UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 19, 1997
GALEY & LORD, INC.
Exact name of registrant as specified in its charter
DELAWARE 56-1593207
State or other jurisdiction of IRS Employer Identification No.
incorporation or organization
980 Avenue of the Americas, New York, New York 10018
Address of principal executive offices Zip Code
212/465-3000
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year, if changed since
last report.
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ITEM 5. OTHER EVENTS.
Incorporated by reference herein and attached as an exhibit hereto is the press
release of Galey & Lord, Inc. dated December 22, 1997 announcing, among other
things, that Galey & Lord, Inc. had entered into an operating agreement with DT
Acquisition, Inc.
On October 27, 1997, Galey & Lord, Inc. (together with its subsidiaries, the
"Company") entered into an agreement with Polymer Group, Inc. ("Polymer") and
its affiliate, DT Acquisition, Inc. ("DTA") to acquire from DTA the apparel
fabrics business (the "Dominion Acquisition") of Dominion Textiles Inc.
("Dominion"). The Dominion Acquisition was contingent upon the successful
completion of DTA's tender offer, which expired at 4 p.m. Toronto time on
December 29, 1997, to purchase the capital stock of Dominion. Dominion's apparel
fabrics business to be acquired by the Company primarily consists of several
subsidiaries and operating divisions of Dominion which manufacture and market
denim fabrics and fabrics for the commercial uniform market. The final tender
offer extended to Dominion shareholders for Dominion's common stock was CDN
$14.50 and for Dominion's preferred stock was CDN $150.00.
On December 19, 1997, DTA received exemption orders from certain securities
regulatory authorities permitting DTA to take-up and pay for the common shares
and first preferred shares of Dominion that had been tendered. On that same
date, the Company, as part of the above agreement, loaned DTA approximately
$141.0 million to be used for the take-up of Dominion's tendered stock. This
loan will be applied against the purchase price to be paid by the Company to DTA
in the Dominion Acquisition. The proceeds for this loan were obtained by the
Company from an initial takedown on the Company's senior subordinated credit
agreement described below. As of December 29, 1997, DTA had taken up 37,422,222
common shares, representing approximately 98.5% of the common shares held by the
public, and 354 first preferred shares, representing approximately 96% of the
outstanding first preferred shares.
On December 19, 1997, the Company also entered into an operating agreement (the
"Operating Agreement") with Polymer and DTA regarding Dominion. Pursuant to the
Operating Agreement, the Company's management has the authority to manage the
day-to-day affairs (subject to certain limitations, as specified in the
Operating Agreement) of the apparel fabrics business of Dominion until such time
that the Company has legally acquired the apparel fabrics business from DTA. The
Company is currently negotiating the terms of a definitive purchase agreement
with respect to the Dominion Acquisition and it is anticipated that the Dominion
Acquisition will be completed in late January or February 1998.
On December 19, 1997, the Company entered into a $470 million senior credit
agreement (the "Senior Credit Agreement") with First Union National Bank, as
agent and lender, and a $250 million senior subordinated credit agreement (the
"Senior Subordinated Credit Agreement") with First Union Corporation, as agent
and lender. The Senior Credit Agreement initially provides for revolving line of
credit borrowings of up to $230 million. Initial revolving credit line
borrowings under the Senior Credit Agreement were used to refinance the
Company's prior term loan and revolving credit facility with its bank group led
by First Union National Bank. Concurrently with the consummation of the Dominion
Acquisition, the Senior Credit Agreement will provide for (i) a revolving line
of credit which will provide for maximum borrowings equal to the lesser of $275
million or a borrowing base (comprised of eligible accounts receivable and
eligible inventory, to be defined in the Senior Credit Agreement) and (ii) a
term loan in the principal amount of $195 million. Term loan and other
borrowings made concurrently with and after the Dominion Acquisition will be
used to fund the Dominion Acquisition (including fees and expenses) and for
general corporate and working capital purposes.
Under the Senior Credit Agreement, the revolving line of credit expires December
19, 2003. The term loan is repayable in twenty-four quarterly principal payments
of $500,000 until December 31, 2003 and thereafter, eight quarterly principal
payments of $22,875,000 until the term loan's maturity on December 31, 2005.
Under the Senior Credit Agreement, the interest rate on the Company's initial
borrowings under its revolving line of credit
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will be set, at the Company's option, at either (i)(a) the greater of the prime
rate or the federal funds rate plus .50% plus (b) a margin of 1.00% or (ii)
LIBOR plus 2.25%. This interest rate will be in effect for at least two full
fiscal quarters following the closing of the Dominion Acquisition. After that
date, the revolving line of credit will bear interest at a per annum rate, at
the Company's option, of either (i)(a) the greater of the prime rate or the
federal funds rate plus .50% plus (b) a margin of 0%, .25%, .50%, .75% or 1.00%,
in accordance with a pricing grid based on certain financial ratios or (ii)
LIBOR plus a margin of .75%, 1.00%, 1.25%, 1.50%, 1.75%, 2.00% or 2.25%, in
accordance with a pricing grid based on certain financial ratios. Under the
Senior Credit Agreement, the interest rate on the Company's initial term loan
borrowings will be fixed at either (i)(a) the greater of the prime rate or the
federal funds rate plus .50% plus (b) a margin of 1.50% or (ii) LIBOR plus
2.75%. This interest rate will be in effect for at least two full fiscal
quarters following the closing of the Dominion Acquisition. After that date, the
term loan will bear interest at a per annum rate, at the Company's option, of
either (i)(a)the greater of the prime rate or federal funds rate plus .50% plus
(b) a margin of .25%, .50%, .75%, 1.00%, 1.25% or 1.50%, in accordance with a
pricing grid based on certain financial ratios or (ii) LIBOR plus a margin of
1.50%, 1.75%, 2.00%, 2.25%, 2.50% or 2.75%, in accordance with a pricing grid
based on certain financial ratios.
The Company's obligations under the Senior Credit Agreement are secured by all
of the Company's assets (other than real property), and a pledge by the Company
of all the outstanding capital stock of its wholly-owned domestic subsidiaries
and a pledge of 65% of the outstanding capital stock of any of its foreign
subsidiaries. Under the Senior Credit Agreement, the Company is required to make
mandatory prepayments of principal annually in an amount equal to 50% of Excess
Cash Flow (as defined in the Senior Credit Agreement) and 100% of the proceeds
of certain events including certain dispositions of assets or debt or equity
issuances.
The Senior Credit Agreement contains certain covenants, including, without
limitation, limits on the Company's ability to incur indebtedness, incur liens,
sell or acquire assets or businesses, change the nature of its business or make
dividends. In addition, the Senior Credit Agreement requires the Company to meet
certain financial ratio tests and limits the amount of capital expenditures
which the Company may make in any fiscal year.
The Senior Subordinated Credit Agreement ("Bridge Financing") provides for
borrowings of $250 million, of which $145.6 million was initially borrowed on
December 19, 1997 ($141 million of which was loaned by the Company to DTA). The
remaining $104.4 million will be borrowed concurrently with the consummation of
the Dominion Acquisition. All borrowings under the Bridge Financing must be used
to fund the Dominion Acquisition (including fees and expenses). The outstanding
principal amount of all borrowings under the Bridge Financing will be due and
payable on December 19, 2007; provided, however, that the Company is required to
make certain mandatory prepayments of principal in the event of certain
dispositions of assets, capital contributions or other debt or equity issuances.
Borrowings under the Bridge Financing bear interest, which is payable monthly,
at a per annum rate initially of LIBOR plus 4.50% and increasing by .25% for
each month that borrowings under the Bridge Financing remain outstanding. In no
event shall the interest rate on such borrowings exceed 18% (with the maximum
interest rate with respect to interest payable in cash not to exceed 14% and the
remainder to be payable in kind).
All borrowings under the Bridge Financing are unsecured and payment by the
Company of all obligations under the Bridge Financing is subordinated to the
prior payment in full of all obligations under the Senior Credit Agreement. The
Bridge Financing contains certain covenants, including, without limitation,
those limiting the Company's ability to incur indebtedness, incur liens, sell or
acquire assets or businesses, change the nature of its business or make
dividends.
The Company expects to replace the Bridge Financing with 10 year senior
subordinated notes during February 1998. The Company has obtained a commitment
regarding the issuance and sale of the 10 year senior subordinated notes.
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FORWARD-LOOKING STATEMENTS
This Form 8-K contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Those statements
include statements regarding the intent, belief or current expectations of the
Company and its management team. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements. Such risks and
uncertainties include, among other things, competitive and economic factors in
the textile, apparel and home furnishings markets, raw material and other costs,
weather-related delays, general economic conditions and other risks and
uncertainties that may be detailed herein.
Exhibits
1. Press Release of Galey & Lord, Inc., dated December 22, 1997.
2. Agreement, dated October 27, 1997, between Polymer Group, Inc. ("Polymer"),
DT Acquisition, Inc. (DTA) and the Company.
3. Amendment to the Agreement between Polymer, DTA and the Company, dated
November 16, 1997.
4. Operating Agreement, dated December 19, 1997, between Polymer, DTA and the
Company.
5. Credit Agreement dated as of December 19, 1997 among Galey & Lord Industries,
Inc. ("Industries"), the Company, G&L Service Company, North America, Inc.
("Service Company") and First Union National Bank, as agent and lender, and
the other lenders' party thereto.
6. Security Agreement dated as of December 19, 1997, among Industries, the
Company, Service Company and First Union National Bank, as Collateral Agent.
7. Pledge Agreement dated as of December 19, 1997, among Industries, the
Company, Service Company and First Union National Bank, as Collateral Agent.
8. Senior Subordinated Credit Agreement dated as of December 19, 1997 among
Industries, the Company and First Union Corporation, as agent and lender.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Galey & Lord, Inc.
(Registrant)
/s/ Michael R. Harmon
Michael R. Harmon
Executive Vice-President,
Chief Financial Officer
(Principal Financial and
Accounting Officer),
Treasurer and Secretary
January 15, 1998
Date
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Exhibit 1
(Galey & Lord P.O. Box 35528
logo appears here) Greensboro, North Carolina 27425-0528
GNL
Listed
NYSE
Contact: Michael R. Harmon
336-665-3037
Galey & Lord Reports Signing Operating Agreement with DT Acquisition Inc.
Greensboro, N.C., December 22, 1997/PRNewswire/ - On Friday, December 19, 1997,
DT Acquisition Inc. (DTA), an affiliate of Polymer Group Inc., purchased
approximately 98% of the common stock and approximately 96% of the first
preferred stock of Dominion Textiles Inc. As part of Galey & Lord, Inc.'s (NYSE:
GNL) agreement with Polymer and DTA, Galey loaned $141 million to DTA and
entered into an operating agreement with DTA to operate the Swift Denim, Swift
Europe, and Klopman International businesses of Dominion Textiles Inc. The
operating agreement grants Galey & Lord the daily management of these businesses
effectively immediately. Galey & Lord anticipates completing the actual purchase
of the above businesses from DTA in late January or early February 1998 after
DTA completes the tender offer to purchase the current outstanding Dominion
Textiles (USA) Inc. bonds. Galey & Lord's total purchase price for Swift Denim,
Swift Europe and Klopman International including all fees and expenses will be
approximately $480 million. Galey entered into new financing agreements on
12/19/97 to provide funds for its loan to DTA, to provide it with funds for the
purchase of the businesses and to refinance Galey's existing debt. The new debt
consists of both senior bank debt and senior subordinated bonds.
Galey & Lord currently estimates that the Company's combined sales on a pro
forma basis including the acquisition would have been $1.1 billion for fiscal
1997. The Company estimates that the adjusted pro forma income for fiscal year
1997 would have been slightly better than the $1.12 earnings per share that
Galey actually reported for fiscal 1997 and estimates that adjusted pro forma
EBITDA would have been in excess of $125 million including syngeries that are
expected from combining the businesses. Final adjusted pro forma numbers for
fiscal year 1997 are not available, as many factors still have to be finalized
and such pro forma results may not be indicative of the Company's future
operating results.
Arthur Wiener, Chairman and Chief Executive Officer of Galey & Lord, said "that
the Company is extremely excited about this acquisition. It is and has been
Galey & Lord's strategy to grow both by internal means and acquisitions. The
resulting company will be one of the leaders in the world producing fabrics for
apparel. Management believes it will be either the number one or number two
producer in each of the markets it competes in. With revenues of $1.1 billion,
the Company will be:
1. A leading producer in the world in terms of both revenues and product
mix of
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cotton woven fabrics for causal wear.
2. The only vertical producer of corduroy in the United States.
3. The number two worldwide producer of denim fabrics with factories in
the United States, Canada and Tunisia, as well as having worldwide sales
offices.
4. An international supplier of workwear fabrics with fabric forming
facilities in the United States and Europe.
5. A leader in selling "garment packages" produced at the Company's owned
and operated garment making facilities in Mexico.
This combination of businesses makes Galey & Lord a truly globalized company,
offering high valued added products world-wide."
Both December quarter 1997 and March quarter 1998 P&L's will be adversely
affected by charges related to the acquisition. In the December quarter, the
Company will incur losses related to the acquisition including cost for hedging
the Canadian dollar, increased interest expense, and an extraordinary charge to
write off the unamortized cost of its existing financing. The March quarter 1998
is expected to include acquisition related charges for amortization of bridge
financing fees, increased interest expense, as well as the expensing of certain
other cost related to the acquisition.
Galey & Lord is a leading manufacturer of high-quality woven cotton and
cotton-blended apparel fabrics, sold principally to manufacturers of sportswear
and commercial uniforms. The Company also manufactures fabrics used in home
furnishings, including comforters, bedspreads and curtains. In June 1996, the
Company began offering finished garments to its branded apparel customers
through G&L Service Company, North America, Inc.
This press release contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Those statements include statements regarding the intent, belief or current
expectations of the Company and its management team. Prospective investors are
cautioned that any such forward looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those anticipated in the forward-looking statements.
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Exhibit 2
PRIVILEGED AND CONFIDENTIAL
[CONFORMED COPY]
AGREEMENT
This Agreement, dated as of October 27, 1997 (the
"Agreement"), is made and entered into by and among Polymer Group, Inc., a
Delaware corporation ("PGI"), DT Acquisition, Inc., a corporation organized
under the laws of Canada ("DTA") and Galey & Lord Incorporated, a Delaware
corporation ("GL") (PGI, DTA and GL are referred to sometimes herein as a
"Party").
WHEREAS, PGI and certain investors currently own approximately
14.5% of the outstanding common shares (the "Common Shares") of Dominion
Textile, Inc., a corporation organized under the laws of Canada ("Target");
WHEREAS, DTA intends to commence, directly or indirectly, a
tender offer to acquire all of the outstanding Common Shares of Target and all
of the outstanding first preferred shares ("First Preferred") of Target;
WHEREAS, PGI, after completing the Target Acquisition (as
defined below), is primarily interested in (i) retaining the nonwoven textile
group businesses of Target (conducted primarily through the Dominion Industrial
Fabrics Company division ("DIFCO") of Target, two indirect, wholly owned
subsidiaries of Target, Poly-Bond Inc., a Delaware corporation, and Nordlys
S.A., a company organized under the laws of the Republic of France, and the
Dominion Nonwoven (South America) Argentinean joint venture) (collectively, the
"Nonwoven Business"); and (ii) disposing of the apparel fabrics textile group
businesses of Target (conducted primarily through the Swift Textiles Canada
division of Target, six direct or indirect wholly owned subsidiaries of Target
(Dominion Textile (USA) Inc., a Delaware corporation, Swift Textiles, Inc., a
Delaware corporation, Dominion Textile (Asia) Pte. Ltd., a company organized
under the laws of Singapore, Swift Textiles (Far East) Ltd., a company organized
under the laws of Hong Kong, Dominion Textile International B.V., a company
organized under the laws of the Netherlands, and Klopman International S.r.L., a
company organized under the laws of Italy), and Swift Textiles Europe Ltd., a
company organized under the laws of the Republic of Ireland) (collectively, the
"Apparel Fabric Business", and together with the Nonwoven Business, the
"Businesses");
WHEREAS, following the Target Acquisition by DTA, GL, directly
or through one or more affiliates (such entities are collectively referred to
herein as the "GL Buyer") is interested in acquiring (the "Transaction") the
Apparel Fabric Business from PGI; and
WHEREAS, PGI and GL are entering into this Agreement for the
purpose of setting forth the rights and obligations of each Party following an
acquisition by DTA, directly or indirectly, of all of the outstanding Common
Shares of Target (including the Common Shares owned by PGI, The Intertech Group,
Inc. ("TIG") and Jerry Zucker), or all or substantially all of the assets or
operations of Target (any such acquisition referred to herein as the "Target
Acquisition").
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NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
Parties hereto intending to be legally bound, hereby agree as follows:
1. Exclusivity. Until this Agreement has been terminated in
accordance with its terms, each Party agrees that it will not, and shall cause
any of their respective affiliates, representatives, officers, directors, agents
or stockholders not to, (a) enter into any arrangement, agreement, understanding
or negotiations with respect to a possible Target Acquisition, with any other
Person, including Target (other than with respect to the Target Acquisition),
nor (b) enter into any agreement, arrangement, understanding or negotiations
with any other Person, including Target (other than with respect to the Target
Acquisition), with respect to (i) the acquisition of only the Nonwoven Business
or only the Apparel Fabric Business, or any portion of the assets, operations,
business or any securities of Target or any similar transaction, however
structured, or (ii) the investment in any other Person (other than through DTA
or an affiliate of PGI or TIG formed for the purpose of the Target Acquisition)
formed for any such purpose; PROVIDED, that in the event this Agreement is
terminated pursuant to clause (c) of Section 14 below, the provisions of the
first sentence of this Section 1 shall survive for two months following the date
of such termination. Following the consummation of the Target Acquisition, PGI
agrees that until the termination of this Agreement it will not, and shall cause
its representatives, officers, directors, agents, stockholders or controlled
affiliates, including Target, not to provide any non-public information to any
Person in connection with any offer or proposal to acquire all or any portion of
the assets, operations, business, or securities related to the Apparel Fabric
Business. PGI will not and following consummation of the Target Acquisition will
cause Target not to, enter into any agreement, arrangement or understanding
requiring it to abandon or terminate the Transaction (other than any agreement,
arrangement or understanding with any governmental or regulatory body or
agency). Each of PGI and GL represents to the other Party that neither is party
to or bound by any agreement with respect to the Target Acquisition other than
this Agreement. The term "Person" in this Agreement will be interpreted broadly
to include, without limitation, any corporation, company (including limited
liability company), partnership, joint venture or individual.
2. Purchase and Sale of Assets. At the earliest possible time
that DTA is able to cause Target to consummate the Transaction following (a) the
purchase by DTA of all of the outstanding Common Shares of Target, or (b) the
acquisition of all or substantially all of the Apparel Fabric Business of
Target, DTA hereby agrees to sell to GL and GL hereby agrees to purchase from
DTA, the Apparel Fabric Business of Target for cash in an amount to be
determined in accordance with Section 3 hereof. The exact structure of the
transaction pursuant to which GL will acquire the Apparel Fabric Business and
PGI will acquire the Nonwovens Business will be determined by the Parties in
good faith to accomplish the objectives contained in this Agreement and minimize
overall tax liabilities. The terms of the agreements relating to the purchase of
the Apparel Fabric Business and Nonwovens Business, as applicable, shall contain
customary terms and conditions for acquisitions of public companies. In
particular, there will be no survival of any representations or warranties, and
limited customary indemnification provisions (related to the allocation of
liabilities of the Businesses) contained in the purchase agreements. To the
extent any assets are used in both the Apparel Fabric Business and Nonwovens
Business, the Parties will enter into an agreement providing for joint use, or
will otherwise agree to an equitable solution for such
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asset. In the event the Parties are unable to negotiate in good faith an
agreement or agreements for the purchase and sale of the Apparel Fabric Business
or the purchase and sale of the Nonwovens Business, as applicable, at the option
of DTA, the Apparel Fabric Business shall be sold to GL by either a sale of
stock of the corporation or corporations containing the Apparel Fabric Business,
or by a sale of the assets necessary for the Apparel Fabric Business, on an "as
is," "where is" and "with all faults" basis, without any express or implied
representations, and without any other representations, warranties, covenants,
agreements or indemnities (other than related to the allocation of liabilities
of the Businesses).
3. Determination of Purchase Price and Allocation.
(a) Cash to Target Stockholders. The Parties agree to
determine the purchase price for each Business by first allocating the
amount of cash consideration (and the fair market value of any
consideration other than cash) paid by DTA to holders of Common Shares
of Target (including the amount that would otherwise have been paid to
PGI and TIG in respect of their Common Shares if such Common Shares are
not acquired by DTA pursuant to the public takeover bid) and First
Preferred shares of Target to effect the Target Acquisition in the
proportion of 60.0% for the purchase of the Apparel Fabric Business and
40.0% for the purchase of the Nonwovens Business. In addition, the
purchase price for each Business shall be adjusted, and the assets and
liabilities with respect thereto shall be allocated to each Business,
as specifically provided in the following clauses (b), (c), (d), (e)
and (f) of this Section.
(b) Specific Allocable Assets and Liabilities. All assets and
liabilities of Target that are specifically allocable to the Apparel
Fabric Business shall be transferred to and assumed by GL and the GL
Buyer, and all assets and liabilities of Target that are specifically
allocable to the Nonwoven Business shall be retained by PGI and DTA,
without any adjustment in the purchase price for each Business.
(c) Transaction Related and Similar Assets and Liabilities.
The net amount of any assets or liabilities that are part of, or
resulted from, the Businesses as a whole on a shared basis and, except
as expressly provided in clause (iv), assets and liabilities associated
with the Target Acquisition and the Transaction, including, without
limitation, (i) the tax liabilities and assets associated with the
transactions contemplated hereby, including taxes imposed in connection
with separating the Apparel Fabric Business and the Nonwovens Business
and transferring such businesses to GL and PGI, respectively, (ii) any
litigation costs and expenses related to the Target Acquisition or
Target defense costs and expenses, (iii) any corporate overhead
liabilities or corporate assets, (iv) any transaction costs incurred by
or on behalf of DTA or PGI solely in connection with the proposed
Target Acquisition, including an amount necessary to compensate PGI and
DTA for obtaining commitments for, and utilizing, the financing
provided directly to DTA by The Chase Manhattan Bank and First Union
National Bank pursuant to the commitment letter dated October 27, 1997,
including the interest expense incurred for the amount necessary to
complete the Target Acquisition and related transactions, but not
including the investment banking and merger and acquisition advisory
fees specified in clause (d)(ii) below or any transaction costs,
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commitment fees or financing fees, payable by either PGI or GL in
connection with providing the financing required to complete the Target
Acquisition or the subsequent purchase and sale of the Apparel Fabric
Business and the Nonwovens Business, (v) the principal amount of
outstanding corporate indebtedness assumed by either Party or Business
or the amounts paid to retire, repay or acquire outstanding corporate
indebtedness (whether in the nature of payments of principal, interest,
premiums, defeasance costs, tender payments, overdrafts, penalties,
breakage costs, fees, litigation expenses, other expenses or
indemnities relating thereto) and Preferred Shares of Target, and (vi)
similar liabilities, shall increase the purchase price of the Apparel
Fabric Business by 60.0% of the total of such amount, and shall
increase the purchase price of the Nonwovens Business by 40.0% of the
total of such amount; provided, if such adjustment is not practicable
because of the nature of the assets or liabilities, such assets or
liabilities shall be acquired by, assumed by or borne by, respectively,
each Business in the respective percentage.
(d) Other Assets and Liabilities. The net amount of any other
such assets or liabilities, including (i) any assets or liabilities
related to any discontinued operations of Target or not otherwise
related to either Business or otherwise described in clause (c) of this
Section, which may include environmental, retiree medical, or similar
liabilities and (ii) investment banking and merger and acquisition
advisory fees incurred by or on behalf of PGI or DTA in connection with
the Target Acquisition, shall increase the purchase price of the
Apparel Fabric Business by 50.0% of the total of such amounts and shall
increase the purchase price of the Nonwovens Business by 50.0% of the
total of such amount; provided, if such adjustment is not practicable
because of the nature of the assets or liabilities, such assets or
liabilities shall be acquired by, assumed by or borne by, respectively,
each Business in the respective percentage.
(e) Aggregate Asset and Liability Adjustment. To the extent
that the allocation of assets to, and assumption of liabilities by,
each Business as contemplated by clauses (c) and (d) of this Section
cannot be accomplished in the exact proportions set forth in such
clauses as a result of the nature of the specific assets or
liabilities, all of the assets acquired or liabilities assumed by each
Party shall be determined on an aggregate basis and an appropriate
adjustment will be made to compensate a Party that has assumed, on a
net overall basis, liabilities in excess of its respective percentages
and require a payment from a Party that has acquired, on a net overall
basis, assets in excess of its respective percentages. Any such
adjustment may take the form of a reallocation of corporate level cash,
a payment from one Party to the other Party, transfer of other assets
or other appropriate mechanism.
(f) DIFCO Adjustment. The purchase price allocation percentage
of 60.0% for the Apparel Fabric Business and 40.0% for the Nonwovens
Business contained in clauses (a) and (c) of this Section 3 shall be
subject to possible further adjustment in accordance with Annex A
attached hereto related to the earnings before interest, depreciation
and amortization of DIFCO.
(g) Illustrative Example. An illustrative example of the
calculation of the purchase price for each Business is set forth on
Annex B attached hereto.
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4. Structure of Transaction.
(a) Plan of Arrangement. The Parties agree that the most
desirable form of the Target Acquisition may be a plan of arrangement
with court approval under Canadian laws, designed to accomplish the
objectives set forth in this Agreement and minimize overall tax
liabilities associated with the Transaction and will attempt to utilize
this structure if possible. To this end, GL agrees to enter into any
agreement or agreements with PGI and Target to accomplish this form of
transaction.
(b) DTA. In the event a plan of arrangement is not possible or
desirable, PGI intends to proceed by causing DTA, a Canadian company,
to commence a public takeover bid for the outstanding Common Shares and
associated preferred share purchase rights. To the extent that,
following the commencement of a public takeover bid by DTA, a plan of
arrangement becomes possible, the Parties will proceed under clause (a)
of this Section. Subject to the other provisions of this Agreement and
until consummation of the Transaction, DTA will not engage in any other
business, incur any other liabilities, sell any of its securities or
make any distributions in respect of its securities, other than a
distribution to its stockholders of the cash proceeds or other
consideration received by DTA in respect of the Common Shares owned by
DTA and tendered into the public takeover bid or a return to its
stockholders of the Common Shares that were contributed to DTA by its
stockholders.
5. Conditions. Following the consummation of the Target
Acquisition, the closing of the Transaction will be subject only to the
following conditions:
(i) The absence of any final injunction or decree
preventing the sale of the Apparel Fabric Business to GL;
(ii) The receipt of all required material
governmental or regulatory approvals and consents, the failure of which
to obtain would prevent the sale of the Apparel Fabric Business to GL;
and
(iii) The repayment, retirement or acquisition of all
outstanding bank indebtedness of Target and its subsidiaries and the
issued and outstanding publicly issued senior notes of Target and its
subsidiaries.
6. Agreement to Disclose Identity. Each Party agrees to permit
DTA to disclose in the takeover circular its identity and the ownership of
Common Shares of DTA and Target by each Party and the nature of this Agreement;
provided, that each Party will have the opportunity to approve any description
of it contained in any publicly filed document, such approval not to be
unreasonably withheld.
7. No Additional Acquisitions of Common Shares. Neither Party
shall acquire any additional Common Shares without the prior consent of the
other Party. In addition, neither Party shall become the "beneficial owner"
(within the meaning of Canadian and U.S. securities laws
-5-
<PAGE>
and Target's shareholder rights plan) of any Common Shares without the prior
consent of the other Party. As of the date hereof, GL does not "beneficially
own" any Common Shares.
8. Liquidated Damages. In the event that GL shall breach this
Agreement in any material respect or fail to satisfy its obligations in any
material respect hereunder for any reason, in addition to any other remedy
available to PGI hereunder for a breach of this Agreement by GL, GL agrees to
pay to PGI liquidated damages in the amount of $35.0 million. In the event that
either PGI or ZB Holdings, Inc. ("ZBH") shall breach this Agreement in any
material respect or fail to satisfy its obligations in any material respect
hereunder, in addition to any other remedy available to GL hereunder for a
breach of this Agreement by PGI or ZBH, as applicable, PGI or ZBH, as the case
may be, shall pay liquidated damages to GL in the amount of $35.0 million. Any
amounts payable pursuant to this Section 8 shall be payable in two equal
installments, one-half of which shall be paid within two business days of the
date of the breach resulting in the payment and the remaining one-half payable
on the second anniversary of the date of such breach. Any amounts paid by GL or
PGI to the other Party following a termination of this Agreement pursuant to
Section 9 shall be credited on a dollar-for-dollar basis against the $35.0
million amount that is otherwise payable to such Party pursuant to this Section
8, with any amount paid by PGI applied to reduce the amount payable by ZBH. The
provisions of this Section 8 shall be the exclusion remedy in the event of a
breach of Section 2 or Section 11 hereof.
9. Expenses. Except as otherwise provided in Section 3 and
Section 8, each Party shall bear its out-of-pocket fees and expenses incurred in
connection with the transactions contemplated by this Agreement; provided, that
if this Agreement is terminated pursuant to clauses (b), (d), (e), (i), (ii),
(iii), (x), (y) or (z) of Section 14, (A) 60.0% of the out-of-pocket fees and
expenses incurred by PGI, any investors acting with PGI with respect to the
Target Acquisition and by or on behalf of DTA which would be included in the
determination of Purchase Price under Section 3 will be payable by GL and GL
Buyer and 40.0% will be payable by PGI and DTA and (B) 50.0% of any break-up
fee, termination payments or other payments made to or for the benefit of DTA by
or on behalf of Target relating to the Target Acquisition (other than with
respect to the Common Shares owned by DTA) will be payable to GL and GL Buyer
and 50.0% will be payable to PGI and DTA.
