64,280,472
<CURRENT-ASSETS> 108,469,909
<PP&E> 67,484,306
<DEPRECIATION> 23,481,000
<TOTAL-ASSETS> 188,885,353
<CURRENT-LIABILITIES> 123,926,760
<BONDS> 0
0
0
<COMMON> 36,849,127
<OTHER-SE> 24,218,751
<TOTAL-LIABILITY-AND-EQUITY> 188,885,353
<SALES> 90,256,136
<TOTAL-REVENUES> 90,256,136
<CGS> 81,610,435
<TOTAL-COSTS> 81,610,435
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,467
<INTEREST-EXPENSE> 3,330,837
<INCOME-PRETAX> (4,088,018)
<INCOME-TAX> (1,488,039)
<INCOME-CONTINUING> (2,599,979)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,599,979)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