10. Covenants. Promptly following the execution of this
Agreement, PGI and GL shall enter into good faith negotiations to enter into an
agreement or agreements to provide for the separate operation of the Apparel
Fabric Business and the Nonwovens Business by GL and PGI, respectively,
following the Target Acquisition. Promptly following the consummation of the
Target Acquisition, PGI and DTA shall commence negotiations with GL to arrive at
a mutually satisfactory structure for the Transaction. All Parties shall use
their respective commercially reasonable efforts to close the Transaction on an
expedited basis. DTA will use its commercial best efforts to obtain access and
information regarding Target and the Businesses. In the event that DTA obtains
any such access and/or information regarding Target or the Businesses at any
time, DTA will (i) promptly provide the same access and/or information to GL and
(ii) utilize such access and/or seek such information regarding both Businesses
with equal efforts and diligence; provided, GL enters into any necessary
confidentiality agreements or arrangements.
-6-
<PAGE>
11. Financing. The financing for the Target Acquisition will
be provided as follows:
(a) GL Financing. GL agrees to provide to DTA $132 million for
the purpose of the Target Acquisition concurrently with the tender to
DTA of the funds to be provided by the letter specified in paragraph
(b) of this Section.
(b) DTA Financing. Attached hereto as Annex C is a true,
complete and executed copy of a letter of commitment dated October 27,
1997, from The Chase Manhattan Bank and First Union National Bank to
DTA, to provide for borrowing by DTA of up to $255.0 million, which
includes a revolving facility in an amount of $25.0 million. DTA shall
not consent to any amendment, modification or waiver of such commitment
letter, the related fee letter, and the related credit agreement
without the consent of GL.
(c) PGI Financing. PGI agrees to provide to DTA $25 million
for the purpose of the Target Acquisition concurrently with the tender
to DTA of the funds to be provided by the letter specified in paragraph
(b) of this Section. This obligation may be satisfied by crediting to
PGI an amount equal to the value of the Common Shares contributed to
DTA that were owned by PGI, valued at the price paid to the holders of
Common Shares pursuant to the public takeover bid.
(d) ZBH Financing. ZBH agrees to provide to DTA $63 million
for the purpose of the Target Acquisition concurrently with the tender
to DTA of the funds to be provided by the letter specified in paragraph
(b) of this Section. This obligation may be satisfied by crediting to
ZBH an amount equal to the value of the Common Shares contributed to
DTA that were owned by TIG, valued at the price paid to the holders of
Common Shares pursuant to the public takeover bid.
(e) Ratable Reductions. In the event that the aggregate funds
required in connection with the public takeover bid (and to pay related
fees and expenses and interest) are less than $450.0 million, ratable
reductions shall be made in the amount of the funds to be provided by
GL, PGI and ZBH described above.
12. Binding Effect. The Parties agree that, until the
execution of the definitive agreement or agreements contemplated by Section 2 of
this Agreement, the provisions of this Agreement shall be a binding commitment
of the Parties with respect to the subject matter hereof.
13. Confidentiality. The Parties agree that the provisions of
the Confidentiality Agreement dated as of September 5, 1997 (the
"Confidentiality Agreement), shall be binding upon the Parties and such
provisions are incorporated herein by reference.
14. Termination. This Agreement will automatically be
terminated and be of no further force and effect upon the earlier of (a) the
execution of definitive acquisition agreements for the Transaction, (b) mutual
agreement of the Parties, (c) the occurrence of a "Termination Event" as defined
in the letter of even date herewith from PGI to GL, (d) subject to the proviso
of the first
-7-
<PAGE>
sentence of Section 1, the termination, abandonment, or withdrawal of the tender
offer related to the Target Acquisition without the purchase of any Common
Shares pursuant thereto following its commencement for any reason (other than as
a result of the implementation of a plan of arrangement with court approval
under Canadian laws which is approved by the board of directors of Target, DTA,
PGI and GL) and (e) April 30, 1998; PROVIDED, that in the event a Party
materially breaches this Agreement or is unable to fulfil any conditions
required to be fulfilled, and such breach is not cured within five business days
following notice from the other Parties, the non-breaching Parties may terminate
this Agreement on the tenth business day following delivery of such notice and
thereafter, the non-breaching Parties will not be subject to the restrictions
contained in Section 1. In the event this Agreement is terminated pursuant to
this Section 14 by a non-breaching Party, a breaching Party will not be relieved
of any liability it may have as a result of any breach of this Agreement
occurring prior to the termination of this Agreement. Notwithstanding the
foregoing, only until the time (the "Acceptance Time") that DTA or PGI has taken
up and paid for any Common Shares pursuant to the tender offer related to the
Target Acquisition, acquired a majority of the outstanding Common Shares of
Target or acquired all or substantially all of the assets of the Apparel Fabric
Business, GL may, upon written notice, terminate this Agreement if (i) any
material adverse change in the business, assets, condition (financing or
otherwise), results of operations, cash flows, prospects or properties relating
to the Apparel Fabric Business has occurred during the period beginning on the
date hereof until the Acceptance Time, (ii) Target has taken any action
following the date hereof and prior to the Acceptance Time, out of the ordinary
course of business, which has a material adverse effect on the Apparel Fabric
Business or the ability of the Parties to consummate the Target Acquisition, the
Transaction or the transactions contemplated hereby, or (iii) the failure of
Target to redeem Target's Rights Plan, adopted as of August 9, 1989 (and any
other similar "poison-pill" or other plan with the purpose of preventing or
obstructing any takeover of Target implemented by Target subsequent hereto), or
failure of PGI or DTA to obtain a cease-trade order, in the Province of Ontario,
the Province of Quebec and such other provinces as may be necessary, of the
rights issued under such Plan by April 30, 1998. Notwithstanding the foregoing,
only until the time (the "Acceptance Time") that DTA or PGI has taken up and
paid for any Common Shares pursuant to the tender offer related to the Target
Acquisition, acquired a majority of the outstanding Common Shares of Target or
acquired all or substantially all of the assets of the Apparel Fabric Business,
PGI and DTA may, upon written notice, terminate this Agreement if (x) any
material adverse change in the business, assets, condition (financing or
otherwise), results of operations, cash flows, prospects or properties relating
to the Nonwovens Business has occurred during the period beginning on the date
hereof until the Acceptance Time, (y) Target has taken any action following the
date hereof and prior to the Acceptance Time, out of the ordinary course of
business, which has a material adverse effect on the Nonwovens Business or the
ability of the Parties to consummate the Target Acquisition, the Transaction or
the transactions contemplated hereby, or (z) the failure of Target to redeem
Target's Rights Plan, adopted as of August 9, 1989 (and any other similar
"poison-pill" or other plan with the purpose of preventing or obstructing any
takeover of Target implemented by Target subsequent hereto), or failure of PGI
or DTA to obtain a cease-trade order, in the Province of Ontario, the Province
of Quebec and such other provinces as may be necessary, of the rights issued
under such Plan by April 30, 1998.
15. Further Assurances. Subject to the terms and conditions
contained herein, each Party agrees to use commercially reasonable efforts to
take, or cause to be taken, all action and
-8-
<PAGE>
to do, or cause to be done, all things necessary, proper or advisable under
applicable law and regulation to consummate the Transaction in accordance with
the terms of this Agreement. In case at any time following the date hereof any
further action is necessary or desirable to carry out the purpose of this
Agreement, the Parties agree to discuss taking such action in good faith.
16. Miscellaneous. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflicts of law principles thereof. This Agreement, together with the
Confidentiality Agreement and the letter agreement of even date herewith from
PGI to GL described in Section 14(c), constitutes the entire agreement and
supersedes all prior agreements and understandings, written and oral, among the
Parties with respect to the subject matter hereof. If any provision of this
Agreement is deemed invalid, illegal or incapable of enforcement by any rule of
law or public policy, all other provisions of this Agreement shall remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated by this Agreement are not affected in any manner
materially adverse to any Party. Upon any determination that any provision of
this Agreement is invalid, illegal or incapable of enforcement, the Parties
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the Parties as closely as possible to the transactions
originally contemplated by the Parties. Each Party may assign its rights
hereunder only to any of its affiliates, but may not assign its obligations or
delegate its duties hereunder without the prior written approval of the other
Party hereto; provided, that in connection with any such assignment to an
affiliate, the assigning party must guarantee all of the obligations owed to the
other Party hereunder. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, and therefore
agree that, in addition to any other remedy to which any Party may be entitled
to at law or in equity, the Parties shall be entitled to injunctive relief to
prevent breaches of this Agreement and to enforce specifically the provisions
hereof; provided, that no Party will be entitled to seek specific performance
hereunder in any particular circumstances to the extent that the provisions of
Section 8 apply to such circumstances. All notices required by this letter
agreement shall be in writing and may be sent by registered or certified mail,
return receipt requested, by overnight courier or by facsimile (with confirming
copy sent by overnight courier). All notices to GL shall be made to Arthur
Wiener, Chairman, President and Chief Executive Officer of GL, and all notices
to PGI shall be made to Jerry Zucker, Chairman, President and Chief Executive
Officer of PGI, at the addresses of their respective principal executive
offices. This Agreement may be executed in counterparts and delivered by
facsimile transmission.
* * * * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereto duly authorized, all
as of the date first above written.
POLYMER GROUP, INC.
By: /s/ Jerry Zucker
Its: Chairman, President and Chief Executive Officer
DT ACQUISITION INC.
By: /s/ Jerry Zucker
Its: Chairman, President and Chief Executive Officer
GALEY & LORD INCORPORATED
By: /s/ Arthur C. Wiener
Its: Chairman, President and Chief Executive Officer
ZB HOLDING, INC.
By: /s/ Jerry Zucker
Its: Chairman, President and Chief Executive Officer
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<PAGE>
Exhibit 3
Polymer Group, Inc.
DT Acquisition, Inc.
4838 Jenkins Avenue
N. Charleston, SC 29405
November 16, 1997
Galey & Lord Incorporated
980 Avenue of the Americas
4th Floor
New York, NY 10018
Ladies and Gentlemen:
Reference is made to that certain agreement (the "Agreement") dated as
of October 27, 1997, between Polymer Group, Inc. ("PGI"), DT Acquisition Inc.
("DTA") and Galey & Lord Incorporated ("GL"), as supplemented by the letter
agreement (the "LA") dated as of October 27, 1997, between PGI, DTA and GL.
Capitalized terms that are not defined in this letter shall have the meanings
given such terms in the Agreement.
PGI and DTA have been engaged in discussions with Dominion Textile Inc.
and its advisors pursuant to which DTA would increase the per Common Share
consideration payable to holders of outstanding Common Shares and modify certain
of the existing condition in the public takeover bid to acquire such Common
Shares, and Dominion Textile Inc. would recommend that the holders of the Common
Shares accept the takeover bid. PGI and DTA have discussed these events with GL,
and kept GL informed of the content and nature of these discussions.
Pursuant to the Agreement and the LA, in the event PGI and DTA wish to
increase the per Common Share consideration payable to the holders of Common
Shares in the public takeover bid made to acquire the outstanding Common Shares
and First Preferred Shares of Dominion Textile Inc. above CN$14.00, they must
first notify GL and obtain the consent of GL to proceed with the takeover bid.
The notice must also specify whether the takeover bid is to proceed with the
Agreement in place with all of the terms and conditions, including those
contained in Section 3 regarding the calculation of the purchase price for each
Business, in full force and effect and not be modified. In addition in the event
that PGI and DTA wish to modify, amend, waive or remove certain conditions
contained in Section 4 of the takeover bid, GL must be notified of such proposed
changes and must consent to such changes.
<PAGE>
Galey & Lord Incorporated
November 16, 1997
This letter will serve to notify GL that PGI and DTA desire to increase
the per Common Share consideration to be payable to holders of outstanding
Common Shares to CN$14.50 per Common Share, and to amend the conditions to the
takeover bid as described in Section 1 of the agreement dated November 16, 1997,
between DTA and Dominion Textile Inc., a copy of which is attached hereto as
Annex A, with no changes to the existing Agreement, including no changes to
Section 3 thereof, and the agreement of GL to such increase in the consideration
to be paid to the holders of the outstanding Common Shares, the changes to the
conditions to the takeover bid, and the continuation of the Agreement with no
changes thereof.
If the foregoing is in accordance with your understanding and
agreement, please indicate your acceptance hereof by executing and returning a
copy of this letter, whereupon this letter will become a binding agreement of
the parties hereto.
Very truly yours,
Polymer Group, Inc.
By: /s/ James Boyd
Name: James Boyd
Title: EVP & CFO
DT Acquisition Inc.
By: /s/ James Boyd
Name: James Boyd
Title: EVP & CFO
Confirmed and agreed as to the date
first above written.
Galey & Lord Incorporated
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: EVP
2
<PAGE>
Exhibit 4
PRIVILEGED AND CONFIDENTIAL
[Execution Copy]
OPERATING AGREEMENT
BY AND AMONG
DT ACQUISITION INC.,
POLYMER GROUP, INC.
AND
GALEY & LORD INCORPORATED
REGARDING
DOMINION TEXTILE INC.
This operating agreement, dated as of December 19, 1997 (the "Operating
Agreement"), is made and entered into by and among Polymer Group, Inc., a
Delaware corporation ("PGI"), DT Acquisition, Inc., a corporation organized
under the laws of Canada ("DTA") and Galey & Lord Incorporated, a Delaware
corporation ("GL") (PGI, DTA and GL are referred to sometimes herein as the
"Parties"). Capitalized terms used but not defined herein shall have the
respective meanings set forth in the DTA Offers and Takeover Bid Circular dated
October 29, 1997, as amended by the Notice of Extension and Variation dated
November 18, 1997, the Notice of Extension dated December 2, 1997 and the Notice
of Extension and Variation dated December 8, 1997.
WHEREAS, DTA has commenced a public takeover bid to acquire all of the
outstanding common shares of Dominion Textile Inc., a corporation organized
under the laws of Canada ("Target") (such acquisition referred to herein as the
"Target Acquisition") and all of the outstanding first preferred shares of
Target;
WHEREAS, PGI, GL and DTA have entered into an agreement dated as of
October 27, 1997 (the "Agreement"), as amended and supplemented by the letter
agreement dated as of October 27, 1997 between the Parties and the three letter
agreements dated as of November 16, 1997 between the Parties (the Agreement as
so amended and supplemented is referred to herein as the "Purchase Agreement"),
which would, contingent on the completion of the Target Acquisition by DTA, (i)
transfer the Nonwovens Business (including its proportionate liabilities) to
PGI, and (ii) transfer the Apparel Fabric Business (including its proportionate
liabilities) to GL (such transfers referred to herein as the "Purchase Agreement
Transaction");
WHEREAS, PGI, GL and an affiliate of PGI have committed to lend money
to DTA to provide funds to DTA to complete the Target Acquisition; WHEREAS, PGI
and GL each has expertise with respect to the Nonwovens Business and the Apparel
Fabric Business, respectively, and, upon completion of the Target Acquisition,
Target
<PAGE>
Operating Agreement
December 19, 1997
Page 2
would benefit from the utilization of their expertise in the management of
Target's operations; and
WHEREAS, DTA, PGI and GL are entering into this Agreement for the
purpose of setting forth certain management rights and responsibilities of each
Party during the period following the appointment by DTA of all of the directors
of Target's board of directors and prior to completion of the Purchase Agreement
Transaction.
NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto intending to be legally bound, hereby agree
as follows:
1.DEFINITIONS. In addition to terms otherwise defined herein and in
the Offers, the following terms have the meanings set forth below:
(a) "Agreement" has the meaning set forth in the preface
above.
(b) "Apparel Committee" has the meaning set forth in Section
2(a).
(c) "Business" has the meaning set forth in Section 2(a).
(d) "DTA" has the meaning set forth in the preface above.
(e) "GL" has the meaning set forth in the preface above.
(f) "Nonwovens Committee" has the meaning set forth in Section
2(a).
(g) "Operating Agreement" has the meaning set forth in the
preface above.
(h) "Operating Committees" has the meaning set forth in
Section 2(a).
(i) "PGI" has the meaning set forth in the preface above.
(j) "Parties" has the meaning set forth in the preface above.
(k) "Partner" means an individual who is designated as a
member of the Partners Committee pursuant to Section 3(b).
(l) "Partners Committee" means the executive committee
designated pursuant to Section 3.
(m) "Purchase Agreement" has the meaning set forth in the
preface above.
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<PAGE>
Operating Agreement
December 19, 1997
Page 3
(n) "Purchase Agreement Transaction" has the meaning set forth
in the preface above.
(o) "Target" has the meaning set forth in the preface above.
(p) "Target Acquisition" has the meaning set forth in the
preface above.
2. DAY-TO-DAY MANAGEMENT: THE APPAREL COMMITTEE AND THE NONWOVENS
COMMITTEE. The Parties hereby expressly agree that this Operating Agreement
shall set forth the exclusive arrangement for the management and operation of
the Apparel Fabric Business and the Nonwovens Business. The Parties agree to
take (and to cause their subsidiaries and affiliates to take) whatever actions
are necessary or desirable (whether in such Party's capacity as a stockholder
(whether direct or indirect), director, Partner or otherwise, and including,
without limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), to
effect the management of the Businesses as set forth herein and in a manner
consistent with the undertakings given to the Minister of Industry by the
Parties. The Parties agree that they will not take any actions specifically for
the purpose of frustrating the intent of this Operating Agreement.
(a) OPERATING COMMITTEE RESPONSIBILITIES. The Apparel Fabric
Business operating committee (the "Apparel Committee") shall manage the
day-to-day affairs of the Apparel Fabric Business. The Nonwovens
Business operating committee (the "Nonwovens Committee", and together
with the Apparel Committee the "Operating Committees") shall manage the
day-to-day affairs of the Nonwovens Business (the Nonwovens Business
and the Apparel Fabric Business are each referred to sometimes herein
as a "Business" and, collectively, as the "Businesses"). Each Operating
Committee shall, in accordance with the direction established by the
Partners Committee, make all decisions and exercise all powers
necessary for the day-to-day operation of its respective Business,
including the power to appoint or cause to be appointed officers and
agents and to execute contracts; provided, however, the powers of the
Operating Committees shall not be construed to extend to those matters
that are reserved for decision by the Partners Committee under Section
3 of this Operating Agreement. Each Operating Committee shall operate
its respective Business consistent with the provisions of this
Operating Agreement and the Purchase Agreement.
(b) FORMATION AND COMPOSITION OF OPERATING COMMITTEES. The
Apparel Committee shall consist of the Partners who are the GL nominees
to the Partners Committee. The Nonwovens Committee shall consist of the
Partners who are the PGI nominees to the Partners Committee. Each
member of an Operating Committee shall serve so long as the person is a
Partner and shall cease to be a member of an Operating Committee in the
event that the person ceases to be a Partner.
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<PAGE>
Operating Agreement
December 19, 1997
Page 4
(c) PROCEDURES GOVERNING OPERATING COMMITTEES.
(i) Each Operating Committee shall meet with such
frequency and at such places (including meetings by telephone
or video conference) as mutually decided by the members of the
respective Operating Committee.
(ii) Meetings of an Operating Committee may be called
by any of its respective members. Notice (by hand, telephone,
overnight courier, or the U.S. mail) shall be given to all
members of the respective Operating Committee at any time
prior to a meeting (notice shall be deemed given when
received). If the notice requirement is not met, an Operating
Committee meeting shall nonetheless be valid as if held after
due notice if all members of the Operating Committee attend
without objection to the lack of notice or if, either before
or after such meeting, each member of the Operating Committee
signs a written waiver of notice, a consent to the holding of
such meeting or a written approval of the minutes of such
meeting.
(iii) No meeting of an Operating Committee may be
validly convened unless both members of the respective
Operating Committee are present (either in person or by
proxy). A member of an Operating Committee may appoint another
person as his or her proxy to represent such member at any
such Operating Committee meeting for any purpose, including
voting and quorum purposes.
(iv) Each member of an Operating Committee shall have
one (1) vote at all meetings of their respective Operating
Committee. All resolutions of an Operating Committee must be
adopted by the unanimous vote of all members of the Operating
Committee present (or their proxies). Minutes shall be kept of
each meeting of an Operating Committee, copies of which shall
be transmitted to each member for approval as to the accuracy
of the minutes. A resolution in writing which is signed by all
of the members of an Operating Committee shall be valid and
effective as if it had been unanimously passed at a meeting of
the respective Operating Committee duly convened and held.
Copies of any such resolutions shall be filed with the minutes
of the meetings of such Operating Committee.
(v) Each of GL and PGI shall pay the expenses
(including travel expenses) incurred by the Operating
Committee members nominated by it to attend Operating
Committee meetings.
(vi) By unanimous consent of its respective members,
an Operating Committee may adopt such other procedures
governing meetings and the conduct of business as it shall
deem appropriate.
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<PAGE>
Operating Agreement
December 19, 1997
Page 5
3. THE PARTNERS COMMITTEE
(a) PARTNERS COMMITTEE RESPONSIBILITIES. Subject to change by
agreement of GL and PGI, the management of each of the Businesses shall
be conducted exclusively by the applicable Operating Committee,
provided that the approval of the Partners Committee shall be required
prior to:
(i) approving any activity outside of the ordinary
course of business, consistent with past practice, of the
Apparel Fabric Business or the Nonwovens Business, considered
individually;
(ii) approving any acquisition or agreement to
acquire, by amalgamating, merging, consolidating or entering
into a business combination with or purchasing or leasing
substantially all of the assets of or otherwise, any business
or undertaking or any corporation, partnership, association or
other business organization or division thereof, if such
transactions, individually or in the aggregate, represent a
value to or commitment of Target or either Business of
$250,000 or more;
(iii) approving the sale, lease, transfer or other
disposition of any of the property or assets, real or
personal, including intangible assets and stock of
subsidiaries with respect to either Business, that,
individually or in the aggregate, (x) represent a value to or
commitment of Target or either Business of $250,000 or more,
or (y) have a book value of $250,000 or more;
(iv) executing or canceling any mortgage, security
interest or similar document or instrument purporting to
encumber any one or more of the assets of either Business if
such transactions, individually or in the aggregate, represent
a value to or commitment of Target or either Business of
$50,000 or more;
(v) entering into, amending or terminating any
agreements, covenants or contracts that, individually or in
the aggregate, represent a value to or commitment of Target or
either Business of $250,000 or more;
(vi) modifying, amending, waiving or terminating any
confidentiality agreement Target or either Business has
entered into with third parties;
(vii) guaranteeing the payment of any indebtedness,
or incurring any liability or indebtedness for borrowed money,
that, individually or in the aggregate, represents a
commitment of Target or either Business of $10,000 or more;
-5-
<PAGE>
Operating Agreement
December 19, 1997
Page 6
(viii) lending funds on behalf of Target or either
Business that, individually or in the aggregate, represent a
value to or commitment of Target or either Business of $25,000
or more;
(ix) committing to any capital expenditure or
investment, including any capital or operating lease, that,
individually or in the aggregate, represents a value to or
commitment of Target or either Business of $25,000 or more;
(x) making any capital expenditure, investment or
other payment pursuant to any contract or commitment if there
is insufficient cash within the particular Business to make
such payment;
(xi) entering into (or amending, modifying, waiving
or deviating from the previously approved terms of) any
transaction between (x) Target or either Business and (y) any
Party or any affiliate of a Party (other than transactions
with a Party (or its affiliates) which are specifically
authorized by the Purchase Agreement);
(xii) entering into (or amending, modifying, waiving
or deviating from the previously approved terms of) any
transaction which benefits any Party (or its affiliates)
(other than transactions benefitting a Party (or its
affiliates) which are specifically authorized by the Purchase
Agreement);
(xiii) approving or changing the salaries, bonuses or
other compensation payable to any officer or employee of
Target or either Business;
(xiv) commencing, prosecuting, defending or settling
any case, controversy, claim, cause of action or dispute which
arises out of or relates to the Target or either Business and
which involves claims in excess of $25,000 to Target, either
Business or any Party;
(xv) determining how best to maintain, protect and
defend the rights and interests in and to the intellectual
property of Target and each Business;
(xvi) approving new bank accounts which shall hold
funds of Target or either Business;
(xvii) approving the purchase of insurance policies;
(xviii) approving any distribution of assets
(including cash) of Target or either Business to any Party (or
its subsidiary) or to the other Business;
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<PAGE>
Operating Agreement
December 19, 1997
Page 7
(xix) adopting, amending or terminating any (a)
collective bargaining agreement, (b) plan, policy, arrangement
or understanding providing any of the following benefits to
current or former employees of Target or either Business:
bonus, pension, profit sharing, deferred compensation,
incentive compensation, equity or quasi-equity based
compensation, retirement, vacation, severance, disability,
death benefit or insurance or (c) other personnel practices or
policies;
(xx) creating any subsidiary of Target or either
Business;
(xxi) causing Target or either Business or any of
their subsidiaries to cease doing business, liquidate or
dissolve, file a petition in bankruptcy, make an assignment
for the benefit of creditors or take or allow to be taken
against it any similar action;
(xxii) permitting any subsidiary of Target or either
Business to take any action described above; and
(xxiii) performing all other duties specifically
reserved to the Partners Committee in this Operating Agreement
or subsequently delegated to the Partners Committee by
agreement of GL and PGI.
(b) FORMATION AND COMPOSITION OF THE PARTNERS COMMITTEE. The
Partners Committee shall consist of four (4) individuals or such other
even number of individuals as GL and PGI from time to time may agree in
writing; provided that each of PGI and GL shall have the right to
nominate an equal number of Partners to the Partners Committee. The
Parties shall cause the board of directors of Target to appoint the
persons so nominated by PGI and GL to serve on the Partners Committee.
All such Partners shall be officers or employees of the Party which
nominated them (or one of its affiliates) or an employee of Target. The
initial Partners shall be Jerry Zucker, James G. Boyd, Arthur C. Wiener
and Michael R. Harmon. Jerry Zucker and James G. Boyd shall be deemed
nominated by PGI, and Arthur C. Wiener and Michael R. Harmon shall be
deemed nominated by GL. At the request of either PGI or GL, which
request must relate to a Partner nominated by the requesting Party, the
Parties shall cause Target's board of directors to replace a Partner,
provided that no revocation shall be valid until a notice thereof has
been given to the other Parties.
(c) OPERATION OF THE PARTNERS COMMITTEE. The Partners
Committee shall meet with such frequency and at such places (including
meetings by telephone or video conference) as mutually decided by the
Partners, provided that there shall be a face-to-face Partners
Committee meeting at least once every two (2) months.
-7-
<PAGE>
Operating Agreement
December 19, 1997
Page 8
(i) Meetings may be called by any Partner on at least
seven (7) days prior written notice to each Partner. If the
notice requirement is not met, a Partners Committee meeting
shall nonetheless be valid as if held after due notice if all
Partners attend without objection to the lack of notice or if,
either before or after such meeting, each Partner signs a
written waiver of notice, a consent to the holding of such
meeting or a written approval of the minutes of such meeting.
(ii) No meeting of the Partners Committee may be
validly convened unless at least one (1) Partner nominated by
PGI and at least one (1) Partner nominated by GL are present
(either in person or by proxy). A Partner may appoint another
person as his or her proxy to represent such Partner at any
meeting for any purpose, including voting and quorum purposes.
(iii) Each Partner shall have one (1) vote at all
meetings of the Partners Committee. All resolutions of the
Partners Committee must be adopted by the unanimous vote of
all Partners present (or their proxies). Minutes shall be kept
of each meeting of the Partners Committee, copies of which
shall be transmitted to each Partner for approval as to the
accuracy of the minutes. A resolution in writing which is
signed by all of the Partners shall be valid and effective as
if it had been unanimously passed at a meeting of the Partners
Committee duly convened and held. Copies of any such
resolutions shall be filed with the minutes of the Partners
Committee meetings. The respective counsel of each of GL and
PGI shall be permitted to attend all Partners Committee
meetings.
(iv) Each of GL and PGI shall pay the expenses
(including travel expenses) incurred by the Partners nominated
by it to attend Partners Committee meetings.
(v) By unanimous consent of all Partners, the
Partners Committee may adopt such other procedures governing
meetings and the conduct of business as it shall deem
appropriate.
4. RESOLUTION OF POTENTIAL PARTNERS COMMITTEE IMPASSE.
(a) MEDIATION. The Partners shall attempt to settle all
matters before the Partners Committee through consultation and
negotiation in good faith and in a spirit of mutual cooperation. In the
event that the Partners Committee does not reach a decision on a matter
within twenty (20) business days from the date that the matter was
submitted to the Partners Committee, then the matter will be deemed to
be a dispute and such dispute will be mediated by a mediator to be
selected by the Partner demanding mediation and to be consented to by
all other Partners. No Partner may unreasonably withhold consent to the
selection of a
-8-
<PAGE>
Operating Agreement
December 19, 1997
Page 9
mediator. By mutual agreement, however, the Partners may postpone
mediation until the Partners have each completed some specified but
limited inquiry regarding the matter.
(b) ARBITRATION. In the event that the Partners Committee,
with or without the involvement of a mediator, does not reach agreement
on a matter within forty (40) business days from the date the matter
was submitted to the Partners Committee, then, at the request of any
Partner, the matter shall be submitted to arbitration by such Partner
delivering a notice of arbitration (a "Notice of Arbitration") to a
Partner who was nominated by a Party other than the Party that
nominated the Partner requesting arbitration. Such Notice of
Arbitration shall specify the matters as to which arbitration is
sought, the nature of any dispute and any other matters required to be
included therein by the Rules and Commentary for Non-Administered
Arbitration of Business Disputes, as in effect from time to time (the
"Rules"), of the Center for Public Resources, Inc. ("CPR"). A partner
of Ernst & Young having expertise in the textile industry to be
selected by such accounting firm and not by either Party, shall be the
arbitrator (the "Arbitrator"); provided, however, that, in the event
that the Arbitrator for any reason withdraws or is disqualified from
serving in that capacity and cannot be replaced by another qualified
partner of such accounting firm because of such accounting firm's
withdrawal or disqualification, CPR shall select as a substitute
Arbitrator a person who is or has been actively employed in an
executive or managerial capacity in the textile industry or with an
independent public accounting firm having expertise in that area.
The Arbitrator will determine the allocations of the costs and
expenses of arbitration (except for fees and expenses of legal counsel,
if any, selected by a party, which shall be borne by such party) as
well as the resolution of any dispute governed by this Section 4. The
Arbitrator shall be instructed to resolve any dispute in a manner that
is consistent with the Purchase Agreement and this Operating Agreement.
The arbitration shall be conducted in Atlanta, Georgia, under the
Rules, except as modified by agreement of GL and PGI. The pendency of
any arbitration under this Section 4 shall not in any way relieve the
Partners from continuing to carry out their responsibilities under this
Operating Agreement in good faith.
Evidentiary hearings, if any, shall not exceed three (3)
business days. The Arbitrator shall conduct the arbitration so that a
final result, determination, finding or judgment (the "Final
Determination") is made or rendered as soon as practicable, but in no
event later than forty (40) business days after the receipt by the
relevant Partner(s) of the Notice of Arbitration nor later than ten
(10) business days following the completion of all other aspects of the
arbitration. The Arbitrator shall seek a Final Determination that
maximizes the net benefit to the Parties while allocating benefits and
detriments in a manner equitable to the Parties in light of the
Parties' relationship.
-9-
<PAGE>
Operating Agreement
December 19, 1997
Page 10
The Final Determination shall be signed by the Arbitrator, and
shall be limited to the matters properly set forth in the Notice of
Arbitration. The Final Determination shall be final and binding on the
Partners Committee, and there shall be no appeal or reexamination of
the Final Determination, except as provided in Sections 10 and 11 of
the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq. Any Partner or
Party may enforce any Final Determination in any state or federal court
having jurisdiction over the dispute. For the purpose of any action or
proceeding instituted with respect to any Final Determination, each
Partner and Party irrevocably consents to the service of process by
registered mail or personal service and hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of
any such action or proceeding brought in any such court and any claim
that any such action or proceeding brought in any court has been
brought in an inconvenient forum.
(c) LIMITED APPLICATION OF DISPUTE RESOLUTION PROCEDURES. The
dispute resolution procedures provided in Sections 4(a) and 4(b) shall
apply only to the resolution of matters properly submitted to the
Partners Committee regarding the operations of Target and its
subsidiaries. These dispute resolution procedures shall not be
construed to apply to any other disputes arising out of or concerning
this Operating Agreement and shall not be construed to apply to or
alter any other agreement between the Parties.
5. INDEMNIFICATION OF PARTNERS AND DIRECTORS AND OFFICERS OF DTA.
(a) SCOPE OF INDEMNIFICATION. In addition to any other right
to indemnification granted by the bylaws or articles of incorporation
of either the Target or DTA (Target and DTA are together referred to as
the "Indemnifying Parties"), each person who was or is made a party to
or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding") by reason of the fact that
he or she is or was a Partner or a member of an Operating Committee or
an officer or director of DTA (hereinafter an "Indemnitee"), whether
the basis of such a Proceeding is alleged action by the Indemnitee in
an official capacity as a Partner, director, or officer or in any other
capacity while serving as a Partner, director, or officer, shall be
indemnified and held harmless by the Indemnifying Parties to the
fullest extent authorized by law (including indemnification for
negligence, gross negligence and breach of fiduciary duty to the extent
so authorized), as the law now exists or may hereinafter be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Indemnifying Parties to provide broader
indemnification rights than such law permitted the Indemnifying Parties
to provide prior to such amendment), against all expense, liability and
loss (including attorneys' fees, judgments, fines, excise taxes, or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith. However, it is
provided that:
-10-
<PAGE>
Operating Agreement
December 19, 1997
Page 11
(i) an Indemnitee shall not be entitled to be
indemnified by the Indemnifying Parties unless he or she acted
in good faith in what such person reasonably believed to be in
accordance with the Purchase Agreement and this Operating
Agreement and, with respect to criminal action or proceeding,
he or she must not have had reasonable cause to believe that
his or her conduct was unlawful;
(ii) any indemnification pursuant to this Section 5
shall be recoverable only from the assets of the Indemnifying
Parties and not from the assets of any other Party.
(b) ADVANCEMENT OF EXPENSES. The right to indemnification
conferred in this Section 5 shall include the right to be paid by the
Indemnifying Parties the expenses (including attorneys' fees) incurred
in defending any Proceeding in advance of its final disposition,
subject to the receipt of an undertaking from such Indemnitee to
promptly repay any amounts so advanced in the event that he or she is
not ultimately entitled to receive indemnification under Section 5(a).
(c) SURVIVAL. The rights of indemnification in Sections 5(a)
and 5(b) shall be contractual rights, and such rights shall continue as
to an Indemnitee who has ceased to be a Partner, director or officer
and shall inure to the benefit of the Indemnitee's heirs, executors and
administrators;
(d) NON-EXCLUSIVE RIGHTS. The rights to indemnification and to
the advancement of expenses conferred in this Section 5 shall not be
exclusive of any other right that any person may have or hereafter
acquire under any statute, agreement, vote of the directors or
shareholders or otherwise.
(e) INSURANCE. The Indemnifying Parties may maintain
insurance, at their expense, to protect themselves and any Indemnitee
against any expense, liability or loss, whether or not the Indemnifying
Parties would have the power to indemnify such person against such
expense, liability or loss under relevant laws.
6. WAIVER OF CONFLICT OF INTEREST. Each Party hereby waives any claim
or cause of action against any other Party, any Partner nominated by another
Party, or any person ("Appointee") appointed by an Operating Committee which
consists of Partners nominated by another Party, for any breach of fiduciary
duty to the Target by such Partner or Appointee as a result of any potential or
actual conflict of interest. Each Party acknowledges and agrees that in the
event of any such conflict of interest, each such Partner or Appointee, subject
to applicable law, may act in the best interest of the Party which, directly or
indirectly through an Operating Committee, nominated him or her. Subject to
applicable law, no Partner or Appointee shall be obligated to recommend or take
any action that prefers the interests of the Target over the interests of a
Party, and the Target and the
-11-
<PAGE>
Operating Agreement
December 19, 1997
Page 12
Parties waive the fiduciary duty, if any, to the Target of each such Partner or
Appointee in the event of any such conflict of interest. The foregoing shall not
limit the right of any Party and its affiliates to pursue available remedies
against the other Parties and their affiliates for breach of any representation,
warranty, covenant or agreement contained in the Purchase Agreement and this
Operating Agreement.
7. PUBLIC ANNOUNCEMENTS. Neither GL on the one hand or PGI and DTA on
the other hand shall make or send a public announcement or communication
regarding this Operating Agreement unless it has first obtained the prior
written approval of PGI or GL, respectively (which approval shall not be
unreasonably withheld); provided that any Party may make any public disclosure
it believes in good faith, upon advice of counsel, is required by applicable
law, the regulations of the stock exchange on which the Party's stock is traded
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party, whether GL on the one hand or PGI and DTA
on the other hand, will use reasonable efforts to consult PGI or GL,
respectively, prior to making the disclosure). The Parties agree that in
response to any questions or inquiries from third parties, any statements shall
be consistent with the provisions of this Operating Agreement and no statements
will be made that would be likely to mislead or confuse third parties regarding
the management authority agreed to herein.
8. ENTIRE AGREEMENT. This Operating Agreement and the Purchase
Agreement together contain the entire agreement and understanding among the
Parties.
9. AMENDMENTS. This Operating Agreement may be amended only upon the
written consent of each of GL and PGI.
10. TERMINATION. This Operating Agreement will automatically be
terminated and be of no further force and effect upon the earlier of (a) mutual
agreement of the Parties, (b) the termination of the Purchase Agreement, or (c)
the completion of the Purchase Agreement Transaction; provided, that in the
event a Party materially breaches this Operating Agreement or is unable to
fulfil any conditions required to be fulfilled, and such breach is not cured
within fifteen days following notice from another Party, the non-breaching
Parties may terminate this Operating Agreement on or after the twenty-second day
following delivery of such notice. Termination of this Operating Agreement by a
non-breaching Party pursuant to this Section 10 will not relieve the breaching
Party of any liability it may have as a result of any breach of the Purchase
Agreement or this Operating Agreement.
11. CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Operating Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Operating Agreement shall
be construed as if drafted jointly by the Parties and no presumption or burden
of proof shall arise favoring or disfavoring any Party by virtue of the
authorship of any of the provisions of this Operating Agreement. Any reference
to any federal, state, local, or foreign
-12-
<PAGE>
Operating Agreement
December 19, 1997
Page 13
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation.
12. MISCELLANEOUS. THIS OPERATING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICTS OF LAW PRINCIPLES THEREOF. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAWS OF THE STATE OF NEW YORK SHALL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS OPERATING AGREEMENT, EVEN THOUGH UNDER NEW YORK'S CHOICE OF
LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
MAY ORDINARILY APPLY. If any provision of this Operating Agreement is deemed
invalid, illegal or incapable of enforcement by any rule of law or public
policy, all other provisions of this Operating Agreement shall remain in full
force and effect. Upon any determination that any provision of this Operating
Agreement is invalid, illegal or incapable of enforcement, the Parties shall
negotiate in good faith to modify this Operating Agreement so as to effect the
original intent of the Parties as closely as possible to the management rights
and responsibilities originally contemplated by the Parties. Each Party may
assign its rights hereunder only to any of its affiliates, but neither GL on the
one hand or PGI and DTA on the other hand may assign its obligations or delegate
its duties hereunder without the prior written approval of PGI or GL,
respectively; provided, that in connection with any such assignment to an
affiliate, the assigning party must guarantee all of the obligations owed to the
other Parties hereunder. The Parties agree that irreparable damage would occur
in the event that any of the provisions of this Operating Agreement were not
performed in accordance with their specific terms or were otherwise breached,
and therefore agree that, in addition to any other remedy to which any Party may
be entitled to at law or in equity, the Parties shall be entitled to injunctive
relief to prevent breaches of this Operating Agreement and to enforce
specifically the provisions hereof (without posting a bond or other security).
All notices required by this letter agreement shall be in writing and may be
sent by registered or certified mail, return receipt requested, by overnight
courier or by facsimile (with confirming copy sent by overnight courier). All
notices to GL shall be made to Arthur Wiener, Chairman, President and Chief
Executive Officer of GL, and all notices to PGI and DTA shall be made to Jerry
Zucker, Chairman, President and Chief Executive Officer of PGI and DTA, at the
addresses of their respective principal executive offices. This Operating
Agreement may be executed in counterparts and delivered by facsimile
transmission. Nothing in this Operating Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Operating Agreement on any persons other than the Parties hereto and their
affiliates and respective permitted successors and assigns.
* * * * *
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<PAGE>
Operating Agreement
December 19, 1997
Page 14
IN WITNESS WHEREOF, the parties hereto have caused this
Operating Agreement to be signed by their respective officers thereto duly
authorized, all as of the date first above written.
POLYMER GROUP, INC.
By: _______________________________________
Its: _______________________________________
DT ACQUISITION INC.
By: _______________________________________
Its: _______________________________________
GALEY & LORD INCORPORATED
By: /s/ Michael R. Harmon ___________________
Its: Executive Vice-President___________________
-14-
<PAGE>
Exhibit 5
- --------------------------------------------------------------------------------
$470,000,000
CREDIT AGREEMENT
among
GALEY & LORD INDUSTRIES, INC.,
as Borrower,
GALEY & LORD, INC.
AND
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTIES HERETO
as Guarantors,
THE LENDERS PARTIES HERETO
and
FIRST UNION NATIONAL BANK,
as Administrative Agent
Dated as of December 19, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
Section 1.1 Defined Terms................................................................................1
Section 1.2 Other Definitional Provisions...............................................................27
Section 1.3 Accounting Terms............................................................................28
ARTICLE II THE LOANS; AMOUNT AND TERMS..........................................................................28
Section 2.1 Revolving Loans.............................................................................28
Section 2.2 Term Loan...................................................................................31
Section 2.3 Swingline Loan Subfacility..................................................................32
Section 2.4 Letter of Credit Subfacility................................................................33
Section 2.5 Fees........................................................................................37
Section 2.6 Commitment Reductions ......................................................................38
Section 2.7 Prepayments.................................................................................38
Section 2.8 Minimum Principal Amount of Tranches........................................................41
Section 2.9 Default Rate and Payment Dates..............................................................41
Section 2.10 Conversion Options.........................................................................41
Section 2.11 Computation of Interest and Fees...........................................................42
Section 2.12 Pro Rata Treatment and Payments............................................................43
Section 2.13 Non-Receipt of Funds by the Agent..........................................................43
Section 2.14 Inability to Determine Interest Rate.......................................................44
Section 2.15 Illegality.................................................................................45
Section 2.16 Requirements of Law........................................................................45
Section 2.17 Indemnity..................................................................................47
Section 2.18 Taxes......................................................................................47
Section 2.19 Indemnification; Nature of Issuing Lender's Duties.........................................49
ARTICLE III REPRESENTATIONS AND WARRANTIES......................................................................50
Section 3.1 Financial Condition.........................................................................51
Section 3.2 No Change...................................................................................51
Section 3.3 Corporate Existence; Compliance with Law....................................................51
Section 3.4 Corporate Power; Authorization; Enforceable Obligations.....................................52
Section 3.5 No Legal Bar; No Default....................................................................52
Section 3.6 No Material Litigation......................................................................52
Section 3.7 Investment Company Act......................................................................53
Section 3.8 Margin Regulations..........................................................................53
Section 3.9 ERISA.......................................................................................53
Section 3.10 Environmental Matters......................................................................53
Section 3.11 Purpose of Loans...........................................................................54
Section 3.12 Subsidiaries...............................................................................55
Section 3.13 Ownership..................................................................................55
Section 3.14 Indebtedness...............................................................................55
Section 3.15 Taxes......................................................................................55
Section 3.16 Intellectual Property......................................................................55
Section 3.17 Solvency...................................................................................56
Section 3.18 Investments................................................................................56
Section 3.19 Location of Collateral.....................................................................56
i
<PAGE>
Section 3.20 No Burdensome Restrictions.................................................................56
Section 3.21 Brokers' Fees..............................................................................56
Section 3.22 Labor Matters..............................................................................57
Section 3.23 Accuracy and Completeness of Information...................................................57
Section 3.24 Printed Apparel Fabrics Business...........................................................57
ARTICLE IV CONDITIONS PRECEDENT.................................................................................57
Section 4.1 Conditions to Closing Date and Initial Revolving Loans......................................57
Section 4.2 Conditions to Revolving Loans and Term Loan To Be Made in Connection with the G&L
Acquisition.............................................................................................60
Section 4.3 Conditions to Initial Revolving Loans following the G&L Acquisition.........................62
Section 4.4 Conditions to All Extensions of Credit......................................................62
ARTICLE V AFFIRMATIVE COVENANTS.................................................................................64
Section 5.1 Financial Statements........................................................................64
Section 5.2 Certificates; Other Information.............................................................65
Section 5.3 Payment of Obligations......................................................................66
Section 5.4 Conduct of Business and Maintenance of Existence............................................66
Section 5.5 Maintenance of Property; Insurance..........................................................66
Section 5.6 Inspection of Property; Books and Records; Discussions......................................67
Section 5.7 Notices.....................................................................................67
Section 5.8 Environmental Laws..........................................................................68
Section 5.9 Financial Covenants.........................................................................68
Section 5.10 Additional Subsidiary Guarantors...........................................................71
Section 5.11 Compliance with Law........................................................................71
Section 5.12 Pledged Assets.............................................................................71
Section 5.13 Revisions or Updates to Schedules..........................................................72
ARTICLE VI NEGATIVE COVENANTS...................................................................................72
Section 6.1 Indebtedness................................................................................73
Section 6.2 Liens.......................................................................................74
Section 6.3 Guaranty Obligations........................................................................74
Section 6.4 Nature of Business..........................................................................74
Section 6.5 Consolidation, Merger, Sale or Purchase of Assets, etc......................................74
Section 6.6 Advances, Investments and Loans.............................................................75
Section 6.7 Transactions with Affiliates................................................................75
Section 6.8 Ownership of Subsidiaries; Company Restrictions.............................................76
Section 6.9 Fiscal Year; Organizational Documents.......................................................76
Section 6.10 Limitation on Restricted Actions...........................................................76
Section 6.11 Restricted Payments........................................................................77
Section 6.12 Prepayments of Indebtedness, etc...........................................................77
Section 6.13 Sale Leasebacks............................................................................77
Section 6.14 No Further Negative Pledges................................................................78
ARTICLE VII EVENTS OF DEFAULT...................................................................................78
Section 7.1 Events of Default...........................................................................78
Section 7.2 Acceleration; Remedies......................................................................81
ARTICLE VIII THE AGENT..........................................................................................81
Section 8.1 Appointment.................................................................................81
Section 8.2 Delegation of Duties........................................................................82
Section 8.3 Exculpatory Provisions......................................................................82
ii
<PAGE>
Section 8.4 Reliance by Agent...........................................................................82
Section 8.5 Notice of Default...........................................................................83
Section 8.6 Non-Reliance on Agent and Other Lenders.....................................................83
Section 8.7 Indemnification.............................................................................84
Section 8.8 Agent in Its Individual Capacity............................................................84
Section 8.9 Successor Agent.............................................................................84
ARTICLE IX MISCELLANEOUS........................................................................................85
Section 9.1 Amendments, Waivers and Release of Collateral...............................................85
Section 9.2 Notices.....................................................................................86
Section 9.3 No Waiver; Cumulative Remedies..............................................................87
Section 9.4 Survival of Representations and Warranties..................................................87
Section 9.5 Payment of Expenses and Taxes...............................................................87
Section 9.6 Successors and Assigns; Participations; Purchasing Lenders..................................88
Section 9.7 Adjustments; Set-off........................................................................91
Section 9.8 Table of Contents and Section Headings......................................................92
Section 9.9 Counterparts................................................................................92
Section 9.10 Severability...............................................................................92
Section 9.11 Integration................................................................................92
Section 9.12 Governing Law..............................................................................92
Section 9.13 Consent to Jurisdiction and Service of Process.............................................93
Section 9.14 Arbitration................................................................................93
Section 9.15 Confidentiality............................................................................94
Section 9.16 Acknowledgments............................................................................95
Section 9.17 Waivers of Jury Trial......................................................................95
Section 9.18 Financial Covenants and Determination of Borrowing Base....................................95
ARTICLE X GUARANTY..............................................................................................96
Section 10.1 The Guaranty...............................................................................96
Section 10.2 Bankruptcy.................................................................................97
Section 10.3 Nature of Liability........................................................................97
Section 10.4 Independent Obligation.....................................................................98
Section 10.5 Authorization..............................................................................98
Section 10.6 Reliance...................................................................................98
Section 10.7 Waiver.....................................................................................98
Section 10.8 Limitation on Enforcement.................................................................100
Section 10.9 Confirmation of Payment...................................................................100
</TABLE>
SCHEDULES
Schedule 1.1(a) Account Designation Letter
Schedule 2.1(a) Schedule of Lenders and Commitments
Schedule 2.1(b)(i) Form of Notice of Borrowing
Schedule 2.1(e) Form of Revolving Note
Schedule 2.2(d) Form of Term Note
Schedule 2.3(d) Form of Swingline Note
Schedule 2.4(a) Letters of Credit Outstanding
Schedule 2.10 Form of Notice of Conversion/Extension
iii
<PAGE>
Schedule 2.18 Section 2.18 Certificate
Schedule 3.6 Litigation
Schedule 3.12 Subsidiaries
Schedule 3.16 Material Intellectual Property
Schedule 3.19(a) Location of Real Property
Schedule 3.19(b) Location of Collateral
Schedule 3.19(c) Chief Executive Offices
Schedule 3.22 Labor Matters
Schedule 4.1(b) Form of Secretary's Certificate
Schedule 4.1(j) Form of Solvency Certificate
Schedule 4.2(o) Existing Indebtedness of Acquired Companies
Schedule 5.2(d) Form of Borrowing Base Certificate
Schedule 5.10 Form of Joinder Agreement
Schedule 6.1(b) Indebtedness
Schedule 9.2 Schedule of Lenders' Lending Offices
Schedule 9.6(c) Form of Commitment Transfer Supplement
iv
<PAGE>
CREDIT AGREEMENT, dated as of December 19, 1997, among GALEY & LORD
INDUSTRIES, INC., a Delaware corporation (the "Borrower"), GALEY & LORD, INC., a
Delaware corporation (the "Company"), those Subsidiaries identified as a
"Guarantor" on the signature pages hereto and such other Subsidiaries as may
from time to time become a party hereto (together with the Company, the
"Guarantors"), the several banks and other financial institutions from time to
time parties to this Agreement (collectively, the "Lenders"; and individually, a
"Lender"), and FIRST UNION NATIONAL BANK, a national banking association, as
agent for the Lenders hereunder (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lenders make loans and
other financial accommodations to the Borrower in the amount of up to
$470,000,000, of which up to $230,000,000 will be used to refinance existing
indebtedness of the Borrower and for general corporate and working capital
purposes and the remaining proceeds will be used to finance the G&L Acquisition
(as such term is defined hereinafter) and for general corporate and working
capital purposes;
WHEREAS, the Lenders have agreed to make such loans and other financial
accommodations to the Borrower on the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, terms defined in the preamble to this
Agreement have the meanings therein indicated, and the following terms have the
following meanings:
"Account Designation Letter" shall mean the Notice of Account
Designation Letter dated the Closing Date from the Borrower to the
Agent substantially in the form attached hereto as Schedule 1.1(a).
"Acquired Companies" shall mean the Apparel Division of Target
to be acquired by the Borrower.
<PAGE>
"Acquisition Documents" shall mean the G&L Purchase Agreement
and the Polymer Purchase Agreement, including the exhibits and
schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith.
"Acquisition Funding Termination Date" shall mean the date
which is the earlier of (i) 364 days following the consummation of the
Tender Offer and (ii) 180 days following the Amalgamation.
"Additional Credit Party" shall mean each Person that becomes
a Guarantor by execution of a Joinder Agreement in accordance with
Section 5.10.
"Adjusted Fixed Charge Coverage Ratio" shall mean the ratio of
Consolidated EBITDA, including any Permitted G&L Acquisition Cost
Savings, to Consolidated Fixed Charges.
"Adjusted Leverage Ratio" shall mean the ratio of Consolidated
Funded Debt to Consolidated EBITDA, including any Permitted G&L
Acquisition Cost Savings.
"Affiliate" shall mean as to any Person, any other Person
(excluding any Subsidiary) which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person. For
purposes of this definition, a Person shall be deemed to be "controlled
by" a Person if such Person possesses, directly or indirectly, power
either (a) to vote 10% or more of the securities having ordinary voting
power for the election of directors of such Person or (b) to direct or
cause the direction of the management and policies of such Person
whether by contract or otherwise.
"Agent" shall have the meaning set forth in the first
paragraph of this Agreement and any successors in such capacity.
"Agreement" shall mean this Credit Agreement, as amended,
modified or supplemented from time to time in accordance with its
terms.
"Alternate Base Rate" shall mean, for any day, a rate per
annum equal to the greater of (a) the Prime Rate in effect on such day
and (b) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%. For purposes hereof: "Prime Rate" shall mean, at any time, the
rate of interest per annum publicly announced from time to time by
First Union at its principal office in Charlotte, North Carolina as its
prime rate. Each change in the Prime Rate shall be effective as of the
opening of business on the day such change in the Prime Rate occurs.
The parties hereto acknowledge that the rate announced publicly by
First Union as its Prime Rate is an index or base rate and shall not
necessarily be its lowest or best rate charged to its customers or
other banks; and "Federal Funds Effective Rate" shall mean, for any
day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day
by the Federal Reserve Bank
2
<PAGE>
of New York, or, if such rate is not so published on the next
succeeding Business Day, the average of the quotations for the day of
such transactions received by the Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Agent shall have determined (which determination shall be conclusive in
the absence of manifest error) that it is unable to ascertain the
Federal Funds Effective Rate, for any reason, including the inability
or failure of the Agent to obtain sufficient quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined
without regard to clause (b) of the first sentence of this definition,
as appropriate, until the circumstances giving rise to such inability
no longer exist. Any change in the Alternate Base Rate due to a change
in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the opening of business on the date of such change.
"Alternate Base Rate Loans" shall mean Loans that bear
interest at an interest rate based on the Alternate Base Rate.
"Amalgamation" shall mean the amalgamation of DTA with and
into Target under the laws of Canada pursuant to the Amalgamation
Agreement.
"Amalgamation Agreement" shall mean an agreement to be entered
into between DTA and Target following the consummation of the Tender
Offer pursuant to which DTA and Target would amalgamate under the laws
of Canada, thereby forming a new corporation, as amended, modified or
supplemented from time to time in accordance with its terms.
"Apparel Division" shall mean the apparel fabrics textile
group businesses of Target conducted primarily through the Swift
Textiles Canada division of Target, six direct or indirect wholly-owned
subsidiaries of Target (being (i) DomTex USA, (ii) Swift Textiles,
Inc., a Delaware corporation, (iii) Dominion Textile (Asia) Pte. Ltd.,
a company organized under the laws of Singapore, (iv) Swift Textiles
(Far East) Ltd., a company organized under the laws of Hong Kong, (v)
Dominion Textile International B.V., a company organized under the laws
of the Netherlands, (vi) Klopman International S.r.L., a company
organized under the laws of Italy) and (vii) Swift Textiles Europe
Ltd., a company organized under the laws of the Republic of Ireland.
"Applicable Percentage" shall mean, for any day, the rate per
annum set forth below opposite the applicable Level then in effect, it
being understood that the Applicable Percentage for (i) Revolving Loans
which are Alternate Base Rate Loans shall be the percentage set forth
under the column "Alternate Base Rate Margin for Revolving Loans", (ii)
Revolving Loans which are LIBOR Rate Loans shall be the percentage set
forth under the column "LIBOR Rate Margin for Revolving Loans and
Letter of Credit Fee", (iii) the Commitment Fee shall be the percentage
set forth under the column "Commitment Fee", (iv) Term Loans which are
Alternate Base Rate Loans shall be the percentage set forth under the
column "Alternate Base Rate Margin for Term Loans", (ii) Term Loans
which are LIBOR Rate Loans shall be the percentage set forth under the
column "LIBOR Rate
Margin for Term Loans" and (vi) the Letter of Credit Fee shall be the
percentage set forth under the column "LIBOR Rate Margin for Revolving
Loans and Letter of Credit Fee":
<TABLE>
<CAPTION>
LIBOR Rate
Alternate Margin for Alternate
Adjusted Base Rate Revolving Loans Base Rate LIBOR Rate
Leverage Margin for and Letter of Commitment Margin for Margin for
Level Ratio Revolving Loans Credit Fee Fee Term Loans Term Loans
--------- --------------- ------------------- -------------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
I (greater than) 1.00% 2.25% 0.50% 1.50% 2.75%
5.5 to 1.0
II (greater than) 0.75% 2.00% 0.50% 1.25% 2.50%
5.0 to 1.0 but
(equal to) 5.5
to 1.0
III (greater than) 0.50% 1.75% 0.375% 1.00% 2.25%
4.5 to 1.0
but (equal to)
5.0 to 1.0
IV (greater than) 0.25% 1.50% 0.375% 0.75% 2.00%
4.0 to 1.0 but
(equal to) 4.5
to 1.0
V (greater than) 0% 1.25% 0.25% 0.50% 1.75%
3.5 to 1.0 but
(equal to) 4.0
to 1.0
VI (greater than) 0% 1.00% 0.25% 0.25% 1.50%
3.0 to 1.0 but
(equal to) 3.5
to 1.0
VII (equal to) 3.0 0% 0.75% 0.25% 0.25% 1.50%
to 1.0
</TABLE>
The Applicable Percentage shall, in each case, be determined and
adjusted quarterly on the date five (5) Business Days after the date by
which the Company is required to provide the quarterly financial
information and certifications to the Agent and the Lenders in
accordance with the provisions of Sections 5.1(b) and 5.2(b) (each an
"Interest Determination Date"). Such Applicable Percentage shall be
effective from such Interest Determination Date until the next such
Interest Determination Date. The initial Applicable Percentages shall
be based on Level I until the first Interest Determination Date
occurring after the end of the second full fiscal quarter of the
Company following the Subsequent Transactions Closing Date. After the
Subsequent Transactions Closing Date, if the Borrower shall fail to
provide the quarterly financial information and certifications in
accordance with the provisions of Sections 5.1(b) and 5.2(b), the
Applicable Percentage from such Interest Determination Date shall, on
the date five (5) Business Days after the date by which the Company was
so required to provide such financial information and certifications to
the Agent and the Lenders, be based on Level I until such time as such
information and certifications are provided, whereupon the Level shall
be determined by the then current Adjusted Leverage Ratio.
"Asset Disposition" shall mean the disposition of any or all
of the assets (including, without limitation, the Capital Stock of a
Subsidiary or any ownership interest in a joint
4
<PAGE>
venture) of the Company or any Subsidiary whether by sale, lease,
transfer or otherwise. The term "Asset Disposition" shall not include
(a) Specified Sales or (b) any Equity Issuance.
"Bankruptcy Code" shall mean the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded or replaced
from time to time.
"Borrower" shall have the meaning set forth in the first
paragraph of this Agreement.
"Borrowing Base" shall mean, as of any day, the sum of (a) 85%
of Eligible Receivables and (b) 55% 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
5.2(d).
"Borrowing Date" shall mean, in respect of any Loan, the date
such Loan is made.
"Bridge Agreement" shall have the meaning set forth in the
definition of Subordinated Debt.
"Bridge Notes" shall have the meaning set forth in the
definition of Subordinated Debt.
"Business" shall have the meaning set forth in Section 3.10.
"Business Day" shall mean a day other than a Saturday, Sunday
or other day on which commercial banks in Charlotte, North Carolina or
New York, New York are authorized or required by law to close;
provided, however, that when used in connection with a rate
determination, borrowing or payment in respect of a LIBOR Rate Loan,
the term "Business Day" shall also exclude any day on which banks in
London, England are not open for dealings in Dollar deposits in the
London interbank market.
"Capital Expenditures" shall mean all expenditures which in
accordance with GAAP would be classified as capital expenditures,
including without limitation, Capital Lease Obligations.
"Capital Lease" shall mean any lease of property, real or
personal, the obligations with respect to which are required to be
capitalized on a balance sheet of the lessee in accordance with GAAP.
"Capital Lease Obligations" shall mean the capitalized lease
obligations relating to a Capital Lease determined in accordance with
GAAP.
"Capital Stock" shall mean (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
5
<PAGE>
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" shall mean (i) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in
support thereof) having maturities of not more than twelve months from
the date of acquisition ("Government Obligations"), (ii) U.S. dollar
denominated (or foreign currency fully hedged) time deposits,
certificates of deposit, Eurodollar time deposits and Eurodollar
certificates of deposit of (y) any domestic commercial bank of
recognized standing having capital and surplus in excess of
$250,000,000 or (z) 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 364
days from the date of acquisition, (iii) commercial paper and variable
or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable rate notes issued by, or guaranteed by
any domestic corporation rated A-1 (or the equivalent thereof) or
better by S&P or P-1 (or the equivalent thereof) or better by Moody's
and maturing within six months of the date of acquisition, (iv)
repurchase agreements with a bank or trust company (including a Lender)
or a 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, (v) obligations of any state of the
United States or any political subdivision thereof for the payment of
the principal and redemption price of and interest on which there shall
have been irrevocably deposited Government Obligations maturing as to
principal and interest at times and in amounts sufficient to provide
such payment, and (vi) auction preferred stock rated in the highest
short-term credit rating category by S&P or Moody's.
"Chase" shall mean The Chase Manhattan Bank, a New York
banking corporation.
"Closing Date" shall mean the date of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" shall mean a collective reference to the
collateral which is identified in, and at any time will be covered by,
the Security Documents.
"Commitment" shall mean the Revolving Commitment, the LOC
Commitment, the Swingline Commitment and the Term Loan Commitment,
individually or collectively, as appropriate.
6
<PAGE>
"Commitment Fee" shall have the meaning set forth in Section
2.5(a).
"Commitment Percentage" shall mean the Revolving Commitment
Percentage, the LOC Commitment Percentage and/or the Term Loan
Commitment Percentage, as appropriate.
"Commitment Period" shall mean the period from and including
the Closing Date to but not including the Termination Date.
"Commitment Transfer Supplement" shall mean a Commitment
Transfer Supplement, substantially in the form of Schedule 9.6(c).
"Commonly Controlled Entity" shall mean an entity, whether or
not incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Company and which is treated as a single employer under
Section 414 of the Code.
"Company" shall have the meaning set forth in the first
paragraph of this Agreement.
"Consolidated EBITDA" shall mean, for any period, Consolidated
Net Income plus the sum of (i) Consolidated Interest Expense for such
period, plus, to the extent the following items are deducted in
calculating Consolidated Net Income, (ii) all provisions for any
Federal, state or other income taxes for such period, plus (iii)
depreciation, amortization and other non-cash charges for such period,
including, without limitation, any accrual necessary for purposes of
conforming with Financial Accounting Standards Board Statement Number
106 (as defined by GAAP) to the extent that the accrued portion thereof
constitutes a non-cash charge, plus the sum of (a) distributions paid
in cash from the Existing Joint Ventures to the Borrower or any of its
wholly-owned Subsidiaries; provided that any such distributions made to
Foreign Subsidiaries shall be decreased by the amount that would have
been deducted from such distributions by the local taxing authorities
of the jurisdiction of organization of any such Foreign Subsidiaries
had such distributions been repatriated to the United States, for such
period and (b) adjustments to EBITDA reasonably acceptable to the Agent
for such period, of the Company and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP applied on a consistent
basis. The applicable period shall be for the four consecutive quarters
ending as of the date of determination.
"Consolidated Fixed Charges" shall mean, for any period, the
sum of (i) Consolidated Interest Expense for such period plus (ii)
Consolidated Scheduled Funded Debt Payments for the next four fiscal
quarters following the end of such period plus (iii) consolidated
Capital Expenditures for such period (without duplication of items in
clause (ii)) of the Company and its Subsidiaries on a consolidated
basis determined in accordance with GAAP applied on a consistent basis.
Except as otherwise specified, the applicable period shall be for the
four consecutive quarters ending as of the date of computation.
7
<PAGE>
"Consolidated Funded Debt" shall mean, on any date of
calculation, Funded Debt of the Company and its Subsidiaries on a
consolidated basis.
"Consolidated Interest Expense" shall mean, for any period,
all interest expense, excluding amortization of debt discount and
premium but including the interest component under Capital Leases for
such period of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis. The
applicable period shall be for the four consecutive quarters ending as
of the date of computation; provided, however, that Consolidated
Interest Expense for the fiscal quarter ending on March 28, 1998 shall
be calculated as Consolidated Interest Expense for such quarter
multiplied by four (4); Consolidated Interest Expense for the fiscal
quarter ending on June 27, 1998 shall be calculated as Consolidated
Interest Expense for the two fiscal quarters immediately preceding such
date multiplied by two (2); and Consolidated Interest Expense for the
fiscal quarter ending on October 3, 1998 shall be calculated as
Consolidated Interest Expense for the three fiscal quarters immediately
preceding such date multiplied by one and one-third (1 and 1/3).
"Consolidated Net Income" shall mean, for any period, the net
income of the Company and its Subsidiaries on a consolidated basis
determined in accordance with GAAP applied on a consistent basis for
such period. Except as otherwise specified, the applicable period shall
be for the four consecutive quarters ending as of the date of
computation.
"Consolidated Net Worth" shall mean total stockholders' equity
for the Company and its Subsidiaries on a consolidated basis as
determined at a particular date in accordance with GAAP applied on a
consistent basis.
"Consolidated Scheduled Funded Debt Payments" shall mean, as
of the end of each fiscal quarter of the Company and its Subsidiaries
on a consolidated basis, the sum of all scheduled payments of principal
on Consolidated Funded Debt for the applicable period ending on such
date (including the principal component of payments due on Capital
Leases during the applicable period ending on such date); it being
understood that scheduled payments on Consolidated Funded Debt shall
not include optional prepayments or the mandatory prepayments required
pursuant to Section 2.7.
"Consolidated Tangible Net Worth" shall mean total
stockholders' equity minus goodwill, patents, trade names, trade marks,
copyrights, franchises, organizational expense, deferred expenses and
other assets in each case as are shown as "intangible assets" on a
balance sheet of the Company and its Subsidiaries on a consolidated
basis as determined at a particular date in accordance with GAAP
applied on a consistent basis.
"Continuing Director" shall have the meaning set forth in
Section 7.1(h).
8
<PAGE>
"Contractual Obligation" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.
"Credit Documents" shall mean this Agreement, each of the
Notes, any Joinder Agreement, the Letters of Credit, LOC Documents, the
Security Documents and the Wachovia JEDA Reimbursement Agreement.
"Credit Party" shall mean any of the Borrower and the
Guarantors.
"Credit Party Obligations" shall mean, without duplication,
(i) all of the obligations of the Credit Parties to the Lenders
(including the Issuing Lender) and the Agent, whenever arising, under
this Agreement, the Notes or any of the other Credit Documents
(including, but not limited to, any interest accruing after the
occurrence of a filing of a petition of bankruptcy under the Bankruptcy
Code 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.
"Debt Issuance" shall mean the issuance of any Indebtedness
for borrowed money by the Company or any of its Subsidiaries (excluding
any Equity Issuance or any Indebtedness of the Company and its
Subsidiaries permitted to be incurred pursuant to Section 6.1 hereof).
"Default" shall mean any of the events specified in Section
7.1, whether or not any requirement for the giving of notice or the
lapse of time, or both, or any other condition, has been satisfied.
"Defaulting Lender" shall mean, at any time, any Lender that,
at such time (a) has failed to make a Loan required pursuant to the
term of this Credit Agreement, including the funding of a Participation
Interest in accordance with the terms hereof, (b) has failed to pay to
the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Credit Agreement, or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or to a
receiver, trustee or similar official.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Domestic Credit Party" shall mean any Credit Party that is
organized and existing under the laws of the United States or any state
or commonwealth thereof or under the laws of the District of Columbia.
"Domestic Lending Office" shall mean, initially, the office of
each Lender designated as such Lender's Domestic Lending Office shown
on Schedule 9.2; and thereafter, such other office of such Lender as
such Lender may from time to time specify
9
<PAGE>
to the Agent and the Borrower as the office of such Lender at which
Alternate Base Rate Loans of such Lender are to be made.
"Domestic Subsidiary" shall mean any Subsidiary that is
organized and existing under the laws of the United States or any state
or commonwealth thereof or under the laws of the District of Columbia.
"DTA" shall mean DT Acquisition, Inc., a corporation
incorporated under the Canada Business Corporations Act.
"DTA Credit Facility" shall mean the Credit Agreement dated as
of December 17, 1997 by and among DTA, the lenders party thereto,
Chase, as administrative agent and First Union, as documentation agent,
as amended, modified or supplemented from time to time in accordance
with its terms.
"Eligible Inventory" shall be determined in accordance with
Section 9.18 hereof.
"Eligible Receivables" shall be determined in accordance with
Section 9.18 hereof.
"Environmental Laws" shall mean any and all applicable
foreign, Federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Authority or other Requirement of Law (including common
law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as
now or may at any time be in effect during the term of this Agreement.
"Equity Issuance" shall mean any issuance by the Company or
any Subsidiary 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. The
term "Equity Issuance" shall not include any Asset Disposition, any
Debt Issuance, any issuance of Permitted Preferred Stock or the
issuance of common stock of the Company or the Borrower to its
officers, directors or employees in connection with stock offering
plans and other benefit plans of the Company or the Borrower.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Eurodollar Reserve Percentage" shall mean for any day, the
percentage (expressed as a decimal and rounded upwards, if necessary,
to the next higher 1/100th of 1%) which is in effect for such day as
prescribed by the Federal Reserve Board (or any successor) for
determining the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves) in respect of
Eurocurrency liabilities, as defined in Regulation D of such Board as
in effect from time to time, or any similar category of liabilities for
a member bank of the Federal Reserve System in New York City.
10
<PAGE>
"Event of Default" shall mean any of the events specified in
Section 7.1; provided, however, that any requirement for the giving of
notice or the lapse of time, or both, or any other condition, has been
satisfied.
"Excess Cash Flow" shall mean, with respect to any fiscal year
period of the Company and its Subsidiaries on a consolidated basis, an
amount equal to (a) Consolidated EBITDA for such period minus (b)
consolidated Capital Expenditures for such period actually paid in cash
minus (c) Consolidated Interest Expense for such period minus (d)
Federal, state and other income taxes actually paid in cash by the
Company and its Subsidiaries on a consolidated basis during such period
minus (e) Consolidated Scheduled Funded Debt Payments made during such
period.
"Existing Joint Ventures" shall mean Swift Textiles Europe
Ltd., Swift Textiles France S.A., Sitex S.A., Tismade S.A., Somotex
International S.A., and C.S. Brooks Corp.
"Existing Letters of Credit" shall mean those Letters of
Credit outstanding on the Closing Date and identified on Schedule
2.4(a).
"Extension of Credit" shall mean, as to any Lender, the making
of a Loan by such Lender or the issuance of, or participation in, a
Letter of Credit by such Lender.
"Federal Funds Effective Rate" shall have the meaning set
forth in the definition of "Alternate Base Rate".
"Fee Letter" shall mean the letter agreement dated November
17, 1997 addressed to the Borrower from the Agent, as amended, modified
or otherwise supplemented.
"First Union" shall mean First Union National Bank, a national
banking association.
"Fixed Charge Coverage Ratio" shall mean the ratio of
Consolidated EBITDA to Consolidated Fixed Charges.
"Foreign Subsidiary" shall mean any Subsidiary that is not a
Domestic Subsidiary.
"Funded Debt" shall mean, for any Person, (i) all Indebtedness
of the types described in subsections (a), (b), (c), (k), (l) and (m)
of the definition of "Indebtedness" and (ii) all Guarantee Obligations
of Indebtedness of the types described in subsections (a), (b), (c),
(k), (l) and (m) of the definition of "Indebtedness."
"GAAP" shall mean generally accepted accounting principles in
effect in the United States of America applied on a consistent basis,
subject, however, in the case of
11
<PAGE>
determination of compliance with the financial covenants set out in
Section 5.9 to the provisions of Section 1.3.
"G&L Acquisition" shall mean the acquisition by the Borrower
of the Acquired Companies pursuant to the G&L Purchase Agreement for a
purchase price of up to $490,000,000.
"G&L Loan" shall mean the subordinated, unsecured loan of up
to $141,000,000 from the Borrower to DTA evidenced by that certain
promissory note of DTA dated the Tender Offer Closing Date.
"G&L Purchase Agreement" shall mean the purchase agreement
dated as of October 27, 1997 entered into among Polymer, DTA and the
Company in connection with the acquisition of the Acquired Companies
following the consummation of the Tender Offer and the Amalgamation, as
assigned to and assumed by the Borrower, as amended, modified, or
otherwise supplemented.
"Government Acts" shall have the meaning set forth in Section
2.19.
"Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guarantee Obligation" shall mean, as to any Person (the
"guaranteeing person"), any obligation of (a) the guaranteeing person
or (b) another Person (including, without limitation, any bank under
any letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary
obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation,
any obligation of the guaranteeing person, whether or not contingent,
(i) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary
obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect
thereof; provided, however, that the term Guarantee Obligation shall
not include endorsements of instruments for deposit or collection in
the ordinary course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary
12
<PAGE>
obligation and the maximum amount for which such guaranteeing person
may be liable are not stated or determinable, in which case the amount
of such Guarantee Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as
determined by the Company in good faith.
"Guarantor" shall mean any of the Company, the Subsidiaries
identified as a "Guarantor" on the signature pages hereto and the
Additional Credit Parties which execute a Joinder Agreement, together
with their successors and permitted assigns.
"Guaranty" shall mean the guaranty of the Guarantors set forth
in Article X.
"Hedging Agreements" shall mean, with respect to any Person,
any agreement entered into to protect such Person against fluctuations
in interest rates, or currency or raw materials values, including,
without limitation, any interest rate swap, cap or collar agreement or
similar arrangement between such Person and one or more counterparties,
any foreign currency exchange agreement, currency protection
agreements, commodity purchase or option agreements or other interest
or exchange rate or commodity price hedging agreements.
"Indebtedness" shall mean, of any Person at any date, (a) all
indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), (b) any other indebtedness of
such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) all obligations of such Person under Capital Leases,
(d) all liabilities secured by any Lien on any property owned by such
Person even though such Person has not assumed or otherwise become
liable for the payment thereof, (e) 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), (f) all obligations of such Person under
take-or-pay or similar arrangements or under commodities agreements,
(g) all Guarantee Obligations of such Person, (h) all obligations of
such Person in respect of Hedging Agreements, (i) the maximum amount of
all letters of credit issued or bankers' acceptances created for the
account of such Person and, without duplication, all drafts drawn
thereunder (to the extent not theretofore reimbursed), (j) all
preferred stock which by its terms requires or permits redemption,
mandatory sinking fund payments or the like, by a fixed date prior to
the Maturity Date, (k) the aggregate net amount of indebtedness or
obligations relating to the sale, contribution or other conveyance of
accounts receivable pursuant to any securitization transaction (or
similar transaction) regardless of whether such transaction is effected
without recourse or in a manner which would not be reflected on a
balance sheet in accordance with GAAP, (l) the principal balance
outstanding under 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 and (m) the Indebtedness of any partnership or unincorporated
joint venture in which such Person is a
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general partner or a joint venturer other than Non-Recourse
Indebtedness of such partnership or unincorporated joint venture.
"Insolvency" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
such term as used in Section 4245 of ERISA.
"Insolvent" shall mean being in a condition of Insolvency.
"Interest Payment Date" shall mean (a) as to any Alternate
Base Rate Loan or Swingline Loan, the last day of each December, March,
June and September and on the Termination Date or Maturity Date, as
applicable, (b) as to any LIBOR Rate Loan having an Interest Period of
three months or less, the last day of such Interest Period, and (c) as
to any LIBOR Rate Loan having an Interest Period longer than three
months, each day which is three months after the first day of such
Interest Period and the last day of such Interest Period.
"Interest Period" shall mean, with respect to any LIBOR Rate
Loan,
(i) initially, the period commencing on the
Borrowing Date or conversion date, as the case may be, with
respect to such LIBOR Rate Loan and ending one, two, three or
six months thereafter, as selected by the Borrower in the
notice of borrowing or notice of conversion given with respect
thereto; and
(ii) thereafter, each period commencing on
the last day of the immediately preceding Interest Period
applicable to such LIBOR Rate Loan and ending one, two, three
or six months thereafter, as selected by the Borrower by
irrevocable notice to the Agent not less than three Business
Days prior to the last day of the then current Interest Period
with respect thereto;
provided that the foregoing provisions are subject to the
following:
(A) if any Interest Period pertaining to a
LIBOR Rate Loan would otherwise end on a day that is
not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless
the result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the
immediately preceding Business Day;
(B) any Interest Period pertaining to a
LIBOR Rate Loan that begins on the last Business Day
of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end
on the last Business Day of the relevant calendar
month;
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(C) if the Borrower shall fail to give
notice as provided above, the Borrower shall be
deemed to have selected an Alternate Base Rate Loan
to replace the affected LIBOR Rate Loan;
(D) any Interest Period in respect of any
Loan that would otherwise extend beyond (1) in the
case of Revolving Loans, the Termination Date, shall
end on the Termination Date and (2) in the case of
the Term Loan, the Maturity Date, shall end on such
Maturity Date and, further with regard to the Term
Loan, no Interest Period shall extend beyond any
principal amortization payment date unless the
portion of the Term Loan consisting of Alternate Base
Rate Loans together with the portion of the Term Loan
consisting of LIBOR Rate Loans with Interest Periods
expiring prior to or concurrently with the date such
principal amortization payment date is due, is at
least equal to the amount of such principal
amortization payment due on such date; and
(E) no more than ten (10) LIBOR Rate Loans
may be in effect at any time. For purposes hereof,
LIBOR Rate Loans with different Interest Periods
shall be considered as separate LIBOR Rate Loans,
even if they shall begin on the same date and have
the same duration, 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 LIBOR Rate Loan
with a single Interest Period.
"Issuing Lender" shall mean, as to the Existing Letters of
Credit, each of the Persons issuing such letters of credit identified
on Schedule 2.4(a), and as to Letters of Credit issued, extended or
renewed after the Closing Date, First Union.
"Issuing Lender Fees" shall have the meaning set forth in
Section 2.5(c)
"JEDA Bonds" shall mean those $7,200,000 South Carolina
Jobs-Economic Development Authority Tax-Exempt Adjustable Mode Economic
Development Revenue Bonds (Galey & Lord Industries, Inc. Project)
Series 1994.
"JEDA Indenture" shall mean the Indenture of Trust dated as of
May 1, 1994 between First-Citizens Bank & Trust Company, as Trustee,
and South Carolina Jobs-Economic Development Authority pursuant to
which the JEDA Bonds were issued, as amended, modified, supplemented
and replaced from time to time.
"Joinder Agreement" shall mean a Joinder Agreement
substantially in the form of Schedule 5.10, executed and delivered by
an Additional Credit Party in accordance with the provisions of Section
5.10.
"Lender" shall have the meaning set forth in the first
paragraph of this Agreement.
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"Letters of Credit" shall mean the Existing Letters of Credit
and any letter of credit issued by the Issuing Lender pursuant to the
terms hereof, as such Letters of Credit may be amended, modified,
extended, renewed or replaced from time to time.
"Letter of Credit Fee" shall have the meaning set forth in
Section 2.5(b).
"Leverage Ratio" shall mean the ratio of Consolidated Funded
Debt to Consolidated EBITDA.
"LIBOR" shall mean the arithmetic mean (rounded to the nearest
1/100th of 1%) of the offered rates for deposits in Dollars for a
period equal to the Interest Period selected which appears on the
Telerate Page 3750 at approximately 11:00 A.M. London time, two (2)
Business Days prior to the commencement of the applicable Interest
Period. If, for any reason, such rate is not available, then "LIBOR"
shall mean the rate per annum at which, as determined by the Agent,
Dollars in an amount comparable to the Loans then requested are being
offered to leading banks at approximately 11:00 A.M. London time, two
(2) Business Days prior to the commencement of the applicable Interest
Period for settlement in immediately available funds by leading banks
in the London interbank market for a period equal to the Interest
Period selected.
"LIBOR Lending Office" shall mean, initially, the office of
each Lender designated as such Lender's LIBOR Lending Office shown on
Schedule 9.2; and thereafter, such other office of such Lender as such
Lender may from time to time specify to the Agent and the Borrower as
the office of such Lender at which the LIBOR Rate Loans of such Lender
are to be made.
"LIBOR Rate" shall mean a rate per annum (rounded upwards, if
necessary, to the next higher 1/100th of 1%) determined by the Agent
pursuant to the following formula:
LIBOR Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
"LIBOR Rate Loan" shall mean Loans the rate of interest
applicable to which is based on the LIBOR Rate.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority
or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement and any Capital Lease having
substantially the same economic effect as any of the foregoing).
"Loan" shall mean a Revolving Loan, a Swingline Loan and/or
the Term Loan, as appropriate.
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"LOC Commitment" shall mean the commitment of the Issuing
Lender to issue Letters of Credit and with respect to each Lender, the
commitment of such Lender to purchase participation interests in the
Letters of Credit up to such Lender's LOC Committed Amount as specified
in Schedule 2.1(a), as such amount may be reduced from time to time in
accordance with the provisions hereof.
"LOC Commitment Percentage" shall mean, for each Lender, the
percentage identified as its LOC 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 9.6(c).
"LOC Committed Amount" shall mean, collectively, the aggregate
amount of all of the LOC Commitments of the Lenders to issue and
participate in Letters of Credit as referenced in Section 2.4 and,
individually, the amount of each Lender's LOC Commitment as specified
in Schedule 2.1(a).
"LOC Documents" shall mean, 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 (ii) any collateral security for such obligations.
"LOC Obligations" shall mean, 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.
"Mandatory Borrowing" shall have the meaning set forth in
Section 2.3(b)(ii) or Section 2.4(e).
"Material Adverse Effect" shall mean a material adverse effect
on (a) the business, operations, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations, when
such obligations are required to be performed, under this Agreement,
any of the Notes or any other Credit Document or (c) the validity or
enforceability of this Agreement, any of the Notes or any of the other
Credit Documents or the rights or remedies of the Agent or the Lenders
hereunder or thereunder.
"Materials of Environmental Concern" shall mean 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 Law,
including, without limitation, asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.
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"Maturity Date" shall mean the last scheduled quarterly
payment date for the Term Loan set forth in Section 2.2(b).
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" shall mean the aggregate cash proceeds
received by the Company or any Subsidiary in respect of any Asset
Disposition, Equity Issuance or Debt Issuance, 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" shall
include, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received by the Company or
any Subsidiary in any Asset Disposition, Equity Issuance or Debt
Issuance.
"Non-Recourse Indebtedness" shall mean Indebtedness with
respect to which recourse for payment is limited to specific assets
encumbered by a Lien securing such Indebtedness; provided, however,
that personal recourse of a holder of Indebtedness against any obligor
with respect thereto for fraud, misrepresentation, misapplication of
cash, waste and other circumstances customarily excluded from
non-recourse provisions in non-recourse financing of real estate shall
not, by itself, prevent any Indebtedness from being characterized as
Non-Recourse Indebtedness.
"Nonwovens Business" shall mean the nonwoven textile group
businesses of Target, conducted primarily through the Dominion
Industrial Fabrics Company division of Target, two direct, wholly-owned
subsidiaries of Target (being Poly-Bond Inc., a Delaware corporation
and Nordlys S.A., a company organized under the laws of the Republic of
France) and the Dominion Nonwoven (South America) Argentinean joint
venture.
"Note" or "Notes" shall mean the Revolving Notes, the
Swingline Note and/or the Term Notes, collectively, separately or
individually, as appropriate.
"Notice of Borrowing" shall mean the written notice of
borrowing as referenced and defined in Section 2.1(b)(i) or 2.3(b)(i),
as appropriate.
"Notice of Conversion" shall mean the written notice of
extension or conversion as referenced and defined in Section 2.10.
"Obligations" shall mean, collectively, Loans and LOC
Obligations.
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"Offer to Purchase" shall mean the offers to purchase for cash
all of the outstanding common shares of Target at Cdn. $11.75 per
share, and all of the outstanding First Preferred Shares of Target at
Cdn. $109.50 per share, dated October 29, 1997, made by DTA to all of
the holders of such Common Shares and First Preferred Shares, as
extended and varied pursuant to a Notice of Extension and Variation
dated November 18, 1997, pursuant to which such offer prices were
increased to Cdn. $14.50 per share and Cdn. $112.00 per share,
respectively, and as the same shall be further modified and
supplemented and in effect from time to time.
"Participant" shall have the meaning set forth in Section
9.6(b).
"Participation Interest" shall mean the purchase by a Lender
of a participation interest in Swingline Loans as provided in Section
2.3(b)(ii) or in Letters of Credit as provided in Section 2.4.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Permanent Subordinated Debt" shall have the meaning set forth
in the definition of Subordinated Debt.
"Permitted G&L Acquisition Cost Savings" shall mean certain
cost savings adjustments reasonably anticipated by the Borrower and the
Company to be achieved in connection with the G&L Acquisition and upon
the Agent's request shall be (a) made in accordance with Regulation S-X
promulgated under the Securities Act of 1933 or as otherwise agreed to
by the Agent; (b) reviewed by Ernst & Young LLP, or another nationally
recognized accounting firm or as otherwise agreed to by the Agent; and
(c) not in excess of $25,000,000 in the aggregate; provided, however,
that all such Permitted G&L Acquisition Cost Savings shall be estimated
on a good faith basis by the Borrower and the Company and shall be
reduced by (i) one-half, following the end of the second full fiscal
quarter of the Company occurring after the Subsequent Transactions
Closing Date, (ii) an additional one-quarter, following the end of the
third full fiscal quarter of the Company occurring after the Subsequent
Transactions Closing Date and (iii) an additional one-quarter,
following the end of the fourth full fiscal quarter of the Company
occurring after the Subsequent Transactions Closing Date, or as
otherwise agreed to by the Agent.
"Permitted Investments" shall mean:
(i) cash and Cash Equivalents;
(ii) receivables owing to the Company or any of its
Subsidiaries or any receivables and advances to suppliers, in
each case if created, acquired or made in the ordinary course
of business and payable or dischargeable in accordance with
customary trade terms;
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<PAGE>
(iii) (A) investments in and loans to any Domestic
Credit Parties; (B) investments made by any Domestic Credit
Party in any Foreign Subsidiaries or foreign joint ventures
not to exceed $3,000,000 in the aggregate at any time
outstanding (excluding from such dollar limitation the initial
investment in Foreign Subsidiaries acquired pursuant to the
G&L Acquisition and investments in Foreign Subsidiaries
existing on or prior to the Closing Date); (C) loans between
Foreign Subsidiaries; and (D) loans from any Domestic Credit
Party to any Foreign Subsidiaries not to exceed $25,000,000 in
the aggregate at any time outstanding;
(iv) loans and advances to officers, directors,
employees and Affiliates in an aggregate amount not to exceed
$2,000,000 at any time outstanding;
(v) investments (including debt obligations) received
in connection with the bankruptcy or reorganization of
suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(vi) investments, acquisitions or transactions
permitted under Section 6.5(b); and
(vii) additional loan advances and/or investments of
a nature not contemplated by the foregoing clauses hereof,
provided that such loans, advances and/or investments made
pursuant to this clause (vii) shall not exceed an aggregate
amount of $6,000,000.
As used herein, "investment" means all investments, in cash or by
delivery of property made, directly or indirectly in, to or from any
Person, whether by acquisition of shares of Capital Stock, property,
assets, indebtedness or other obligations or securities or by loan
advance, capital contribution or otherwise.
"Permitted Liens" shall mean:
(i) Liens created by or otherwise existing, under or
in connection with this Agreement or the other Credit
Documents in favor of the Lenders (including those Liens
securing the Wachovia JEDA Letter of Credit and the bonds
which are supported by the Wachovia JEDA Letter of Credit);
(ii) Liens in favor of a Lender hereunder in
connection with Hedging Agreements, but only (A) to the extent
such Liens secure obligations under Hedging Agreements
permitted under Section 6.1, (B) to the extent such Liens are
on the same collateral as to which the Agent on behalf of the
Lenders also has a Lien and (C) if such provider and the
Lenders shall share pari passu in the collateral subject to
such Liens;
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(iii) purchase money Liens securing purchase money
indebtedness (and refinancings thereof) to the extent
permitted under Section 6.1(c);
(iv) Liens for taxes, assessments, charges or other
governmental levies not yet due or as to which the period of
grace (not to exceed 60 days), if any, related thereto has not
expired or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Company or
its Subsidiaries, as the case may be, in conformity with GAAP
(or, in the case of Subsidiaries with significant operations
outside of the United States of America, generally accepted
accounting principles in effect from time to time in their
respective jurisdictions of incorporation);
(v) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a period
of more than 60 days or which are being contested in good
faith by appropriate proceedings;
(vi) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation and deposits securing liability to insurance
carriers under insurance or self-insurance arrangements;
(vii) deposits to secure the performance of bids,
trade contracts, (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the
ordinary course of business;
(viii) any extension, renewal or replacement (or
successive extensions, renewals or replacements) , in whole or
in part, of any Lien referred to in the foregoing clauses;
provided that such extension, renewal or replacement Lien
shall be limited to all or a part of the property which
secured the Lien so extended, renewed or replaced (plus
improvements on such property); and
(ix) Liens created by or otherwise existing in
connection with the Indebtedness set forth on Schedule 4.2(o).
"Permitted Preferred Stock" shall mean any preferred stock
issued by the Company or the Borrower in an aggregate amount of up to
$30,000,000 which by its terms prohibits or does not permit (i)
redemption, liquidation, mandatory sinking fund payments or the like by
a fixed date on or prior to the Maturity Date and (ii) the payment of
cash dividends on or prior to the Maturity Date at a rate in excess of
eight percent (8%).
"Person" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
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"Plan" shall mean, at any particular time, any employee
benefit plan which is covered by Title IV of ERISA and in respect of
which the Borrower or a Commonly Controlled Entity is (or, if such plan
were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
the Closing Date given by the Company, the Borrower and the other
Credit Parties to the Agent, as amended, modified or supplemented from
time to time in accordance with its terms.
"Polymer" shall mean Polymer Group, Inc., a Delaware
corporation.
"Polymer Acquisition" shall mean the acquisition by Polymer of
the Nonwovens Business effected (i) pursuant to the Polymer Purchase
Agreement or (ii) by DTA becoming a "Restricted Subsidiary" of Polymer
pursuant to Polymer's Credit Agreement dated as of July 3, 1997 among
Chase, as administrative agent, the various lenders and co-agents party
thereto, Polymer and certain of its subsidiaries.
"Polymer Purchase Agreement" shall mean the purchase agreement
to be entered into prior to the Subsequent Transactions Closing Date
between Polymer and DTA in connection with the acquisition of the
Nonwovens Business.
"Prime Rate" shall have the meaning set forth in the
definition of Alternate Base Rate.
"Pro Forma Basis" shall mean, with respect to any transaction,
that such transaction shall be deemed to have occurred as of the first
day of the four-fiscal quarter period ending as of the end of the
fiscal quarter most recently ended prior to the date of such
transaction with respect to which the Agent has received the financial
information required under Section 5.1. As used herein, "transaction"
means any merger or consolidation or acquisition as referenced in
Section 6.5(b).
"Projections" shall have the meaning set forth in Section 3.1.
"Properties" shall have the meaning set forth in Section
3.10(a).
"Purchase Price" shall mean the purchase price to be paid by
the Borrower for the Acquired Companies (which shall include all
related fees and expenses and the refinancing of the existing
indebtedness of such Acquired Companies).
"Purchasing Lenders" shall have the meaning set forth in
Section 9.6(c).
"Receivables" shall mean any right of payment from or on
behalf of any obligor, whether constituting an account, chattel paper,
instrument, general intangible or otherwise, arising from the sale or
financing by the Borrower or any Subsidiary of the
22
<PAGE>
Borrower of merchandise or services, and monies due thereunder,
security in the merchandise and services financed thereby, records
related thereto, and the right to payment of any interest or finance
charges and other obligations with respect thereto, proceeds from
claims on insurance policies related thereto, any other proceeds
related thereto, and any other related rights.
"Recovery Event" shall mean the receipt by the Company, the
Borrower or any of their respective Subsidiaries of any cash insurance
proceeds or condemnation award payable by reason of theft, loss,
physical destruction or damage, taking or similar event with respect to
any of their respective property or assets.
"Register" shall have the meaning set forth in Section 9.6(d).
"Reorganization" shall mean, with respect to any Multiemployer
Plan, the condition that such Plan is in reorganization within the
meaning of such term as used in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the
thirty-day notice period is waived under subsections .13, .14, .16,
.18, .19 or .20 of PBGC Reg. ss.4043.
"Required Lenders" shall mean Lenders holding in the aggregate
not less than 51% of the sum of (i) all Obligations then outstanding at
such time and (ii) the aggregate unused Commitments at such time
(treating for purposes hereof in the case of Swingline Loans and LOC
Obligations, in the case of the Swingline Lender and the Issuing
Lender, only the portion of the Swingline Loans and the LOC Obligations
of the Swingline Lender and the Issuing Lender, respectively, which is
not subject to the Participation Interests of the other Lenders and, in
the case of the Lenders other than the Swingline Lender and the Issuing
Lender, the Participation Interests of such Lenders in Swingline Loans
and LOC Obligations hereunder as direct Obligations); provided,
however, that if any Lender shall be a Defaulting Lender at such time,
then there shall be excluded from the determination of Required
Lenders, Obligations (including Participation Interests) owing to such
Defaulting Lender and such Defaulting Lender's Commitments, or after
termination of the Commitments, the principal balance of the
Obligations owing to such Defaulting Lender.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation and By-laws or other organizational or
governing documents of such Person, and each 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 property or to which such Person or any of its
property is subject.
"Responsible Officer" shall mean, as to (a) the Company, the
President and Chief Executive Officer or the Chief Financial Officer or
(b) the Borrower or any other Credit Party, any duly authorized officer
thereof.
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"Restricted Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of Capital Stock of the Company or any of its Subsidiaries, now or
hereafter outstanding, (b) 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 the Company or
any of its Subsidiaries, now or hereafter outstanding, (c) 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 the Company or any of its Subsidiaries, now or
hereafter outstanding, (d) any payment or prepayment of principal of,
premium, if any, or interest on, redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, the
Subordinated Debt, and (e) any loan or advance to the Company.
"Revolving Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Revolving Loans in an
aggregate principal amount at any time outstanding up to such Lender's
Revolving Committed Amount as specified in Schedule 2.1(a), as such
amount may be reduced from time to time in accordance with the
provisions hereof.
"Revolving Commitment Percentage" shall mean, for each Lender,
the percentage identified as its Revolving Commitment Percentage on
Schedule 2.1(a), as such percentage may be modified in connection with
any assignment made in accordance with the provisions of Section
9.6(c).
"Revolving Committed Amount" shall mean, collectively, the
aggregate amount of all Revolving Commitments as referenced in Section
2.1(a), as such amount may be reduced from time to time in accordance
with the provisions hereof, and, individually, the amount of each
Lender's Revolving Commitment as specified on Schedule 2.1(a).
"Revolving Loans" shall have the meaning set forth in Section
2.1.
"Revolving Note" or "Revolving Notes" shall mean 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, supplemented, extended, renewed or replaced
from time to time.
"S&P" shall mean Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc.
"Security Agreement" shall mean the Security Agreement dated
as of the Closing Date given by the Company, the Borrower and the other
Credit Parties to the Agent, as amended, modified or supplemented from
time to time in accordance with its terms.
"Security Documents" shall mean the Security Agreement, the
Pledge Agreement, any mortgage instrument and such other documents
executed and delivered in connection
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with the attachment and perfection of the Agent's security interests
and liens arising thereunder, including, without limitation, UCC
financing statements and patent and trademark filings.
"Single Employer Plan" shall mean any Plan which is not a
Multiemployer Plan.
"Specified Sales" shall mean (a) the sale, transfer, lease or
other disposition of inventory and materials in the ordinary course of
business, (b) the sale, transfer, lease or other disposition of
machinery, parts and equipment no longer useful in the conduct of the
business of the Company, the Borrower or any of their respective
Subsidiaries, as appropriate, in its reasonable discretion, and (c) the
sale, transfer or other disposition of Permitted Investments.
"Stock Repurchase Plan" shall mean the stock repurchase plan
of the Company implemented in April 1997 providing for the repurchase
by the Company from time to time of up to 900,000 shares of its common
stock.
"Subordinated Debt" shall mean the Senior Subordinated
Increasing Rate Notes (the "Bridge Notes") up to $250,000,000 issued by
the Borrower pursuant to the Senior Subordinated Credit Agreement among
the Company, the other guarantors party thereto, the Borrower and First
Union Corporation (the "Bridge Agreement") and the permanent senior
subordinated notes up to $250,000,000 issued by the Borrower to
refinance the Bridge Notes (the "Permanent Subordinated Debt").
"Subsequent Transactions" shall mean, collectively, the G&L
Acquisition and the Polymer Acquisition.
"Subsequent Transactions Closing Date" shall mean the date on
which the G&L Acquisition and the Polymer Acquisition are consummated.
"Subsidiary" shall mean, as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Company.
"Swingline Commitment" shall mean the commitment of the
Swingline Lender to make Swingline Loans in an aggregate principal
amount at any time outstanding up to the Swingline Committed Amount,
and the commitment of the Lenders to purchase participation interests
in the Swingline Loans as provided in Section 2.3(b)(ii), as such
amounts may be reduced from time to time in accordance with the
provisions hereof.
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"Swingline Committed Amount" shall mean the amount of the
Swingline Lender's Swingline Commitment as specified in Section 2.3(a).
"Swingline Lender" shall mean First Union, in its capacity as
such.
"Swingline Loan" or "Swingline Loans" shall have the meaning
set forth in Section 2.3(a).
"Swingline Note" shall mean the promissory note of the
Borrower in favor of the Swingline Lender evidencing the Swingline
Loans provided pursuant to Section 2.3(d), as such promissory note may
be amended, modified, supplemented, extended, renewed or replaced from
time to time.
"Target" shall mean Dominion Textile Inc., a corporation
incorporated under the Canada Business Corporations Act.
"Taxes" shall have the meaning set forth in Section 2.18.
"Tender Offer" shall mean the cash tender offer by DTA for all
of the issued and outstanding Common Shares and associated rights and
First Preferred Shares of Target as contemplated by the Offer to
Purchase.
"Tender Offer Closing Date" shall mean the date on which the
Tender Offer is consummated and all conditions set forth in the Offer
to Purchase are satisfied or waived.
"Tender Offer Funding Termination Date" shall mean February
26, 1998.
"Tender Loans" shall mean the loans made to DTA under the DTA
Credit Facility for the purpose of consummating the Tender Offer.
"Term Loan" shall have the meaning set forth in Section
2.2(a).
"Term Loan Commitment" shall mean, 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 (and for purposes of
making determinations of Required Lenders hereunder after the Closing
Date, the principal amount outstanding on the Term Loan).
"Term Loan Commitment Fee" shall have the meaning set forth in
Section 2.5(d).
"Term Loan Commitment Percentage" shall mean, 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 9.6.
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"Term Loan Committed Amount" shall have the meaning set forth
in Section 2.2(a).
"Term Note" or "Term Notes" shall mean the promissory notes of
the Borrower in favor of each of the Lenders evidencing the portion of
the Term Loan provided pursuant to Section 2.2(d), individually or
collectively, as appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or replaced from
time to time.
"Termination Date" shall mean the sixth anniversary of the
Closing Date.
"Tranche" shall mean the collective reference to LIBOR Rate
Loans whose Interest Periods begin and end on the same day. A Tranche
may sometimes be referred to as a "Eurodollar Tranche".
"Transfer Effective Date" shall have the meaning set forth in
each Commitment Transfer Supplement.
"2.18 Certificate" shall have the meaning set forth in Section
2.18.
"Type" shall mean, as to any Loan, its nature as an Alternate
Base Rate Loan, LIBOR Rate Loan or Swingline Loan, as the case may be.
"Wachovia JEDA Letter of Credit" shall mean that irrevocable
letter of credit no. LC 968-044594 dated May 17, 1994 issued by
Wachovia Bank of North Carolina, National Association in favor of First
Citizens Bank & Trust Company, as Trustee under those $7,200,000 South
Carolina Jobs-Economic Development Authority Tax-Exempt Adjustable Mode
Economic Development Revenue Bonds (Galey & Lord Industries, Inc.
Project) Series 1994, for the account of the Borrower in the original
maximum amount of $7,830,000, being an Existing Letter of Credit
identified on Schedule 2.4(a), as such letter of credit may be
modified, supplemented, extended and replaced from time to time.
"Wachovia JEDA Reimbursement Agreement" shall mean the Amended
and Restated Reimbursement and Security Agreement dated as of June 4,
1996 between the Borrower and Wachovia Bank of North Carolina, N.A.
pursuant to which the Wachovia JEDA Letter of Credit was issued, as
amended, modified, supplemented and replaced from time to time.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Unless otherwise specified therein, all terms defined in
this Agreement shall have the defined meanings when used in the Notes
or other Credit Documents or any certificate or other document made or
delivered pursuant hereto.
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(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and Section, subsection, Schedule and Exhibit references are
to this Agreement unless otherwise specified.
(c) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
SECTION 1.3 ACCOUNTING TERMS.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of the Company and the Borrower delivered to
the Lenders; provided that, if the Company or the Borrower notifies the Agent
that it wishes to amend any covenant in Section 5.9 to eliminate the effect of
any change in GAAP on the operation of such covenant (or if the Agent notifies
the Company and the Borrower that the Required Lenders wish to amend Section 5.9
for such purpose), then the Company's and the Borrower's compliance with such
covenant shall be determined on the basis of GAAP in effect immediately before
the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Company,
the Borrower and the Required Lenders.
The Company and the Borrower shall deliver to the Agent and each Lender
at the same time as the delivery of any annual or quarterly financial statements
given in accordance with the provisions of Section 5.1, (i) a description in
reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding quarterly or annual financial statements
as to which no objection shall have been made in accordance with the provisions
above and (ii) a reasonable estimate of the effect on the financial statements
on account of such changes in application.
ARTICLE II
THE LOANS; AMOUNT AND TERMS
SECTION 2.1 REVOLVING LOANS.
(a) Revolving Commitment. During the Commitment Period,
subject to the terms and conditions hereof, each Lender severally
agrees to make revolving credit loans ("Revolving Loans") to the
Borrower from time to time for the purposes hereinafter set forth;
provided, however, that (i) with regard to each Lender individually,
the sum of such Lender's share of outstanding Revolving Loans plus such
Lender's Revolving Commitment Percentage of Swingline Loans plus such
Lender's LOC Commitment Percentage of LOC Obligations shall not exceed
such Lender's Revolving Commitment
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Percentage of the aggregate Revolving Committed Amount, and (ii) with
regard to the Lenders collectively, the sum of the aggregate amount of
outstanding Revolving Loans plus Swingline Loans plus LOC Obligations
shall not exceed (A) on or prior to the Subsequent Transactions Closing
Date, the aggregate Revolving Committed Amount then in effect and (B)
after the Subsequent Transactions Closing Date, the lesser of the
aggregate Revolving Committed Amount then in effect and the Borrowing
Base. For purposes hereof, the aggregate amount available hereunder
shall be TWO HUNDRED SEVENTY-FIVE MILLION DOLLARS ($275,000,000) (as
such aggregate maximum amount may be reduced from time to time as
provided in Section 2.6, the "Revolving Committed Amount"); provided,
however, that, until the Subsequent Transactions Closing Date, the
Revolving Committed Amount shall be TWO HUNDRED THIRTY MILLION DOLLARS
($230,000,000). Revolving Loans may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance with the
provisions hereof. LIBOR Rate Loans shall be made by each Lender at its
LIBOR Lending Office and Alternate Base Rate Loans at its Domestic
Lending Office. Notwithstanding any provision herein to the contrary,
(x) the initial LIBOR borrowing under this Agreement shall be made, at
the Borrower's election, as a LIBOR Rate Loan having an Interest Period
of one month or a LIBOR Rate Loan having an Interest Period of fourteen
(14) days and (y) subsequent to such initial LIBOR borrowing but prior
to the closing of the initial syndication of the Commitment and the
Loans to the Lenders, all LIBOR Rate Loans under this Agreement shall
be made or continued, at the Borrower's election, as LIBOR Rate Loans
having an Interest Period of fourteen (14) days. All LIBOR Rate Loans
having an Interest Period of fourteen (14) days shall bear interest at
the same rate as LIBOR Rate Loans having an Interest Period of one
month..
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall request a
Revolving Loan borrowing by written notice (or telephone
notice promptly confirmed in writing which confirmation may be
by fax) to the Agent not later than 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day prior to the date of
requested borrowing in the case of Alternate Base Rate Loans,
and on the third Business Day prior to the date of the
requested borrowing in the case of LIBOR Rate Loans; provided,
however, that LIBOR Rate Loans will not be available until
three Business Days following the Closing Date. 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 Alternate Base Rate Loans,
LIBOR Rate Loans or a combination thereof, and if LIBOR Rate
Loans are requested, the Interest Period(s) therefor. A form
of Notice of Borrowing (a "Notice of Borrowing") is attached
as Schedule 2.1(b)(i). If the Borrower shall fail to specify
in any such Notice of Borrowing (I) an applicable Interest
Period in the case of a LIBOR Rate Loan, then such notice
shall be deemed to be a request for an Interest Period of one
month, or (II) the
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type of Revolving Loan requested, then such notice shall be
deemed to be a request for an Alternate Base Rate Loan
hereunder. The Agent shall give notice to each Lender promptly
upon receipt of each Notice of Borrowing, the contents thereof
and each such Lender's share thereof.
(ii) Minimum Amounts. Each Revolving Loan borrowing
shall be in a minimum aggregate amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof (or the
remaining amount of the Revolving Committed Amount, if less).
(iii) Advances. Each Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing
available to the Agent for the account of the Borrower at the
office of the Agent specified in Schedule 9.2, or at such
other office as the Agent may designate 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 Termination Date.
(d) Interest. Subject to the provisions of Section 2.9,
Revolving Loans shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as
Revolving Loans shall be comprised of Alternate Base Rate
Loans, each such Alternate Base Rate Loan shall bear interest
at a per annum rate equal to the sum of the Alternate Base
Rate plus the Applicable Percentage; and
(ii) LIBOR Rate Loans. During such periods as
Revolving Loans shall be comprised of LIBOR Rate Loans, each
such LIBOR Rate Loan shall bear interest at a per annum rate
equal to the sum of the LIBOR Rate plus the Applicable
Percentage.
Interest on Revolving Loans shall be payable in arrears on each
Interest Payment Date.
(e) Revolving Notes. Each Lender's Revolving Commitment
Percentage of the Revolving Loans shall be evidenced by a duly executed
promissory note of the Borrower to such Lender in substantially the
form of Schedule 2.1(e).
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SECTION 2.2 TERM LOAN.
(a) Term Loan. 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 on the
Subsequent Transactions Closing Date such Lender's Term Loan Commitment
Percentage of a term loan in Dollars (the "Term Loan") in the aggregate
principal amount of ONE HUNDRED NINETY-FIVE MILLION DOLLARS
($195,000,000) (the "Term Loan Committed Amount") for the purposes
hereinafter set forth. The Term Loan may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrower
may request. The Borrower shall request the initial Term Loan borrowing
by written notice (or telephone notice promptly confirmed in writing
which confirmation may be by fax) to the Agent not later than 11:00
A.M. (Charlotte, North Carolina time) on the Business Day prior to the
date of requested borrowing in the case of Alternate Base Rate Loans,
and on the third Business Day prior to the date of the requested
borrowing in the case of LIBOR Rate Loans. Amounts repaid on the Term
Loan may not be reborrowed. LIBOR Rate Loans shall be made by each
Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its
Domestic Lending Office.
(b) Repayment of Term Loan. The principal amount of the Term
Loan shall be repaid in thirty-two (32) consecutive quarterly
installments, unless accelerated sooner pursuant to Section 7.2,
commencing on the last day of the first calendar quarter following the
consummation of the G&L Acquisition. Installments one (1) through
twenty-four (24), inclusive, shall each be in the amount of $500,000
and installments twenty-five (25) through thirty-two (32), inclusive,
shall each be in the amount of $22,875,000.
(c) Interest on the Term Loan. Subject to the provisions of
Section 2.9, the Term Loan shall bear interest as follows:
(i) Alternate Base Rate Loans. During such periods as the Term
Loan shall be comprised of Alternate Base Rate Loans, each such
Alternate Base Rate Loan shall bear interest at a per annum rate equal
to the sum of the Alternate Base Rate plus the Applicable Percentage;
and
(ii) LIBOR Rate Loans. During such periods as the Term Loan
shall be comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall
bear interest at a per annum rate equal to the sum of the LIBOR Rate
plus the Applicable Percentage.
Interest on the Term Loan shall be payable in arrears on each Interest
Payment Date.
(d) Term Notes. Each Lender's Term Loan Commitment Percentage
of the Term Loan outstanding as of the Subsequent Transactions Closing
Date shall be evidenced by a duly executed promissory note of the
Borrower to such Lender in substantially the form of Schedule 2.2(d).
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SECTION 2.3 SWINGLINE LOAN SUBFACILITY.
(a) Swingline Commitment. During the Commitment Period,
subject to the terms and conditions hereof, 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") for the purposes hereinafter set forth; provided,
however, (i) the aggregate amount of Swingline Loans outstanding at any
time shall not exceed FIFTEEN MILLION DOLLARS ($15,000,000) (the
"Swingline Committed Amount"), and (ii) the sum of the aggregate amount
of outstanding Revolving Loans plus Swingline Loans plus LOC
Obligations shall not exceed (A) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (B) after the Subsequent Transactions Closing Date,
the lesser of the aggregate Revolving Committed Amount then in effect
and the Borrowing Base. Swingline Loans hereunder may be repaid and
reborrowed in accordance with the provisions hereof.
(b) Swingline Loan Borrowings.
(i) Notice of Borrowing and Disbursement. The
Swingline Lender will make Swingline Loans available to the
Borrower on any Business Day upon request made by the Borrower
not later than 12:00 Noon (Charlotte, North Carolina time) on
such Business Day. A notice of request for Swingline Loan
borrowing shall be made in the form of Schedule 2.1(b)(i) with
appropriate modifications. Swingline Loan borrowings hereunder
shall be made in minimum amounts of $100,000 and in integral
amounts of $100,000 in excess thereof.
(ii) Repayment of Swingline Loans. Each Swingline
Loan borrowing shall be due and payable on the Termination
Date. The Swingline Lender may, at any time, in its sole
discretion, by written notice to the Borrower and the Agent,
demand repayment of its Swingline Loans by way of a Revolving
Loan borrowing, in which case the Borrower shall be deemed to
have requested a Revolving Loan borrowing comprised entirely
of Alternate Base Rate Loans in the amount of such Swingline
Loans; provided, however, that, in the following
circumstances, any such demand shall also be deemed to have
been given one Business Day prior to each of (i) the
Termination Date, (ii) the occurrence of any Event of Default
described in Section 7.1(e), (iii) upon acceleration of the
Credit Party Obligations hereunder, whether on account of an
Event of Default described in Section 7.1(e) or any other
Event of Default, and (iv) the exercise of remedies in
accordance with the provisions of Section 7.2 hereof (each
such Revolving Loan borrowing made on account of any such
deemed request therefor as provided herein being hereinafter
referred to as a "Mandatory Borrowing"). Each Lender hereby
irrevocably agrees to make such Revolving Loans promptly upon
any such request or deemed request on account of each
Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the same such date
notwithstanding (I) the amount of Mandatory Borrowing may not
comply with the
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minimum amount for borrowings of Revolving Loans otherwise
required hereunder, (II) whether any conditions specified in
Section 4.2 are then satisfied, (III) whether a Default or an
Event of Default then exists, (IV) failure of any such request
or deemed request for Revolving Loans to be made by the time
otherwise required in Section 2.1(b)(i), (V) the date of such
Mandatory Borrowing, or (VI) any reduction in the Revolving
Committed Amount or termination of the Revolving Commitments
immediately prior to such Mandatory Borrowing or
contemporaneously therewith. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of
the commencement of a proceeding under the Bankruptcy Code
with respect to the Borrower), then each Lender hereby agrees
that it shall forthwith purchase (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for any
payments received from the Borrower on or after such date and
prior to such purchase) 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 respective Revolving Commitment
Percentage (determined before giving effect to any termination
of the Commitments pursuant to Section 7.2), 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 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 interest on the principal amount of
such participation purchased for each day from and including
the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such
participation, at the rate equal to, if paid within two (2)
Business Days of the date of the Mandatory Borrowing, the
Federal Funds Effective Rate, and thereafter at a rate equal
to the Alternate Base Rate.
(c) Interest on Swingline Loans. Subject to the provisions of
Section 2.9, Swingline Loans shall bear interest at a per annum rate
equal to the Alternate Base Rate plus the Applicable Percentage.
Interest on Swingline Loans shall be payable in arrears on each
Interest Payment Date.
(d) Swingline Note. The Swingline Loans shall be evidenced by
a duly executed promissory note of the Borrower to the Swingline Lender
in the original amount of the Swingline Committed Amount and
substantially in the form of Schedule 2.3(d).
SECTION 2.4 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, during the Commitment Period
the Issuing Lender shall issue, and the Lenders shall participate in,
Letters of Credit for the account of the Borrower from time to time
upon request in a form acceptable to the Issuing Lender; provided,
however, that (i)
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the aggregate amount of LOC Obligations shall not at any time exceed
THIRTY MILLION DOLLARS ($30,000,000) (the "LOC Committed Amount"), (ii)
the sum of the aggregate amount of Revolving Loans plus Swingline Loans
plus LOC Obligations shall not at any time exceed (A) on or prior to
the Subsequent Transactions Closing Date, the aggregate Revolving
Committed Amount then in effect and (B) after the Subsequent
Transactions Closing Date, the lesser of the aggregate Revolving
Committed Amount and the Borrowing Base, (iii) all Letters of Credit
shall be denominated in U.S. Dollars and (iv) Letters of Credit shall
be issued for the purpose of supporting tax-advantaged variable rate
demand note financing and for other lawful corporate purposes and may
be issued as standby letters of credit, including in connection with
workers' compensation and other insurance programs, and trade letters
of credit. Except as otherwise expressly agreed upon by all the
Lenders, no Letter of Credit (other than the JEDA Letter of Credit
which has an original expiry date of fourteen (14) months) shall have
an original expiry date more than twelve (12) months from the date of
issuance; provided, however, so long as no Default or Event of Default
has occurred and is continuing and subject to the other terms and
conditions to the issuance of Letters of Credit hereunder, and other
than the Wachovia JEDA Letter of Credit which by its terms is, and
shall continue to be, automatically extended each month as to which no
Notice of Non-Extension (as defined in the Wachovia JEDA Reimbursement
Agreement) is given until the 5th day of the 13th month following
receipt by the Borrower and the Trustee for the JEDA Bonds of a Notice
of Non-Extension from the Issuing Lender thereof (but not to a date
later than the "Termination Date" as defined therein), the expiry dates
of Letters of Credit may be extended annually or periodically from time
to time on the request of the Borrower or by operation of the terms of
the applicable Letter of Credit to a date not more than twelve (12)
months (fourteen (14) months for the JEDA Letter of Credit) from the
date of extension; provided, further, that no Letter of Credit, as
originally issued or as extended, shall have an expiry date extending
beyond the Termination Date except that prior to the Termination Date a
Letter of Credit may be issued or extended with an expiry date
extending beyond the Termination Date if, and to the extent that,
unless the Issuing Lender and the Required Lenders shall otherwise
agree, the Borrower shall provide cash collateral to the Issuing Lender
on the date of issuance or extension in an amount equal to the maximum
amount available to be drawn under such Letter of Credit. Each Letter
of Credit shall comply with the related LOC Documents. The issuance and
expiry date of each Letter of Credit shall be a Business Day. Any
Letters of Credit issued hereunder shall be in a minimum original face
amount of $250,000. There will be no more than fifteen (15) Letters of
Credit outstanding at any time. First Union shall be the Issuing Lender
on all Letters of Credit issued after the Closing Date and shall become
the Issuing Lender on all Existing Letters of Credit on the date such
Letters of Credit are extended or renewed in accordance with the terms
hereof and thereof.
(b) Notice and Reports. The request for the issuance of a
Letter of Credit shall be submitted to the Issuing Lender at least five
(5) Business Days prior to the requested date of issuance. The Issuing
Lender will promptly upon request provide to the Agent for
dissemination to the Lenders a detailed report specifying the Letters
of Credit which are then issued and outstanding and any activity with
respect thereto which may have
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occurred since the date of any prior report, and including therein,
among other things, the account party, the beneficiary, the face
amount, expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the Agent
promptly upon request copies of the Letters of Credit. The Issuing
Lender will provide to the Agent promptly upon request a summary report
of the nature and extent of LOC Obligations then outstanding.
(c) Participations. Each Lender, with respect to the Existing
Letters of Credit, hereby purchases a participation interest in such
Existing Letters of Credit and with respect to Letters of Credit issued
on or after the Closing Date, upon issuance of a Letter of Credit,
shall be deemed to have purchased without recourse a risk participation
from the 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 LOC Commitment Percentage of the obligations
under such Letter of Credit and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Issuing Lender therefor and discharge when due,
its LOC Commitment Percentage of the obligations arising under such
Letter of Credit. Without limiting the scope and nature of each
Lender's participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or under
any LOC Document, each such Lender shall pay to the Issuing Lender its
LOC Commitment Percentage 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)
hereof. 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
and the Agent. The Borrower shall reimburse the Issuing Lender on the
day of drawing under any Letter of Credit (either with the proceeds of
a Swingline Loan or Revolving Loan obtained hereunder or otherwise) in
same day funds as provided herein or in the LOC Documents. If the
Borrower shall fail to reimburse the Issuing Lender as provided herein,
the unreimbursed amount of such drawing shall bear interest at a per
annum rate equal to the Alternate Base Rate plus two percent (2%).
Unless the Borrower shall immediately notify the Issuing Lender and the
Agent of its intent to otherwise reimburse the Issuing Lender, the
Borrower shall be deemed to have requested a Swingline Loan, or if and
to the extent Swingline Loans shall not be available, a Revolving Loan
in the amount of the drawing as provided in subsection (e) hereof, the
proceeds of which will be used to satisfy the reimbursement
obligations. The Borrower's reimbursement obligations hereunder shall
be absolute and unconditional under all circumstances irrespective of
any rights of set-off, 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 to receive
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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 LOC Commitment Percentage of such unreimbursed drawing. Such
payment shall be made on the day such notice is received by such Lender
from the Issuing Lender if such notice is received at or before 2:00
P.M. (Charlotte, North Carolina time), otherwise such payment shall be
made at or before 12:00 Noon (Charlotte, North Carolina time) on the
Business Day next succeeding the day such notice is received. If such
Lender does not pay such amount to the Issuing Lender in full upon such
request, such Lender shall, on demand, pay to the Agent for the account
of the Issuing Lender interest on the unpaid amount during the period
from the date 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 of drawing, the Federal Funds Effective
Rate and thereafter at a rate equal to the Alternate 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 Agreement or the Commitments
hereunder, the existence of a Default or Event of Default or the
acceleration of the Credit Party Obligations hereunder and shall be
made without any offset, abatement, withholding or reduction
whatsoever.
(e) Repayment with Revolving Loans. On any day on which the
Borrower shall have requested, or been deemed to have requested, (i) a
Swingline Loan borrowing to reimburse a drawing under a Letter of
Credit, the Swingline Lender shall make the Swingline Loan advance
pursuant to the terms of the request or deemed request in accordance
with the provisions for Swingline Loan advances hereunder, or (ii) a
Revolving Loan 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 in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan borrowing comprised
entirely of Alternate Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made (without giving effect
to any termination of the Commitments pursuant to Section 7.2) pro rata
based on each Lender's respective Revolving Commitment Percentage
(determined before giving effect to any termination of the Commitments
pursuant to Section 7.2) and in the case of both clauses (i) and (ii)
the proceeds thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each Lender hereby
irrevocably agrees to make such Revolving Loans immediately upon any
such request or deemed request on account of each Mandatory Borrowing
in the amount and in the manner specified in the preceding sentence and
on the same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether any
conditions specified in Section 4.2 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 in Section 2.1(b), (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the
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Revolving Committed Amount after any such Letter of Credit may have
been drawn upon; provided, however, that in the event any such
Mandatory Borrowing should be less than the minimum amount for
borrowings of Revolving Loans otherwise provided in Section 2.1(b)(ii),
the Borrower shall pay to the Agent for its own account an
administrative fee of $500. In the event that any Mandatory Borrowing
cannot for any reason be made on the date otherwise required above
(including, without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the Borrower or
the Company), then each such Lender hereby agrees that it shall
forthwith fund (as of the date the Mandatory Borrowing would otherwise
have occurred, but adjusted for any payments received from the Borrower
on or after such date and prior to such purchase) its Participation
Interests in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation Interest
on the day the Mandatory Borrowing would otherwise have occurred, then
the amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the Issuing Lender upon demand, at the
rate equal to, if paid within two (2) Business Days of such date, the
Federal Funds Effective Rate, and thereafter at a rate equal to the
Alternate Base Rate.
(f) Modification, Extension. The issuance of any supplement,
modification, amendment, renewal, or extension to any Letter of Credit
shall, for purposes hereof, be treated in all respects the same as the
issuance of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender shall
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.
SECTION 2.5 FEES.
(a) Commitment Fee. In consideration of the Revolving
Commitment, the Borrower agrees to pay to the Agent for the ratable
benefit of the Lenders a commitment fee (the "Commitment Fee") in an
amount equal to the Applicable Percentage per annum on the average
daily unused amount of the aggregate Revolving Committed Amount. For
purposes of computing the Commitment hereunder, Swingline Loans shall
be considered usage under the aggregate Revolving Committed Amount. The
Commitment Fee shall be payable quarterly in arrears on the 15th day
following the last day of each calendar quarter for the prior calendar
quarter.
(b) Letter of Credit Fees. In consideration of the LOC
Commitments, the Borrower agrees to pay to the Issuing Lender a fee
(the "Letter of Credit Fee") equal to the Applicable Percentage per
annum on the average daily maximum amount available to be
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drawn under each Letter of Credit from the date of issuance to the date
of expiration. In addition to such Letter of Credit Fee, the Issuing
Lender may charge, and retain for its own account without sharing by
the other Lenders, an additional facing fee of one-eighth of one
percent (1/8%) per annum on the average daily maximum amount available
to be drawn under each such Letter of Credit issued by it. The Issuing
Lender shall promptly pay over to the Agent for the ratable benefit of
the Lenders (including the Issuing Lender) the Letter of Credit Fee.
The Letter of Credit Fee shall be payable quarterly in arrears on the
15th day following the last day of each calendar quarter.
(c) Issuing Lender Fees. In addition to the Letter of Credit
Fees payable pursuant to subsection (b) hereof, the Borrower shall pay
to the Issuing Lender for its own account without sharing by the other
Lenders the reasonable and customary charges from time to time of the
Issuing Lender with respect to the amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of
Credit (collectively, the "Issuing Lender Fees").
(d) Term Loan Commitment Fee. In consideration of the Term
Loan Commitment, the Borrower agrees to pay to the Agent the commitment
fee as described in the Fee Letter.
(e) Administrative Fee. The Borrower agrees to pay to the
Agent the annual administrative fee as described in the Fee Letter.
SECTION 2.6 COMMITMENT REDUCTIONS .
(a) Voluntary Reductions. The Borrower shall have the right to
terminate or permanently reduce the unused portion of the Revolving
Committed Amount at any time or from time to time upon not less than
three Business Days' prior notice to the Agent (which shall notify the
Lenders thereof as soon as practicable) of each such termination or
reduction, which notice shall specify the effective date thereof and
the amount of any such reduction which shall be in a minimum amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof and
shall be irrevocable and effective upon receipt by the Agent, provided
that no such reduction or termination shall be permitted if after
giving effect thereto, and to any prepayments of the Revolving Loans
made on the effective date thereof, the sum of the then outstanding
aggregate principal amount of the Revolving Loans plus Swingline Loans
plus LOC Obligations would exceed (i) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (ii) after the Subsequent Transactions Closing Date,
the lesser of the aggregate Revolving Committed Amount then in effect
and the Borrowing Base.
(b) Termination Date. The Revolving Commitment, the LOC
Commitment and the Swingline Commitment shall automatically terminate
on the Termination Date.
SECTION 2.7 PREPAYMENTS.
(a) Optional Prepayments. The Borrower shall have the right to
prepay Loans in whole or in part from time to time; provided, however,
that each partial prepayment of Revolving Loans and Term Loans shall be
in a minimum principal amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof and each prepayment of Swingline
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Loans shall be in a minimum principal amount of $100,000 and integral
multiples of $100,000 in excess thereof. The Borrower shall give three
Business Days' irrevocable notice in the case of LIBOR Rate Loans and
one Business Day's irrevocable notice in the case of Alternate Base
Rate Loans, to the Agent (which shall notify the Lenders thereof as
soon as practicable). Subject to the foregoing terms, amounts prepaid
under this Section 2.7(a) shall be applied as the Borrower may elect;
provided that if the Borrower fails to specify the application of an
optional prepayment then such prepayment shall be applied first to
Revolving Loans and then ratably to the remaining principal
installments of the Term Loan, in each case first to Alternate Base
Rate Loans and then to LIBOR Rate Loans in direct order of Interest
Period maturities. All prepayments under this Section 2.7(a) shall be
subject to Section 2.17, but otherwise without premium or penalty.
Interest on the principal amount prepaid shall be payable on the next
occurring Interest Payment Date that would have occurred had such loan
not been prepaid or, at the request of the Agent, interest on the
principal amount prepaid shall be payable on any date that a prepayment
is made hereunder through the date of prepayment. Amounts prepaid on
the Swingline Loan and the Revolving Loans may be reborrowed in
accordance with the terms hereof. Amounts prepaid on the Term Loan may
not be reborrowed.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time, the
sum of the aggregate principal amount of outstanding Revolving
Loans plus Swingline Loans plus LOC Obligations shall exceed
(i) on or prior to the Subsequent Transactions Closing Date,
the aggregate Revolving Committed Amount then in effect and
(ii) after the Subsequent Transactions Closing Date, the
lesser of the aggregate Revolving Committed Amount then in
effect and the Borrowing Base, the Borrower immediately shall
prepay the Revolving Loans and (after all Revolving Loans have
been repaid) cash collateralize the LOC Obligations, in an
amount sufficient to eliminate such excess.
(ii) Excess Cash Flow. Within ninety (90) days after
the end of each fiscal year (commencing with the fiscal year
ending October 3, 1998), the Borrower shall prepay the Loans
in an amount equal to (x) fifty percent (50%) of the Excess
Cash Flow earned during such prior fiscal year less (y) the
amount of any optional prepayments of the Term Loan or (to the
extent accompanied by a reduction in the Revolving Committed
Amount) the Revolving Loans during such prior fiscal year. Any
payments of Excess Cash Flow shall be applied as set forth in
clause (ix) below. Notwithstanding the foregoing to the
contrary, the prepayment of Loans from Excess Cash Flow shall
not be required for any prior fiscal year if the Leverage
Ratio for the four fiscal quarters ending on the last day of
such fiscal year shall be less than or equal to 3.75 to 1.0.
(iii) Asset Dispositions. Promptly following any
Asset Disposition, the Borrower shall prepay the Loans in an
aggregate amount equal to the Net Cash
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Proceeds derived from such Asset Disposition (such prepayment
to be applied as set forth in clause (ix) below).
(iv) Debt Issuances. Immediately upon receipt by any
Credit Party of proceeds from any Debt Issuance, the Borrower
shall prepay the Loans in an aggregate amount equal to
one-hundred percent (100%) of the Net Cash Proceeds of such
Debt Issuance to the Lenders (such prepayment to be applied as
set forth in clause (ix) below).
(v) Issuances of Equity. Immediately upon receipt by
a Credit Party of proceeds from any Equity Issuance, the
Borrower shall prepay the Loans in an aggregate amount equal
to one-hundred percent (100%) of the Net Cash Proceeds of such
Equity Issuance to the Lenders (such prepayment to be applied
as set forth in clause (ix) below).
(vi) Recovery Event. To the extent of cash proceeds
received in connection with a Recovery Event which are not
applied in accordance with Section 6.5(a)(ii), immediately
following the 180th day occurring after the receipt by a
Credit Party of such cash proceeds, the Borrower shall prepay
the Loans in an aggregate amount equal to one-hundred percent
(100%) of such cash proceeds to the Lenders (such prepayment
to be applied as set forth in clause (ix) below).
(vii) Payment of G&L Loan. Immediately upon receipt
by the Borrower of any repayment or prepayment of the G&L Loan
to the extent the proceeds of such loan have not been applied
to fund the Subsequent Transactions, the Borrower shall prepay
the Loans in an aggregate amount equal to one-hundred percent
(100%) of any such repayment or prepayment to the Lenders
(such prepayment to be applied as set forth in clause (ix)
below).
(viii) Adjustments to Purchase Price. Immediately
upon receipt by the Borrower of any payment or refund arising
from an adjustment to the Purchase Price paid by the Borrower
for the Acquired Companies which, when aggregated with any
other such payments or refunds, exceeds $25,000,000, the
Borrower shall prepay the Loans in an aggregate amount equal
to one-hundred percent (100%) of any such excess to the
Lenders (such prepayment to be applied as set forth in clause
(ix) below).
(ix) Application of Mandatory Prepayments. All
amounts required to be paid pursuant to this Section 2.7(b)
shall be applied as follows: (A) with respect to all amounts
prepaid pursuant to Section 2.7(b)(i), to Revolving Loans and
(after all Revolving Loans have been repaid) to a cash
collateral account in respect of LOC Obligations, (B) with
respect to all amounts prepaid pursuant to Section 2.7(b)(ii)
through (viii), (1) first pro rata to the Term Loan (ratably
to the remaining principal installments thereof) and (2)
second to the Revolving Loans and (after all Revolving Loans
have been repaid) to a cash collateral account in
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respect of LOC Obligations. Within the parameters of the
applications set forth above, prepayments shall be applied
first to Alternate Base Rate Loans and then to LIBOR Rate
Loans in direct order of Interest Period maturities. All
prepayments under this Section 2.7(b) shall be subject to
Section 2.17 and be accompanied by interest on the principal
amount prepaid through the date of prepayment.
SECTION 2.8 MINIMUM PRINCIPAL AMOUNT OF TRANCHES.
All borrowings, payments and prepayments in respect of Revolving Loans
and Term Loan shall be in such amounts and be made pursuant to such elections so
that after giving effect thereto the aggregate principal amount of the Revolving
Loans and Term Loan comprising any Tranche shall not be less than $5,000,000 or
a whole multiple of $1,000,000 in excess thereof.
SECTION 2.9 DEFAULT RATE AND PAYMENT DATES.
(a) If all or a portion of the principal amount of any Loan
which is a LIBOR Rate Loan shall not be paid when due or continued as a
LIBOR Rate Loan in accordance with the provisions of Section 2.10
(whether at the stated maturity, by acceleration or otherwise), such
overdue principal amount of such Loan shall be converted to an
Alternate Base Rate Loan at the end of the Interest Period applicable
thereto.
(b) If all or a portion of (i) the principal amount of any
Loan, (ii) any interest payable thereon, or (iii) any fee or other
amount payable hereunder shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum which is (x) in the case of
overdue principal, the rate that would otherwise be applicable thereto
assuming Level I interest rate margins were then in effect, plus 2% or
(y) in the case of overdue interest, fees or other amounts, the
Alternate Base Rate, plus 2%, in each case from the date of such
non-payment until such amount is paid in full (after as well as before
judgment). Upon the occurrence, and during the continuance, of any
other Event of Default hereunder, the principal of and, to the extent
permitted by law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear interest,
payable on demand, at a per annum rate which is (A) in the case of
principal, the rate that would otherwise be applicable thereto assuming
Level I interest rate margins were then in effect, plus 2% or (B) in
the case of interest, fees or other amounts, the Alternate Base Rate,
plus 2% (after as well as before judgment).
(c) Interest on each Loan shall be payable in arrears on each
Interest Payment Date, provided that interest accruing pursuant to
paragraph (b) of this Section 2.9 shall be payable from time to time on
demand.
SECTION 2.10 CONVERSION OPTIONS.
(a) The Borrower may, in the case of Revolving Loans and the
Term Loan, elect from time to time to convert Alternate Base Rate Loans
to LIBOR Rate Loans, by
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giving the Agent at least three Business Days' prior irrevocable
written notice of such election. A form of Notice of Conversion/
Extension is attached as Schedule 2.10. If the date upon which an
Alternate Base Rate Loan is to be converted to a LIBOR Rate Loan is not
a Business Day, then such conversion shall be made on the next
succeeding Business Day and during the period from such last day of an
Interest Period to such succeeding Business Day such Loan shall bear
interest as if it were an Alternate Base Rate Loan. All or any part of
outstanding Alternate Base Rate Loans may be converted as provided
herein, provided that (i) no Loan may be converted into a LIBOR Rate
Loan when any Default or Event of Default has occurred and is
continuing and (ii) partial conversions shall be in an aggregate
principal amount of $5,000,000 or a whole multiple of $1,000,000 in
excess thereof.
(b) Any LIBOR Rate Loans may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in Section 2.10(a);
provided, that no LIBOR Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, in which
case such Loan shall be automatically converted to an Alternate Base
Rate Loan at the end of the applicable Interest Period with respect
thereto. If the Borrower shall fail to give timely notice of an
election to continue a LIBOR Rate Loan, or the continuation of LIBOR
Rate Loans is not permitted hereunder, such LIBOR Rate Loans shall be
automatically converted to Alternate Base Rate Loans at the end of the
applicable Interest Period with respect thereto.
SECTION 2.11 COMPUTATION OF INTEREST AND FEES.
(a) Interest payable hereunder with respect to Alternate Base
Rate Loans shall be calculated on the basis of a year of 365 days (or
366 days, as applicable) for the actual days elapsed. All other fees,
interest and all other amounts payable hereunder shall be calculated on
the basis of a 360 day year for the actual days elapsed. The Agent
shall as soon as practicable notify the Borrower and the Lenders of
each determination of a LIBOR Rate on the Business Day of the
determination thereof. Any change in the interest rate on a Loan
resulting from a change in the Alternate Base Rate shall become
effective as of the opening of business on the day on which such change
in the Alternate Base Rate shall become effective. The Agent shall as
soon as practicable notify the Borrower and the Lenders of the
effective date and the amount of each such change.
(b) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest
error. The Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the computations used by the Agent in
determining any interest rate.
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SECTION 2.12 PRO RATA TREATMENT AND PAYMENTS.
Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Each payment under this Agreement or any Note shall
be applied, first, to any fees then due and owing by the Borrower pursuant to
Section 2.5, second, to interest then due and owing in respect of the Notes of
the Borrower and, third, to principal then due and owing hereunder and under the
Notes of the Borrower. Each payment on account of any fees pursuant to Section
2.5 shall be made pro rata in accordance with the respective amounts due and
owing (except as to the portion of the Letter of Credit retained by the Issuing
Lender and the Issuing Lender Fees). Each payment (other than prepayments) by
the Borrower on account of principal of and interest on the Revolving Loans and
on the Term Loan shall be made pro rata according to the respective amounts due
and owing. Each prepayment on account of principal of the Loans shall be
applied, to such of the Loans as the Borrower may designate (to be applied pro
rata among the Lenders); provided, that prepayments made pursuant to Section
2.15 shall be applied in accordance with such section. All payments (including
prepayments) to be made by the Borrower on account of principal, interest and
fees shall be made without defense, set-off or counterclaim (except as provided
in Section 2.18(b)) and shall be made to the Agent for the account of the
Lenders at the Agent's office specified on Schedule 9.2 in Dollars and in
immediately available funds not later than 1:00 P.M. (Charlotte, North Carolina
time) on the date when due. The Agent shall distribute such payments to the
Lenders entitled thereto promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the LIBOR Rate Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a LIBOR Rate Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would be to extend
such payment into another calendar month, in which event such payment shall be
made on the immediately preceding Business Day.
SECTION 2.13 NON-RECEIPT OF FUNDS BY THE AGENT.
(a) Unless the Agent shall have been notified in writing by a
Lender prior to the date a Loan is to be made by such Lender (which
notice shall be effective upon receipt) that such Lender does not
intend to make the proceeds of such Loan available to the Agent, the
Agent may assume that such Lender has made such proceeds available to
the Agent on such date, and the Agent may in reliance upon such
assumption (but shall not be required to) 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
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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 Effective Funds Rate.
(b) Unless the Agent shall have been notified in writing by
the Borrower, prior to the date on which any payment is due from it
hereunder (which notice shall be effective upon receipt) that the
Borrower does not intend to make such payment, the Agent may assume
that such Borrower has made such payment when due, and the Agent may in
reliance upon such assumption (but shall not be required to) make
available to each Lender on such payment date an amount equal to the
portion of such assumed payment to which such Lender is entitled
hereunder, and if the Borrower has not in fact made such payment to the
Agent, such Lender shall, on demand, repay to the Agent the amount made
available to such Lender. If such amount is repaid to the Agent on a
date after the date such amount was made available to such Lender, such
Lender shall pay to the Agent on demand interest on such amount in
respect of each day from the date such amount was made available by the
Agent to such Lender to the date such amount is recovered by the Agent
at a per annum rate equal to the Federal Funds Effective Rate.
(c) A certificate of the Agent submitted to the Borrower or
any Lender with respect to any amount owing under this Section 2.13
shall be conclusive in the absence of manifest error.
SECTION 2.14 INABILITY TO DETERMINE INTEREST RATE.
Notwithstanding any other provision of this Agreement, if (i) the Agent
shall reasonably determine (which determination shall be conclusive and binding
absent manifest error) that, by reason of circumstances affecting the relevant
market, reasonable and adequate means do not exist for ascertaining LIBOR for
such Interest Period, or (ii) the Required Lenders shall reasonably determine
(which determination shall be conclusive and binding absent manifest error) that
the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders
of funding LIBOR Rate Loans that the Borrower has requested be outstanding as a
Eurodollar Tranche during such Interest Period, the Agent shall forthwith give
telephone notice of such determination, confirmed in writing, to the Borrower,
and the Lenders at least two Business Days prior to the first day of such
Interest Period. Unless the Borrower shall have notified the Agent upon receipt
of such telephone notice that it wishes to rescind or modify its request
regarding such LIBOR Rate Loans, any Loans that were requested to be made as
LIBOR Rate Loans shall be made as Alternate Base Rate Loans and any Loans that
were requested to be converted into or continued as LIBOR Rate Loans shall be
converted into Alternate Base Rate Loans. Until any such notice has been
withdrawn by the Agent, no further Loans shall be made as, continued as, or
converted into, LIBOR Rate Loans for the Interest Periods so affected.
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SECTION 2.15 ILLEGALITY.
Notwithstanding any other provision of this Agreement, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof by the relevant Governmental Authority to any Lender shall
make it unlawful for such Lender or its LIBOR Lending Office to make or maintain
LIBOR Rate Loans as contemplated by this Agreement or to obtain in the interbank
eurodollar market through its LIBOR Lending Office the funds with which to make
such Loans, (a) such Lender shall promptly notify the Agent and the Borrower
thereof, (b) the commitment of such Lender hereunder to make LIBOR Rate Loans or
continue LIBOR Rate Loans as such shall forthwith be suspended until the Agent
shall give notice that the condition or situation which gave rise to the
suspension shall no longer exist, and (c) such Lender's Loans then outstanding
as LIBOR Rate Loans, if any, shall be converted on the last day of the Interest
Period for such Loans or within such earlier period as required by law as
Alternate Base Rate Loans. The Borrower hereby agrees promptly to pay any
Lender, upon its demand, any additional amounts necessary to compensate such
Lender for actual and direct costs (but not including anticipated profits)
reasonably incurred by such Lender in making any repayment in accordance with
this Section including, but not limited to, any interest or fees payable by such
Lender to lenders of funds obtained by it in order to make or maintain its LIBOR
Rate Loans hereunder. A certificate as to any additional amounts payable
pursuant to this Section submitted by such Lender, through the Agent, to the
Borrower shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to change its
LIBOR Lending Office) to avoid or to minimize any amounts which may otherwise be
payable pursuant to this Section; provided, however, that such efforts shall not
cause the imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender to be material.
SECTION 2.16 REQUIREMENTS OF LAW.
(a) If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof or compliance by any
Lender with any request or directive (whether or not having the force
of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit or any
application relating thereto, any LIBOR Rate Loan made by it,
or change the basis of taxation of payments to such Lender in
respect thereof (except for changes in the rate of tax on the
overall net income of such Lender);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other
extensions of credit by, or any other acquisition of funds by,
any office of such Lender which is not otherwise included in
the determination of the LIBOR Rate hereunder; or
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(iii) shall impose on such Lender any other
condition;
and the result of any of the foregoing is to increase the cost to such
Lender of making or maintaining LIBOR Rate Loans or the Letters of
Credit or to reduce any amount receivable hereunder or under any Note,
then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such
Lender for such additional cost or reduced amount receivable which such
Lender reasonably deems to be material as determined by such Lender
with respect to its LIBOR Rate Loans or Letters of Credit. A
certificate as to any additional amounts payable pursuant to this
Section submitted by such Lender, through the Agent, to the Borrower
shall be conclusive in the absence of manifest error. Each Lender
agrees to use reasonable efforts (including reasonable efforts to
change its Domestic Lending Office or LIBOR Lending Office, as the case
may be) to avoid or to minimize any amounts which might otherwise be
payable pursuant to this paragraph of this Section; provided, however,
that such efforts shall not cause the imposition on such Lender of any
additional costs or legal or regulatory burdens deemed by such Lender
to be material.
(b) If any Lender shall have reasonably determined that the
adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance
by such Lender or any corporation controlling such Lender with any
request or directive regarding capital adequacy (whether or not having
the force of law) from any central bank or Governmental Authority made
subsequent to the date hereof does or shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which
such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) by an
amount reasonably deemed by such Lender to be material, then from time
to time, within fifteen (15) days after demand by such Lender, the
Borrower shall pay to such Lender such additional amount as shall be
certified by such Lender as being required to compensate it for such
reduction. Such a certificate as to any additional amounts payable
under this Section submitted by a Lender (which certificate shall
include a description of the basis for the computation), through the
Agent, to the Borrower shall be conclusive absent manifest error.
(c) Notwithstanding anything to the contrary contained herein,
the Borrower shall not have any obligation to pay to any Lender amounts
owing under this Section 2.16 for any period which is more than ninety
(90) days prior to the date upon which the request for payment therefor
is delivered to the Borrower.
(d) The agreements in this Section 2.16 shall survive the
termination of this Agreement and payment of the Notes and all other
amounts payable hereunder.
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SECTION 2.17 INDEMNITY.
The Borrower hereby agrees to indemnify each Lender and to hold such
Lender harmless from any funding loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in payment of the
principal amount of or interest on any Loan by such Lender in accordance with
the terms hereof, (b) default by the Borrower in accepting a borrowing after the
Borrower has given a notice in accordance with the terms hereof, (c) default by
the Borrower in making any prepayment after the Borrower has given a notice in
accordance with the terms hereof, and/or (d) the making by the Borrower of a
prepayment of a Loan, or the conversion thereof, on a day which is not the last
day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by
such Lender to lenders of funds obtained by it in order to maintain its Loans
hereunder. A certificate as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Agent, to the Borrower (which
certificate must be delivered to the Agent within thirty days following such
default, prepayment or conversion) shall be conclusive in the absence of
manifest error. The agreements in this Section shall survive termination of this
Agreement and payment of the Notes and all other amounts payable hereunder.
SECTION 2.18 TAXES.
(a) All payments made by the Borrower hereunder or under any
Note will be, except as provided in Section 2.18(b), made free and
clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any Governmental
Authority or by any political subdivision or taxing authority thereof
or therein with respect to such payments (but excluding any tax imposed
on or measured by the net income or profits of a Lender pursuant to the
laws of the jurisdiction in which it is organized or the jurisdiction
in which the principal office or applicable lending office of such
Lender is located or any subdivision thereof or therein) and all
interest, penalties or similar liabilities with respect thereto (all
such non-excluded taxes, levies, imposts, duties, fees, assessments or
other charges being referred to collectively as "Taxes"). If any Taxes
are so levied or imposed, the Borrower agrees to pay the full amount of
such Taxes, and such additional amounts as may be necessary so that
every payment of all amounts due under this Agreement or under any
Note, after withholding or deduction for or on account of any Taxes,
will not be less than the amount provided for herein or in such Note.
The Borrower will furnish to the Agent as soon as practicable after the
date the payment of any Taxes is due pursuant to applicable law
certified copies (to the extent reasonably available and required by
law) of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Lender, and
reimburse such Lender upon its written request, for the amount of any
Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver
to the Borrower and the Agent on or prior to the Closing Date, or in
the case of a Lender that is an assignee or transferee of an
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interest under this Agreement pursuant to Section 9.6(d) (unless the
respective Lender was already a Lender hereunder immediately prior to
such assignment or transfer), on the date of such assignment or
transfer to such Lender, (i) if the Lender is a "bank" within the
meaning of Section 881(c)(3)(A) of the Code, two accurate and complete
original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the
Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of
the Code, either Internal Revenue Service Form 1001 or 4224 as set
forth in clause (i) above, or (x) a certificate substantially in the
form of Schedule 2.18 (any such certificate, a "2.18 Certificate") and
(y) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 (or successor form) certifying such Lender's
entitlement to an exemption from United States withholding tax with
respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Lender agrees that it will deliver
upon the Borrower's request updated versions of the foregoing, as
applicable, whenever the previous certification has become obsolete or
inaccurate in any material respect, together with such other forms as
may be required in order to confirm or establish the entitlement of
such Lender to a continued exemption from or reduction in United States
withholding tax with respect to payments under this Agreement and any
Note. Notwithstanding anything to the contrary contained in Section
2.18(a), but subject to the immediately succeeding sentence, (x) each
Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold Taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of
any Lender which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Lender has not provided to the
Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall
not be obligated pursuant to Section 2.18(a) hereof to gross-up
payments to be made to a Lender in respect of Taxes imposed by the
United States if (I) such Lender has not provided to the Borrower the
Internal Revenue Service Forms required to be provided to the Borrower
pursuant to this Section 2.18(b) or (II) in the case of a payment,
other than interest, to a Lender described in clause (ii) above, to the
extent that such Forms do not establish a complete exemption from
withholding of such Taxes. Notwithstanding anything to the contrary
contained in the preceding sentence or elsewhere in this Section 2.18,
the Borrower agrees to pay additional amounts and to indemnify each
Lender in the manner set forth in Section 2.18(a) (without regard to
the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as
described in the immediately preceding sentence as a result of any
changes after the Closing Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the
interpretation thereof, relating to the deducting or withholding of
Taxes.
(c) Each Lender agrees to use reasonable efforts (including
reasonable efforts to change its Domestic Lending Office or LIBOR
Lending Office, as the case may be) to avoid or to minimize any amounts
which might otherwise be payable pursuant to this
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Section; provided, however, that such efforts shall not cause the
imposition on such Lender of any additional costs or legal or
regulatory burdens deemed by such Lender to be material.
(d) If the Borrower pays any additional amount pursuant to
this Section 2.18 with respect to a Lender, such Lender shall use
reasonable efforts to obtain a refund of tax or credit against its tax
liabilities on account of such payment; provided that such Lender shall
have no obligation to use such reasonable efforts if either (i) it is
in an excess foreign tax credit position or (ii) it believes in good
faith, in its sole discretion, that claiming a refund or credit would
cause adverse tax consequences to it. In the event that such Lender
receives such a refund or credit, such Lender shall pay to the Borrower
an amount that such Lender reasonably determines is equal to the net
tax benefit obtained by such Lender as a result of such payment by the
Borrower. In the event that no refund or credit is obtained with
respect to the Borrower's payments to such Lender pursuant to this
Section 2.18, then such Lender shall upon request provide a
certification that such Lender has not received a refund or credit for
such payments. Nothing contained in this Section 2.18 shall require a
Lender to disclose or detail the basis of its calculation of the amount
of any tax benefit or any other amount or the basis of its
determination referred to in the proviso to the first sentence of this
Section 2.18 to the Borrower or any other party.
(e) The agreements in this Section 2.18 shall survive the
termination of this Agreement and the payment of the Notes and all
other amounts payable hereunder.
SECTION 2.19 INDEMNIFICATION; NATURE OF ISSUING LENDER'S DUTIES.
(a) In addition to its other obligations under Section 2.4,
the Borrower hereby agrees to protect, indemnify, pay and save each
Issuing Lender harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees) that the Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit or (ii) the failure of the Issuing Lender to honor
a drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions,
herein called "Government Acts").
(b) As between the Borrower and the Issuing Lender, the
Borrower shall assume all risks of the acts, omissions or misuse of any
Letter of Credit by the beneficiary thereof. The Issuing Lender shall
not be responsible: (i) 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; (ii) 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; (iii) for failure of
the beneficiary of a Letter of Credit to comply fully
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with conditions required in order to draw upon a Letter of Credit; (iv)
for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) for errors in
interpretation of technical terms; (vi) 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 (vii)
for any consequences arising from causes beyond the control of the
Issuing Lender, including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the vesting of the
Issuing Lender's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted
by the Issuing Lender, under or in connection with any Letter of Credit
or the related certificates, if taken or omitted in good faith, shall
not put such Issuing Lender under any resulting liability to the
Borrower. It is the intention of the parties that this Agreement shall
be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower,
including, without limitation, any and all risks of the acts or
omissions, whether rightful or wrongful, of any Government Authority.
The Issuing Lender shall not, in any way, be liable for any failure by
the Issuing Lender or anyone else to pay any drawing under any Letter
of Credit as a result of any Government Acts or any other cause beyond
the control of the Issuing Lender.
(d) Nothing in this Section 2.19 is intended to limit the
reimbursement obligation of the Borrower contained in Section 2.4(d)
hereof. The obligations of the Borrower under this Section 2.19 shall
survive the termination of this 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 Issuing Lender to enforce any right,
power or benefit under this Agreement.
(e) Notwithstanding anything to the contrary contained in this
Section 2.19, the Borrower shall have no obligation to indemnify any
Issuing Lender in respect of any liability incurred by such Issuing
Lender arising out of the gross negligence or willful misconduct of the
Issuing Lender (including action not taken by an Issuing Lender), as
determined by a court of competent jurisdiction.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make the
Extensions of Credit herein provided for, each of the Company and the Borrower
hereby represents and warrants to the Agent and to each Lender that:
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SECTION 3.1 FINANCIAL CONDITION.
The consolidated balance sheet of the Company and its consolidated
Subsidiaries as at September 27, 1997 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on
(only in the case of such annual statements) by Ernst & Young LLP, copies of
which have heretofore been furnished to each Lender, are complete and correct
and present fairly the consolidated financial condition of the Company and its
consolidated Subsidiaries as at such date, and the consolidated results of their
operations and their consolidated cash flows for the fiscal year then ended. All
such financial statements, including the related schedules and notes thereto,
have been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as disclosed therein). Neither the Company nor any of
its consolidated Subsidiaries had, at the date of the balance sheets referred to
above, any material Guarantee Obligation, contingent liabilities or liability
for taxes, long-term lease or unusual forward or long-term commitment,
including, without limitation, any material interest rate or foreign currency
swap or exchange transaction, which is not reflected in the foregoing statements
or in the notes thereto. The five-year financial and operational projections for
the Company and its Subsidiaries (including the Apparel Division) for the fiscal
years of 1998 through 2002 delivered to the Agent prior to the Closing Date (the
"Projections"), constitute a reasonable basis as of the Closing Date for the
assessment of the future performance of the Company and its Subsidiaries
(including the Apparel Division) during the periods indicated therein, it being
understood that any projected financial information represents projections,
based on various assumptions, of future results of operations which may or may
not in fact occur and no assurance can be given that such results will be
achieved.
SECTION 3.2 NO CHANGE.
Since September 27, 1997 (and after delivery of annual audited
financial statements in accordance Section 5.1(a), from the date of the most
recently delivered annual audited financial statements) there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW.
Each of the Company, its Subsidiaries and the Borrower (a) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the requisite power and authority and
the legal right to own and operate all its material property, to lease the
material property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified to conduct business 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
except to the extent that the failure to so qualify or be in good standing would
not, in the aggregate, have a Material Adverse Effect and (d) is in compliance
with all Requirements of Law except to the extent that the failure to comply
therewith would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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SECTION 3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Company, the Borrower and the other Credit Parties has full
power and authority and the legal right to make, deliver and perform the Credit
Documents to which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of the Credit Documents
to which it is party. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is
required in connection with the borrowings hereunder or with the execution,
delivery or performance of any Credit Document by the Company, the Borrower or
the other Credit Parties (other than those which have been obtained) or with the
validity or enforceability of any Credit Document against the Company or the
Borrower (except such filings as are necessary in connection with the perfection
of the Liens created by such Credit Documents). Each Credit Document to which it
is a party has been duly executed and delivered on behalf of the Company, the
Borrower or the other Credit Parties, as the case may be. Each Credit Document
to which it is a party constitutes a legal, valid and binding obligation of the
Company, the Borrower or the other Credit Parties, as the case may be,
enforceable against the Company, the Borrower or such other Credit Party, as the
case may be, 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).
SECTION 3.5 NO LEGAL BAR; NO DEFAULT.
The execution, delivery and performance of the Credit Documents, the
borrowings thereunder and the use of the proceeds of the Loans will not violate
any Requirement of Law or any Contractual Obligation of the Company, its
Subsidiaries or the Borrower (except those as to which waivers or consents have
been obtained), and will not result in, or require, the creation or imposition
of any Lien on any of its or their respective properties or revenues pursuant to
any Requirement of Law or Contractual Obligation other than the Liens arising
under or contemplated in connection with the Credit Documents. Neither the
Company nor any of its Subsidiaries is in default under or with respect to any
of its Contractual Obligations in any respect which would reasonably be expected
to have a Material Adverse Effect. No Default or Event of Default has occurred
and is continuing.
SECTION 3.6 NO MATERIAL LITIGATION.
Except as set forth in Schedule 3.6, no litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the best knowledge of the Company or the Borrower, threatened by or against
the Company, the Borrower or any of their Subsidiaries or against any of its or
their respective properties or revenues (a) with respect to the Credit Documents
or any Loan or any of the transactions contemplated hereby, or (b) which, if
adversely determined, would reasonably be expected to have a Material Adverse
Effect.
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SECTION 3.7 INVESTMENT COMPANY ACT.
Neither the Company nor the Borrower is an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 3.8 MARGIN REGULATIONS.
No part of the proceeds of any Loan hereunder will be used directly or
indirectly for any purpose which violates, or which would be inconsistent with,
the provisions of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. The
Company and its Subsidiaries taken as a group do not own "margin stock" except
as identified in the financial statements referred to in Section 3.1 and the
aggregate value of all "margin stock" owned by the Company and its Subsidiaries
taken as a group does not exceed 25% of the value of their assets.
SECTION 3.9 ERISA.
Neither a Reportable Event nor an "accumulated funding deficiency"
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code, except to the extent that any such occurrence or failure to comply
would not reasonably be expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred resulting in any liability
that has remained underfunded, and no Lien in favor of the PBGC or a Plan has
arisen, during such five-year period which would reasonably be expected to have
a Material Adverse Effect. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by an amount which, as determined in
accordance with GAAP, would reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any Commonly Controlled Entity is currently
subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan which would reasonably be expected to have a Material Adverse
Effect.
SECTION 3.10 ENVIRONMENTAL MATTERS.
Except to the extent that all of the following, in the aggregate, would
not reasonably be expected to have a Material Adverse Effect:
(a) To the best knowledge of the Company or the Borrower, the
facilities and properties owned, leased or operated by the Company, the
Borrower or any of their Subsidiaries (the "Properties") do not contain
any Materials of Environmental Concern in amounts or concentrations
which (i) constitute a violation of, or (ii) could give rise to
liability under, any Environmental Law.
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(b) To the best knowledge of the Company or the Borrower, the
Properties and all operations of the Company, the Borrower and/or their
Subsidiaries at the Properties are in compliance, and have in the last
five years been in compliance, in all material respects with all
applicable Environmental Laws, and there is no contamination at, under
or about the Properties or violation of any Environmental Law with
respect to the Properties or the business operated by the Company, the
Borrower or any of their Subsidiaries (the "Business").
(c) Neither the Company, the Borrower nor any of their
Subsidiaries has received any written or actual notice of 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 Business, nor does the
Company or the Borrower have knowledge or reason to believe that any
such notice will be received or is being threatened.
(d) To the best knowledge of the Company or the Borrower,
Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a
location which could give rise to liability under any Environmental
Law, nor have any Materials of Environmental Concern been generated,
treated, stored or disposed of at, on or under any of the Properties 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 knowledge of the Company or the Borrower,
threatened, under any Environmental Law to which the Company, the
Borrower or any Subsidiary is or will be named as a party with respect
to the Properties or the Business, 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 Properties or the Business.
(f) To the best knowledge of the Company or the Borrower,
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 of the Company, the Borrower or any
Subsidiary in connection with the Properties or otherwise in connection
with the Business, in violation of or in amounts or in a manner that
could give rise to liability under Environmental Laws.
SECTION 3.11 PURPOSE OF LOANS.
Up to $230,000,000 of the proceeds of the Revolving Loans will be used
to refinance existing indebtedness of the Borrower and for general corporate and
working capital purposes. On and after the G&L Acquisition, the remaining
proceeds of the Revolving Loans and the proceeds of the Term Loan will be used
to finance the G&L Acquisition and for general corporate and working capital
purposes.
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SECTION 3.12 SUBSIDIARIES.
Set forth on Schedule 3.12 is a complete and accurate list of all
Subsidiaries of the Company and the Borrower. Information on the attached
Schedule includes state of incorporation; the number of shares of each class of
Capital Stock or other equity interests outstanding; the number and percentage
of outstanding shares of each class of stock; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. The outstanding Capital Stock and other equity
interests of all such Subsidiaries is validly issued, fully paid and
non-assessable and is owned, free and clear of all Liens (other than those
arising under or contemplated in connection with the Credit Documents). The
Company and the Borrower shall cause Schedule 3.12 to be updated upon the
consummation of the G&L Acquisition.
SECTION 3.13 OWNERSHIP.
Each of the Company and its Subsidiaries is the owner of, and has good
and marketable title to, all of its respective assets, except as may be
permitted pursuant Section 6.13 hereof, and none of such assets is subject to
any Lien other than Permitted Liens.
SECTION 3.14 INDEBTEDNESS.
Except as otherwise permitted under Section 6.1, the Company and its
Subsidiaries have no Indebtedness.
SECTION 3.15 TAXES.
Each of the Company and its Subsidiaries 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. Neither the Company nor the Borrower is aware as of the
Closing Date of any proposed tax assessments against it or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect..
SECTION 3.16 INTELLECTUAL PROPERTY.
Each of the Company and its Subsidiaries owns, or has the legal right
to use, all trademarks, tradenames, copyrights, technology, know-how and
processes 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 (the "Material Intellectual Property").
Set forth on Schedule 3.16 is a list of all Material Intellectual Property owned
by each of the Company and its Subsidiaries or that the Company or any of its
Subsidiaries has the
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right to use. Except as provided on Schedule 3.16, no claim has been asserted
and is pending by any Person challenging or questioning the use of any such
Material Intellectual Property or the validity or effectiveness of any such
Material Intellectual Property, nor does the Company or any of its Subsidiaries
know of any such claim, and, to the knowledge of the Company or any of its
Subsidiaries, the use of such Material Intellectual Property by the Company or
any of its Subsidiaries 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 3.16 may be updated from time to time by the
Borrower by giving written notice thereof to the Agent.
SECTION 3.17 SOLVENCY.
The fair saleable value of each Credit Party's assets, measured on a
going concern basis, exceeds all probable liabilities, including those to be
incurred pursuant to this Credit Agreement. None of the Credit Parties (a) has
unreasonably small capital in relation to the business in which it is or
proposes to be engaged or (b) has incurred, or believes that it will incur after
giving effect to the transactions contemplated by this Credit Agreement, debts
beyond its ability to pay such debts as they become due.
SECTION 3.18 INVESTMENTS.
All Investments of each of the Company and its Subsidiaries are
Permitted Investments.
SECTION 3.19 LOCATION OF COLLATERAL.
Set forth on Schedule 3.19(a) is a list of the Properties of the
Company and its Subsidiaries with street address, county and state where
located. Set forth on Schedule 3.19(b) is a list of all locations where any
tangible personal property of the Company and its Subsidiaries is located,
including county and state where located. Set forth on Schedule 3.19(c) is the
chief executive office and principal place of business of each of the Company
and its Subsidiaries. Schedule 3.19(a), 3.19(b) and 3.19(c) may be updated from
time to time by the Borrower giving written notice thereof to the Agent.
SECTION 3.20 NO BURDENSOME RESTRICTIONS.
None of the Company or any of its Subsidiaries is a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could have a Material Adverse Effect.
SECTION 3.21 BROKERS' FEES.
None of the Company or any of its Subsidiaries has any obligation to
any Person in respect of any finder's, broker's, investment banking or other
similar fee in connection with any of the transactions contemplated under the
Credit Documents other than the closing and other fees payable pursuant to this
Credit Agreement or payable in connection with the Tender Offer or the
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G&L Acquisition, which fees, together with expenses incurred in connection with
this Credit Agreement, the Tender Offer and the G&L Acquisition, shall not
exceed $60,000,000.
SECTION 3.22 LABOR MATTERS.
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of the Company or any of its Subsidiaries as of the
Closing Date and none of the Company or any of its Subsidiaries has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years other than as set forth in Schedule 3.22 hereto.
SECTION 3.23 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information (excluding the Projections) heretofore,
contemporaneously or hereafter furnished by or on behalf of the Borrower, the
Company or any of their Subsidiaries to the Agent or any Lender for purposes of
or in connection with this Agreement or any other Credit Document, or any
transaction contemplated hereby or thereby, is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time. There is no fact now known to
the Borrower, the Company or any of their Subsidiaries which has, or would have,
a Material Adverse Effect which fact has not been set forth herein, in the
financial statements of the Company and its Subsidiaries furnished to the Agent
and/or the Lenders, or in any certificate, opinion or other written statement
made or furnished by the Borrower or the Company to the Agent and/or the
Lenders.
SECTION 3.24 PRINTED APPAREL FABRICS BUSINESS.
Neither the Company nor any of its Subsidiaries owes any material
payments or has any other material obligations with respect to the closure in
September, 1995, of the printed apparel fabrics business of the Borrower.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.1 CONDITIONS TO CLOSING DATE AND INITIAL REVOLVING LOANS.
This Agreement shall become effective upon, and the obligation of each
Lender to make the initial Revolving Loans on the Tender Offer Closing Date is
subject to, the satisfaction of the following conditions precedent:
(a) Execution of Agreement. The Agent shall have received (i)
multiple counterparts of this Agreement for each Lender, executed by a
duly authorized officer of each party hereto, (ii) for the account of
each Lender a Revolving Note and a Term Note and for the account of the
Swingline Lender, a Swingline Note and (iii) multiple counterparts of
the
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Security Agreement and the Pledge Agreement for each Lender, in each
case conforming to the requirements of this Agreement and executed by a
duly authorized officer of the Borrower or the Company or other Credit
Party, as applicable.
(b) Corporate Documents. The Agent shall have received the
following:
(i) Articles of Incorporation. Copies of the
articles of incorporation or charter documents of the Company,
the Borrower and the other Credit Parties certified to be true
and complete as of a recent date by the appropriate
governmental authority of the state of its incorporation.
(ii) Resolutions. Copies of resolutions of
the Board of Directors of the Company, the Borrower and the
other Credit Parties approving and adopting the Credit
Documents, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a
secretary or assistant secretary as of the Closing Date to be
true and correct and in force and effect as of such date.
(iii) Bylaws. A copy of the bylaws of the
Company, the Borrower and the other Credit Parties certified
by a secretary or assistant secretary as of the Closing Date
to be true and correct and in force and effect as of such
date.
(iv) Good Standing. Copies of (i)
certificates of good standing, existence or its equivalent
with respect to the Company, the Borrower and the other Credit
Parties certified as of a recent date by the appropriate
governmental authorities of the state of incorporation and
each other state in which the failure to so qualify and be in
good standing would have a Material Adverse Effect on the
business or operations of the Company, the Borrower and their
respective Subsidiaries in such state and (ii) 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) Legal Opinions of Counsel. The Agent shall have received,
with a copy for each Lender, an opinion of Rosenman & Colin LLP,
counsel for the Company, the Borrower and the other Credit Parties,
dated the Closing Date and addressed to the Agent and the Lenders, in
form and substance acceptable to the Agent.
(d) Personal Property Collateral. The Agent shall have
received:
(i) searches of Uniform Commercial Code
filings in the jurisdiction of the chief executive office of
each Credit Party and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to
perfect
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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;
(iii) searches of ownership of Material
Intellectual Property in the appropriate governmental offices
and such patent/trademark/copyright filings as requested by
the Agent in order to perfect the Agent's security interest in
the Collateral;
(iv) all stock certificates evidencing the
Capital Stock pledged to the Agent pursuant to the Pledge
Agreement, together with duly executed in blank undated stock
powers attached thereto (unless, with respect to the pledged
Capital Stock of any Foreign Subsidiary, such stock powers are
deemed unnecessary by the Agent in its reasonable discretion
under the law of the jurisdiction of incorporation of such
Person);
(v) such patent/trademark/copyright filings
as requested by the Agent in order to perfect the Agent's
security interest in the Material Intellectual Property;
(vi) all instruments and chattel paper in
the possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or appropriate to
perfect the Agent's security interest in the Collateral;
(vii) duly executed consents as are
necessary, in the Agent's sole discretion, to perfect the
Lenders' security interest in the Collateral; and
(viii) in the case of any personal property
Collateral located at premises leased by a Credit Party, such
estoppel letters, consents and waivers from the landlords on
such real property as may be required by the Agent.
(e) Liability and Casualty Insurance. The Agent shall have
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements
set forth herein or in the Security Documents. The Agent shall be named
as loss payee and additional insured on all such insurance policies for
the benefit of the Lenders.
(f) Fees. The Agent shall have received all fees, if any,
owing pursuant to the Fee Letter and Section 2.5.
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(g) Tender Offer Closing Date. The Tender Offer Closing Date
shall have occurred on or before the Tender Offer Funding Termination
Date.
(h) DTA Credit Facility. (i) DTA shall have entered into the
DTA Credit Facility, (ii) the Agent shall have a received a copy of the
DTA Credit Facility, certified by an officer of DTA as true and
correct, (iii) the conditions to the financing for the Tender Offer set
forth in the DTA Credit Facility shall have been satisfied or waived,
(iv) DTA shall have received proceeds from the Tender Loans made under
the DTA Credit Facility in an aggregate principal amount of
$245,000,000 and (v) the Tender Offer shall have been consummated in
accordance with the Offer to Purchase.
(i) Litigation. There shall not exist any pending litigation
or investigation affecting or relating to the Bridge Notes, this
Agreement and the other Credit Documents, the DTA Credit Facility, the
Tender Offer or the Amalgamation that in the reasonable judgment of the
Agent could materially adversely affect the Bridge Notes, this
Agreement and the Other Credit Documents, the DTA Credit Facility, the
Tender Offer or the Amalgamation, that has not been settled, dismissed,
vacated, discharged or terminated prior to the Tender Offer Closing
Date.
(j) Solvency Certificate. The Agent shall have received, with
a copy for each Lender, an officer's certificate for each Credit Party
prepared by the chief financial officer of each such Credit Party as to
the financial condition, solvency and related matters of each such
Credit Party, in each case after giving effect to the initial
borrowings under the Credit Documents, in substantially the form of
Schedule 4.1(j) hereto.
(k) Account Designation Letter. The Agent shall have received
the executed Account Designation Letter in the form of Schedule 1.1(a)
hereto.
(l) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent and
its counsel.
SECTION 4.2 CONDITIONS TO REVOLVING LOANS AND TERM LOAN TO BE MADE IN
CONNECTION WITH THE G&L ACQUISITION.
The obligation of each Lender to make the Revolving Loans and the Term
Loan on the Subsequent Transactions Closing Date is subject to the satisfaction
of the following conditions precedent on such date:
(a) Acquisition Documents. The Acquisition Documents shall
have been completed to the satisfaction of the Agent, the Subsequent
Transactions shall have been consummated substantially in accordance
with the terms of the Acquisition Documents and the purchase price
(including fees and expenses) for the Acquired Companies (which shall
include the refinancing of the existing senior bank indebtedness and
the publicly
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issued senior indebtedness of such Acquired Companies other than the
Indebtedness set forth on Schedule 4.2(o) hereto) shall not exceed
$490,000,000.
(b) Legal Opinions of Counsel. The Agent shall have received
each opinion, report and other document required to be delivered
pursuant to the Acquisition Documents in connection with the Subsequent
Transactions, with a letter from each person delivering such opinion,
report and other document authorizing reliance thereon by the Agent and
the Lenders, all in form and substance acceptable to the Agent.
(c) Personal Property Collateral. The Agent shall have
received the items described in Section 4.1(d) hereof relating to the
Acquired Companies and the actions described in Section 4.1(d) to
perfect the Agent's security interest in the assets of the Acquired
Companies shall have been taken.
(d) Liability and Casualty Insurance. The Agent shall have
received copies of insurance policies or certificates of insurance
evidencing liability and casualty insurance meeting the requirements
set forth herein or in the Security Documents relating to the Acquired
Companies. The Agent shall be named as loss payee and additional
insured on all such insurance policies for the benefit of the Lenders.
(e) Subsequent Transactions Closing Date. The Subsequent
Transactions Closing Date shall have occurred on or before the
Acquisition Funding Termination Date.
(f) Corporate Structure. The corporate capital and ownership
structure of the Company and its Subsidiaries shall be as described in
Schedule 3.12.
(g) Subordinated Debt. The Borrower shall have received
proceeds from the issuance of the Subordinated Debt in an aggregate
principal amount of $250,000,000. The terms and conditions governing
the Subordinated Debt shall be acceptable to the Agent.
(h) Government Consent. The Agent shall have received evidence
that all U.S. and Canadian governmental, shareholder and material third
party consents and approvals necessary in connection with the
Subsequent Transactions and the related financings and other
transactions contemplated hereby have been obtained and all applicable
waiting periods have expired without any action being taken by any
authority that could restrain, prevent or impose any material adverse
conditions on the Subsequent Transactions or such other transactions or
that could seek or threaten any of the foregoing.
(i) Compliance with Laws. The Subsequent Transactions and the
related financings and other transactions contemplated hereby shall be
in compliance with all applicable U.S. and Canadian laws and
regulations (including all applicable U.S. and Canadian securities and
banking laws, rules and regulations).
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(j) Bankruptcy. There shall be no bankruptcy or insolvency
proceedings with respect to the Acquired Companies or any pending
injunction with respect to the Subsequent Transactions.
(k) Legal Aspects. The Agent and its counsel shall be
reasonably satisfied with all legal aspects regarding the G&L
Acquisition.
(l) Consolidated Funded Debt. The aggregate Consolidated
Funded Debt on the Subsequent Transactions Closing Date shall not be in
excess of $695,000,000.
(m) Availability of Revolving Loans. After giving effect to
the making of the Revolving Loans and the Term Loan on the Subsequent
Transactions Closing Date, there shall be availability under the
Revolving Commitments of at least $25,000,000.
(n) Fees and Expenses. The aggregate fees and expenses
incurred by the Company and the Borrower in connection with the Tender
Offer and the Subsequent Transactions shall not exceed $60,000,000.
(o) Existing Indebtedness of Acquired Companies. All of the
existing senior bank indebtedness and publicly issued senior
indebtedness of the Acquired Companies shall be repaid in full on the
Subsequent Transactions Closing Date except for the Indebtedness set
forth on Schedule 4.2(o) hereto.
(p) Additional Matters. All other documents and legal matters
in connection with the transactions contemplated by this Agreement
shall be reasonably satisfactory in form and substance to the Agent and
its counsel.
SECTION 4.3 CONDITIONS TO INITIAL REVOLVING LOANS FOLLOWING THE G&L
ACQUISITION.
The obligation of each Lender to make the initial Revolving Loans
hereunder following the G&L Acquisition is subject to the receipt by the Agent
of a Borrowing Base Certificate dated as of the Borrowing Date, after giving
effect to the G&L Acquisition, substantially in the form of Schedule 5.2(d) and
certified by the chief financial officer of the Borrower to be true and correct
as of such Borrowing Date.
SECTION 4.4 CONDITIONS TO ALL EXTENSIONS OF CREDIT.
The obligation of each Lender to make any Extension of Credit hereunder
(excluding the initial Revolving Loans to be made hereunder on the Tender Offer
Closing Date and the Loans to be made hereunder on the Subsequent Transactions
Closing Date to finance the Subsequent Transactions) is subject to the
satisfaction of the following conditions precedent on the date of making such
Extension of Credit:
(a) Representations and Warranties. The representations and
warranties made by the Credit Parties herein, in the Security Documents
or which are contained in any
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certificate furnished at any time under or in connection herewith shall
be true and correct in all material respects on and as of the date of
such Extension of Credit as if made on and as of such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date or after
giving effect to the Extension of Credit to be made on such date unless
such Default or Event of Default shall have been waived in accordance
with this Agreement.
(c) Compliance with Commitments. Immediately after giving
effect to the making of any such Extension of Credit (and the
application of the proceeds thereof), (i) the sum of the aggregate
principal amount of outstanding Revolving Loans plus Swingline Loans
plus LOC Obligations shall not exceed (A) on or prior to the Subsequent
Transactions Closing Date, the aggregate Revolving Committed Amount
then in effect and (B) after the Subsequent Transactions Closing Date,
the lesser of the Revolving Committed Amount then in effect and the
Borrowing Base, (ii) the LOC Obligations shall not exceed the LOC
Committed Amount and (iii) the Swingline Loans shall not exceed the
Swingline Commitment.
(d) Additional Conditions to Revolving Loans. If such Loan is
made pursuant to Section 2.1, all conditions set forth in such Section
shall have been satisfied.
(e) Additional Conditions to Term Loan. If such Loan is made
pursuant to Section 2.2, all conditions set forth in such Section shall
have been satisfied.
(f) Additional Conditions to Swingline Loan. If such Loan is
made pursuant to Section 2.3, all conditions set forth in such Section
shall have been satisfied.
(g) Additional Conditions to Letters of Credit. If such
Extension of Credit is made pursuant to Section 2.4, all conditions set
fort in such Section shall have been satisfied.
Each request for an Extension of Credit (excluding the initial
Revolving Loans to be made hereunder on the Tender Offer Closing Date and the
Loans to be made hereunder on the Subsequent Transactions Closing Date to
finance the Subsequent Transactions) and each acceptance by the Borrower of any
such Extension of Credit shall be deemed to constitute a representation and
warranty by the Borrower as of the date of such Extension of Credit that the
applicable conditions in paragraphs (a) and (b), and in (d), (e), (f) or (g) of
this Section have been satisfied.
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ARTICLE V
AFFIRMATIVE COVENANTS
The Company hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fees and all other amounts owing
to the Agent or any Lender hereunder, are paid in full, the Company shall, and
shall cause the Borrower to, and each of its other Subsidiaries (other than in
the case of Sections 5.1, 5.2 or 5.7 hereof), to:
SECTION 5.1 FINANCIAL STATEMENTS.
Furnish to the Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, but in
any event within ninety (90) days after the end of each fiscal year of
the Company, a copy of the consolidated balance sheet of the Company
and its consolidated Subsidiaries as at the end of such fiscal year and
the related consolidated statements of income and retained earnings and
of cash flows of the Company and its consolidated Subsidiaries for such
year, audited by Ernst & Young LLP or other firm of independent
certified public accountants of nationally recognized standing
reasonably acceptable to the Required Lenders, setting forth in each
case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or
qualification indicating that the scope of the audit was inadequate to
permit such independent certified public accountants to certify such
financial statements without such qualification;
(b) Quarterly Financial Statements. As soon as available and
in any event within forty-five (45) days after the end of each of the
first three fiscal quarters of the Company, a company-prepared
consolidated balance sheet of the Company and its consolidated
Subsidiaries as at the end of such period and related company-prepared
statements of income and retained earnings and of cash flows for the
Company and its consolidated Subsidiaries for such quarterly period and
for the portion of the fiscal year ending with such period, in each
case setting forth in comparative form consolidated figures for the
corresponding period or periods of the preceding fiscal year (subject
to normal recurring year-end audit adjustments);
(c) Annual Budget Plan. As soon as available, but in any event
no more than forty-five (45) days after the end of each fiscal year, a
copy of the detailed annual budget or plan of the Company for the next
fiscal year, in form and detail reasonably acceptable to the Agent and
the Required Lenders, together with a summary of the material
assumptions made in the preparation of such annual budget or plan; and
(d) Audited Financials of Apparel Division. As soon as
available, but in any event no more than fifteen (15) Business Days
following the Subsequent Transactions
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Closing Date but in no event later than February 15, 1998, the audited
annual financial statements of the Apparel Division for the fiscal year
ended June 30, 1997,
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal recurring
year-end audit adjustments) and to be prepared in reasonable detail and, in the
case of the annual and quarterly financial statements provided in accordance
with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a
description of, and an estimation of the effect on the financial statements on
account of, a change, if any, in the application of accounting principles as
provided in Section 1.3.
SECTION 5.2 CERTIFICATES; OTHER INFORMATION.
Furnish to the Agent and each of the Lenders:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) above, a certificate of the independent
certified public accountants reporting on such financial statements
stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in
such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and 5.1(b) above, a certificate of a
Responsible Officer stating that, to the best of such Responsible
Officer's knowledge, each of the Credit Parties during such period
observed or performed in all material respects all of its covenants and
other agreements, and satisfied in all material respects every
condition, contained in this Agreement to be observed, performed or
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in
such certificate and such certificate shall include the calculations
required to indicate compliance with Section 5.9;
(c) within thirty (30) days after the same are sent, copies of
all reports (other than those otherwise provided pursuant to Section
5.1 and those which are of a promotional nature) and other financial
information which the Company or the Borrower sends to its
stockholders, and within thirty days after the same are filed, copies
of all financial statements and non-confidential reports which the
Company or the Borrower may make to, or file with, the Securities and
Exchange Commission or any successor or analogous Governmental
Authority;
(d) within fifteen (15) days after the end of each fiscal
month, a Borrowing Base Certificate as of the end of the immediately
preceding fiscal month, substantially in the form of Schedule 5.2(d)
and certified by the chief financial officer of the Borrower to be true
and correct as of the date thereof;
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(e) within ninety (90) days after the end of each fiscal year
of the Company, a certificate containing information regarding (i) the
calculation of Excess Cash Flow and (ii) the amount of all Asset
Dispositions, Debt Issuances, Equity Issuances, amounts received in
connection with any Recovery Event, any repayments or prepayments of
the G&L Loan and any adjustments to the purchase price of the Acquired
Companies that were made during the prior fiscal year;
(f) promptly upon receipt thereof, a copy of any other report
or "management letter" submitted by independent accountants to the
Company or any of its Subsidiaries in connection with any annual,
interim or special audit of the books of such Person; and
(g) promptly, such additional financial and other information
as the Agent, on behalf of any Lender, may from time to time reasonably
request.
SECTION 5.3 PAYMENT OF OBLIGATIONS.
Pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, in accordance with industry practice
(subject, where applicable, to specified grace periods) all its material
obligations of whatever nature and any additional costs that are imposed as a
result of any failure to so pay, discharge or otherwise satisfy such
obligations, except when the amount or validity of such obligations and costs is
currently being contested in good faith by appropriate proceedings and reserves,
if applicable, in conformity with GAAP with respect thereto have been provided
on the books of the Company or its Subsidiaries, as the case may be.
SECTION 5.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
Continue to engage in business of the same general type as now
conducted by it on the date hereof and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary or desirable in the normal
conduct of its business; comply with all Contractual Obligations and
Requirements of Law applicable to it except to the extent that failure to comply
therewith would not, in the aggregate, have a Material Adverse Effect.
SECTION 5.5 MAINTENANCE OF PROPERTY; INSURANCE.
Keep all material property useful and necessary in its business in good
working order and condition (ordinary wear and tear excepted); maintain with
financially sound and reputable insurance companies insurance on all its
material property (including without limitation its material tangible
Collateral) in at least such amounts and against at least such risks as are
usually insured against in the same general area by companies engaged in the
same or a similar business; and furnish to the Agent, upon written request, full
information as to the insurance carried; provided, however, that the Company and
its Subsidiaries may maintain self insurance plans to the extent companies of
similar size and in similar businesses do so.
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SECTION 5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its businesses and activities; and
permit, during regular business hours and upon reasonable notice by the Agent,
the Agent to visit and inspect any of its properties and examine and make
abstracts from any of its books and records (other than materials protected by
the attorney-client privilege and materials which the Company or the Borrower
may not disclose without violation of a confidentiality obligation binding upon
it) at any reasonable time and as often as may reasonably be desired, and to
discuss the business, operations, properties and financial and other condition
of the Company and its Subsidiaries with officers and employees of the Company
and its Subsidiaries and with its independent certified public accountants.
SECTION 5.7 NOTICES.
Give notice in writing to the Agent (which shall promptly transmit such
notice to each Lender) of:
(a) within five Business Days after the Company or the
Borrower knows or has reason to know thereof, the occurrence of any
Default or Event of Default;
(b) promptly, any default or event of default under any
Contractual Obligation of the Company or any of its Subsidiaries or the
Borrower which would reasonably be expected to have a Material Adverse
Effect;
(c) promptly, any litigation, or any investigation or
proceeding known to the Company or the Borrower, affecting the Company
or any of its Subsidiaries or the Borrower which, if adversely
determined, would reasonably be expected to have a Material Adverse
Effect;
(d) as soon as possible and in any event within thirty (30)
days after the Company or the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable
Event with respect to any Plan, a failure to make any required
contribution to a Plan, the creation of any Lien in favor of the PBGC
or a Plan or any withdrawal from, or the termination, Reorganization or
Insolvency of, any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the terminating, Reorganization
or Insolvency of, any Plan; and
(e) promptly, any other development or event which would
reasonably be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company or
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the Borrower proposes to take with respect thereto. In the case of any notice of
a Default or Event of Default, the Borrower shall specify that such notice is a
Default or Event of Default notice on the face thereof.
SECTION 5.8 ENVIRONMENTAL LAWS.
(a) Comply in all material respects with, and 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 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) 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
pendency of such proceedings would not reasonably be expected to have a
Material Adverse Effect; and
(c) 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 Company, any of its Subsidiaries or the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable
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 Notes and
all other amounts payable hereunder.
SECTION 5.9 FINANCIAL COVENANTS.
Commencing on the day immediately following the Subsequent Transactions
Closing Date or, if the G&L Acquisition shall not have occurred on or prior to
the Acquisition Funding Termination Date, on the day immediately following the
Acquisition Funding Termination Date, and subject to the negotiation of
satisfactory covenant levels pursuant to Section 9.18 hereof, the Company shall,
and shall cause each of its Subsidiaries and the Borrower to, comply with the
following financial covenants:
(a) Adjusted Leverage Ratio. As of the end of each fiscal
quarter set forth in the table below, there shall be maintained an
Adjusted Leverage Ratio of not greater than
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the corresponding ratio appearing in such table. The applicable period
for purposes of determining compliance herewith shall be for the period
of four (4) fiscal quarters ending on the applicable date set forth
below.
[COMPANY/BORROWER TO PROVIDE CORRECT FISCAL QUARTER END DATES]
Period Ratio
March 28, 1998
June 27, 1998
October 3, 1998
December 31, 1998
March 31, 1999
June 30, 1999
September 30, 1999
March 31, 2000
June 30, 2000
September 30, 2000
December 31, 2000
March 31, 2001
June 30, 2001
September 30, 2001
December 31, 2001
March 31, 2002
June 30, 2002
September 30, 2002
December 31, 2002
Last day of fiscal year
2000 and thereafter
(b) Consolidated Tangible Net Worth. There shall be maintained
at all times Consolidated Tangible Net Worth of at least the amounts
set forth below for the applicable periods set forth below:
Period Amounts
Last day of fiscal year
1997 through the next-
to-last day of fiscal
year 1998 $
Last day of fiscal year
1998 through the next-
to-last day of fiscal
year 1999 $
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Last day of fiscal year
1999 through the next-
to-last day of fiscal
year 2000 $
Last day of fiscal year
2000 through the next-
to-last day of fiscal
year 2001 $
Last day of fiscal year
2001 through the next-
to-last day of fiscal
year 2002 $
Last day of fiscal year
2002 and thereafter $
(c) Capital Expenditures. The Company and its Subsidiaries
shall not, as a group, make or incur Capital Expenditures in any fiscal
year in excess of the amount shown below, on a non-cumulative basis:
Fiscal year 1998 $
Fiscal year 1999 $
Fiscal year 2000 $
Fiscal year 2001 $
Fiscal year 2002 $
Fiscal year 2003
and each fiscal
year thereafter $
(d) Adjusted Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, commencing with March 28, 1998, there shall be
maintained an Adjusted Fixed Charge Coverage Ratio of at least ___:1.0.
The applicable period for purposes of determining compliance herewith
shall be for the period of four (4) fiscal quarters then ended.
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SECTION 5.10 ADDITIONAL SUBSIDIARY GUARANTORS.
The Credit Parties will cause each of their Domestic Subsidiaries,
whether newly formed, after acquired or otherwise existing, to promptly become a
"Subsidiary Guarantor" hereunder by way of execution of a Joinder Agreement. The
guaranty obligations of any such Additional Credit Party shall be secured by,
among other things, the Collateral of the Additional Credit Party and a pledge
of 100% of the Capital Stock or other equity interest of its Domestic
Subsidiaries and 65% of the Capital Stock or other equity interest of its
Foreign Subsidiaries to the extent that such pledge is permissible under
applicable law, and a pledge by the Company, the Borrower or other Credit Party
which is the owner of the Capital Stock or other equity interest in such
Subsidiary of 100% of the Capital Stock if it is a Domestic Subsidiary and 65%
of its Capital Stock or other equity interest if it is a Foreign Subsidiary.
SECTION 5.11 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.
SECTION 5.12 PLEDGED ASSETS.
(a) Each Credit Party will, and will cause each of its
Subsidiaries to, cause 100% of the Capital Stock in the Borrower and
each other direct or indirect Domestic Subsidiaries of the Company and
65% of the Capital Stock in each of the Foreign Subsidiaries of the
Company and its Domestic Subsidiaries to be subject at all times to a
first priority, perfected Lien in favor of the Agent pursuant to the
terms and conditions of the Security Documents or such other security
documents as the Agent shall reasonably request.
(b) If, subsequent to the Closing Date, a Credit Party shall
(a) acquire any Material 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
Security Documents or (b) acquire or lease any real property, the
Borrower shall promptly (and in any event within three (3) Business
Days) after any Responsible Officer of a Credit Party acquires
knowledge of same notify the Agent of same. Each Credit Party shall,
and shall cause each of its Subsidiaries to, take such action at its
own expense as requested by the Agent (including, without limitation,
any of the actions described in Section 4.1(d) hereof) to ensure that
the Agent has a first priority perfected Lien to secure the Credit
Party Obligations in (i) all personal property of the Credit Parties
located in the United States and (ii) to the extent deemed to be
material by the Agent or the Required Lenders in its or their sole
reasonable discretion, all other personal property of the Credit
Parties, subject in each case only to Permitted Liens. Each Credit
Party shall, and shall cause each of its Subsidiaries to, adhere to the
covenants regarding the location of personal property as set forth in
the Security Documents.
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(c) The Borrower shall use reasonable commercial efforts to
deliver or cause to be delivered to the Agent satisfactory estoppel
letters, consents and/or waivers from the landlords and other property
owners with respect to each of its leased locations, warehouse or
processing locations within 45 days following the Closing Date and
within 45 days following the acquisition or leasing of additional
locations by the Borrower or any of its Subsidiaries.
(d) The Borrower shall deliver or cause to be delivered to the
Agent within 60 days following the Closing Date satisfactory evidence
that the security interests of the Agent in the stock of Dimmit
Industries and in any other property of the Credit Parties located in,
or otherwise subject to the laws of, Mexico have been perfected under
the laws of Mexico.
(e) The Borrower shall deliver or cause to be delivered to the
Agent within 45 days following the Closing Date satisfactory evidence
that the security interest of CIT Group/Business Credit, Inc. in the
Galey & Lord trademark on file in the U.S. Patent and Trademark Office
has been terminated and released.
SECTION 5.13 REVISIONS OR UPDATES TO SCHEDULES.
If any of the information or disclosures provided on any of Schedules
originally attached hereto become outdated or incorrect in any material respect
as a result of the consummation of the G&L Acquisition, the Borrower shall
promptly deliver to the Agent and the Lenders such revisions or updates to such
Schedule(s) as may be necessary or appropriate to update or correct such
Schedule(s), provided, that no such revisions or updates to any such Schedule(s)
shall be deemed to have amended, modified or superseded such Schedule(s) as
originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such
Schedule(s), unless and until the Agent, in its sole discretion, shall have
accepted in writing such revisions or updates to such Schedule(s).
ARTICLE VI
NEGATIVE COVENANTS
The Company hereby covenants and agrees that on the Closing Date, and
thereafter for so long as this Agreement is in effect and until the Commitments
have terminated, no Note remains outstanding and unpaid and the Credit Party
Obligations, together with interest, Commitment Fees and all other amounts owing
to the Agent or any Lender hereunder, are paid in full, the Company shall, and
shall cause each of its Subsidiaries and the Borrower, to:
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SECTION 6.1 INDEBTEDNESS.
The Company will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Indebtedness, except:
(a) Indebtedness arising or existing under this Agreement and
the other Credit Documents and the Subordinated Debt;
(b) Indebtedness existing as of the Closing Date as referenced
in the financial statements referenced in Section 3.1 (and set out more
specifically in Schedule 6.1(b)) and Indebtedness set forth on Schedule
4.2(o) hereto and renewals, refinancings or extensions thereof in a
principal amount not in excess of that outstanding as of the date of
such renewal, refinancing or extension;
(c) Indebtedness incurred after the Closing Date consisting of
Capital Leases or Indebtedness incurred to provide all or a portion of
the purchase price or cost of construction of an asset provided that
(i) such Indebtedness when incurred shall not exceed the purchase price
or cost of construction of such asset; (ii) no such Indebtedness shall
be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing; and (iii) the
total amount of all such Indebtedness shall not exceed $20,000,000 at
any time outstanding;
(d) Unsecured intercompany Indebtedness among the Company and
its Subsidiaries, provided that any such Indebtedness shall be fully
subordinated to the Credit Party Obligations hereunder on terms
reasonably satisfactory to the Agent; and provided, further, that
intercompany Indebtedness of Foreign Subsidiaries owed to Domestic
Credit Parties shall not exceed $25,000,000 in the aggregate at any one
time;
(e) Indebtedness and obligations owing under Hedging
Agreements relating to the Loans hereunder and other Hedging Agreements
entered into in order to manage existing or anticipated interest rate,
exchange rate or commodity price risks and not for speculative
purposes;
(f) Indebtedness and obligations of Domestic Credit Parties
owing under documentary letters of credit (but not under standby,
direct pay or other letters of credit except for the Letters of Credit
hereunder) generally; and
(g) other unsecured Indebtedness of Domestic Credit Parties
which does not exceed $10,000,000 in the aggregate at any time
outstanding.
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SECTION 6.2 LIENS.
The Company will not, nor will it permit any Subsidiary to, contract,
create, incur, assume or permit to exist any Lien with respect to any of its
property or assets of any kind (whether real or personal, tangible or
intangible), whether now owned or hereafter acquired, except for Permitted
Liens.
SECTION 6.3 GUARANTY OBLIGATIONS.
The Company will not, nor will it permit any Subsidiary to, enter into
or otherwise become or be liable in respect of any Guaranty Obligations
(excluding specifically therefrom endorsements in the ordinary course of
business of negotiable instruments for deposit or collection) other than (i)
those in favor of the Lenders in connection herewith and (ii) Guaranty
Obligations by the Company or its Subsidiaries of Indebtedness permitted under
Section 6.1 (except, as regards Indebtedness under subsection (b) thereof, only
if and to the extent such Indebtedness was guaranteed on the Closing Date).
SECTION 6.4 NATURE OF BUSINESS.
The Company will not, nor will it permit any Subsidiary to, alter the
character of its business in any material respect from that conducted as of the
Closing Date except as a result of the G&L Acquisition.
SECTION 6.5 CONSOLIDATION, MERGER, SALE OR PURCHASE OF ASSETS, ETC.
The Company will not, nor will it permit any Subsidiary to,
(a) dissolve, liquidate or wind up its affairs, sell,
transfer, lease or otherwise dispose of its property or assets or agree
to do so at a future time except the following, without duplication,
shall be expressly permitted:
(i) Specified Sales;
(ii) the sale, transfer, lease or other disposition
of property or assets to an unrelated party not in the
ordinary course of business (other than Specified Sales),
where and to the extent that they are the result of a Recovery
Event or otherwise and the net proceeds therefrom are used to
repair or replace damaged property or to purchase or otherwise
acquire new assets or property, provided that such purchase or
acquisition is consummated within 180 days of such receipt;
(iii) the sale, lease or transfer of property or
assets (at fair value) between the Company and the Borrower;
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(iv) the sale, lease or transfer of property or
assets from a Domestic Credit Party other than the Company or
the Borrower to another Domestic Credit Party; and
(v) the sale and lease of the Borrower's property
permitted pursuant to Section 6.13 hereof; or
(b) purchase, lease or otherwise acquire (in a single
transaction or a series of related transactions) all or any substantial
part of the property or assets of any Person (other than purchases or
other acquisitions of inventory, leases, materials, property and
equipment in the ordinary course of business, except as otherwise
limited or prohibited herein), or enter into any transaction of merger
or consolidation, except for (i) investments or acquisitions permitted
pursuant to Section 6.6, (ii) the merger or consolidation of the
Company into the Borrower or the Borrower into the Company, or a sale,
transfer or lease of all or a substantial part of its properties (at
fair value) to, the Company or the Borrower, (iii) the G&L Acquisition,
(iv) the merger or consolidation of a Domestic Credit Party with and
into another Domestic Credit Party, provided that if the Company or the
Borrower is a party thereto, either the Company or the Borrower will be
the surviving corporation, and (v) the merger or consolidation of any
other Person with and into a Credit Party, provided that in any such
case a Credit Party shall be the surviving corporation and no Default
or Event of Default would exist after giving effect thereto on a Pro
Forma Basis.
As used herein, "substantial part" shall mean property and assets, the book
value of which, when added to the book value of all other assets sold, leased or
otherwise disposed of by the Company and its Subsidiaries (other than in the
ordinary course of business), during the 12-month period ending with the date of
such sale, lease or other disposition exceeds 10% of Consolidated Tangible Net
Worth, determined as of the end of the immediately preceding fiscal year.
SECTION 6.6 ADVANCES, INVESTMENTS AND LOANS.
The Company will not, nor will it permit any Subsidiary to, lend money
or extend credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person except for (a) Permitted Investments and (b)
repurchases of the Company's common stock by the Company permitted pursuant to
Section 6.11 hereof.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES.
Except as permitted in subsection (iv) of the definition of Permitted
Investments and otherwise to an extent not judged material by the Required
Lenders in their discretion, the Company will not, nor will it permit any
Subsidiary to, enter into any transaction or series of transactions, whether or
not in the ordinary course of business, with any officer, director, shareholder
or Affiliate other than on terms and conditions substantially as favorable as
would be
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obtainable in a comparable arm's-length transaction with a Person other than an
officer, director, shareholder or Affiliate.
SECTION 6.8 OWNERSHIP OF SUBSIDIARIES; COMPANY RESTRICTIONS.
(a) The Company will not, nor will it permit any Subsidiary
to, create, form or acquire any Subsidiaries, except for (i) Domestic
Subsidiaries which are joined as Additional Credit Parties in
accordance with the terms hereof, (ii) Foreign Subsidiaries acquired
pursuant to the G&L Acquisition and (iii) other Foreign Subsidiaries,
provided that any investment in, capitalization of or organizational
costs and expenses incurred in the formation and start-up of, any such
other Foreign Subsidiaries shall not, together with other Permitted
Investments in Foreign Subsidiaries, exceed $3,000,000 in the aggregate
at any one time. The Company will not sell, transfer, pledge or
otherwise dispose of any Capital Stock or other equity interests in any
of its Subsidiaries (including the Borrower), nor will it permit any of
its Subsidiaries to issue, sell, transfer, pledge or otherwise dispose
of any of their Capital Stock or other equity interests, except in a
transaction permitted by Section 6.5.
(b) The Company will not (i) hold any assets other than the
Capital Stock of the Borrower, (ii) have any liabilities other than (A)
the liabilities under the Credit Documents, (B) tax liabilities in the
ordinary course of business, (C) loans and advances permitted under
this Agreement and (D) corporate, administrative and operating expenses
in the ordinary course of business and (iii) engage in any business
other than (A) owning the Capital Stock of the Borrower and activities
incidental or related thereto and (B) acting as a Guarantor hereunder
and pledging its assets to the Agent, for the benefit of the Lenders,
pursuant to the Security Documents to which it is a party.
SECTION 6.9 FISCAL YEAR; ORGANIZATIONAL DOCUMENTS.
The Company will not, nor will it permit the Borrower to, change its
fiscal year. The Company will not, nor will it permit any Subsidiary to, 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.
SECTION 6.10 LIMITATION ON RESTRICTED ACTIONS.
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Person to (a) pay
dividends or make any other distributions to any Credit Party on its Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any Indebtedness or other obligation owed to any Credit
Party, (c) make loans or advances to any Credit Party, (d) sell, lease or
transfer any of its properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents or any
renewals, refinancings, exchanges, refundings or extension thereof, except (in
respect of any of the matters referred to in clauses (a)-(d) above) for such
encumbrances or restrictions existing
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under or by reason of (i) this Agreement and the other Credit Documents, (ii)
the Subordinated Debt, (iii) applicable law, (iv) any document or instrument
governing Indebtedness incurred pursuant to Section 6.1(c), provided that any
such restriction contained therein relates only to the asset or assets
constructed or acquired in connection therewith or (v) any Permitted Lien or any
document or instrument governing any Permitted Lien, provided that any such
restriction contained therein relates only to the asset or assets subject to
such Permitted Lien.
SECTION 6.11 RESTRICTED PAYMENTS.
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, declare, order, make or set apart any sum for or pay any Restricted
Payment, except (a) to make dividends payable solely in the same class of
Capital Stock of such Person, (b) to make dividends or other distributions
payable to any Credit Party (directly or indirectly through Subsidiaries), (c)
to make dividends payable on Permitted Preferred Stock, (d) to make repurchases
of the Company's common stock pursuant to the Stock Repurchase Plan in an amount
up to $5,000,000 in the aggregate and (e) as permitted by Section 6.12.
SECTION 6.12 PREPAYMENTS OF INDEBTEDNESS, ETC.
The Company will not, nor will it permit any Subsidiary to, (a) after
the issuance thereof, amend or modify (or permit the amendment or modification
of) any of the terms of any Indebtedness if such amendment or modification would
add or change any terms in a manner adverse to the issuer of such Indebtedness,
or shorten the final maturity or average life to maturity or require any payment
to be made sooner than originally scheduled or increase the interest rate
applicable thereto or change any subordination provision thereof, or (b) make
(or give any notice with respect thereto) any voluntary or optional payment or
prepayment, redemption, acquisition for value or defeasance 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 Subordinated Debt, except that so long as there is
no Default or Event of Default then in existence and subject to the terms and
provisions of the indenture or other document evidencing the Subordinated Debt,
the Borrower shall be entitled to pay interest and scheduled principal payments
thereon in accordance with the terms of the Subordinated Debt.
SECTION 6.13 SALE LEASEBACKS.
The Company will not, nor will it permit any Subsidiary 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 the Company or any Subsidiary has sold or transferred or is
to sell or transfer to a Person which is not the Company or any Subsidiary or
(b) which the Company or any Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by the Company or any Subsidiary to another Person which is not the
Company or any Subsidiary in connection with such lease; provided, however, that
the Borrower shall be permitted to enter into that certain Inducement and
Millage Rate Agreement and that certain Lease Purchase Agreement, in each
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case, with Darlington County, South Carolina and dated as of December 1, 1997
relating to the sale and lease of the expansion of the Borrower's textile
manufacturing facility located in Darlington County, South Carolina, and such
other related documents necessary to effect such sale and lease.
SECTION 6.14 NO FURTHER NEGATIVE PLEDGES.
The Company will not, nor will it permit any Subsidiary to, enter into,
assume or become subject to any agreement prohibiting or otherwise restricting
the creation or assumption of any Lien upon its properties or assets, whether
now owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation, except (a) pursuant
to this Agreement and the other Credit Documents, (b) pursuant to the terms of
the Subordinated Debt, (c) pursuant to any document or instrument governing
Indebtedness incurred pursuant to Section 6.1(c), provided that any such
restriction contained therein relates only to the asset or assets constructed or
acquired in connection therewith and (d) in connection with any Permitted Lien
or any document or instrument governing any Permitted Lien, provided that any
such restriction contained therein relates only to the asset or assets subject
to such Permitted Lien.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 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) The Borrower shall fail to pay any principal on any Note
when due in accordance with the terms thereof or hereof; or the
Borrower shall fail to reimburse the Issuing Lender for any LOC
Obligations when due in accordance with the terms hereof and such
failure shall continue unremedied for three (3) Business Days; or the
Borrower shall fail to pay any interest on any Note or any fee or other
amount payable hereunder when due in accordance with the terms thereof
or hereof and such failure shall continue unremedied for five (5)
Business Days (or any Guarantor shall fail to pay on the Guaranty in
respect of any of the foregoing or in respect of any other Guaranty
Obligations thereunder); or
(b) Any representation or warranty made or deemed made herein,
in the Security Documents or in any of the other Credit Documents or
which is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect, false or misleading in
any material respect on or as of the date made or deemed made; or
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(c) (i) Any Credit Party shall fail to perform, comply with or
observe any term, covenant or agreement applicable to it contained in
Section 5.1(d), Section 5.7(a), Section 5.9 or Article VI hereof ; or
(ii) any Credit Party shall fail to comply with any other covenant,
contained in this Credit Agreement or the other Credit Documents or any
other agreement, document or instrument among any Credit Party, the
Agent and the Lenders or executed by any Credit Party in favor of the
Agent or the Lenders (other than as described in Sections 7.1(a) or
7.1(c)(i) above), and in the event such breach or failure to comply is
capable of cure, is not cured within thirty (30) days of its
occurrence; or
(d) The Company, any of its Subsidiaries or the Borrower shall
(i) default in any payment of principal of or interest on (A) the
Subordinated Debt or (B) any Indebtedness (other than the Notes) in a
principal amount outstanding of at least $5,000,000 in the aggregate
for the Company, its Subsidiaries and the Borrower beyond the period of
grace (not to exceed 30 days), if any, provided in the instrument or
agreement under which such Indebtedness was created; or (ii) default in
the observance or performance of any other agreement or condition
relating to (A) the Subordinated Debt or (B) any Indebtedness in a
principal amount outstanding of at least $5,000,000 in the aggregate
for the Company, its Subsidiaries and the Borrower or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or beneficiaries
of such Indebtedness (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity; or
(e) (i) The Company, any of its Subsidiaries or the Borrower
shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any
substantial part of its assets, or the Company, any Subsidiary or the
Borrower shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Company, any
Subsidiary or the Borrower any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry
of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days;
or (iii) there shall be commenced against the Company, any Subsidiary
or the Borrower any case, proceeding or other action seeking issuance
of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) the Company, any Subsidiary or the
Borrower shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
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set forth in clause (i), (ii), or (iii) above; or (v) the Company, any
Subsidiary or the Borrower shall generally not, or shall be unable to,
or shall admit in writing its inability to, pay its debts as they
become due; or
(f) One or more judgments or decrees shall be entered against
the Company, any of its Subsidiaries or the Borrower involving in the
aggregate a liability (to the extent not paid when due or covered by
insurance) of $5,000,000 or more and all such judgments or decrees
shall not have been paid and satisfied, vacated, discharged, stayed or
bonded pending appeal within 45 days from the entry thereof; or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Company or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer
Plan, which Reportable Event or commencement of proceedings or
appointment of a Trustee is, in the reasonable opinion of the Required
Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company, any of its Subsidiaries
or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, any
Multiemployer Plan or (vi) any other similar event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, could have a Material Adverse
Effect; or
(h) Either (i) a "person" or a "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934
other than Citicorp Venture Capital Ltd. or any of its Affiliates
("CVC") or members of senior management of the Company or the Borrower
as of the Closing Date) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934) of 45% or more of
the then outstanding voting stock of the Company (other than as a
result of CVC converting its shares in the Company from voting stock to
non-voting stock) or (ii) a majority of the Board of Directors of the
Company shall consist of individuals who are not Continuing Directors;
"Continuing Director" means, as of any date of determination, (i) an
individual who on the date two years prior to such determination date
was a member of the Company's Board of Directors and (ii) any new
Director whose nomination for election by the Company's shareholders
was approved by a vote of at least 75% of the Directors then still in
office who either were Directors on the date two years prior to such
determination date or whose nomination for election was previously so
approved; or
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(i) The Guaranty or any provision thereof shall cease to be in
full force and effect or any Guarantor or any Person acting by or on
behalf of any Guarantor shall deny or disaffirm any Guarantor's
obligations under the Guaranty; or
(j) Any other Credit Document shall fail to be in full force
and effect or to give the Agent and/or the Lenders the security
interests, liens, rights, powers and privileges purported to be created
thereby (except as such documents may be terminated or no longer in
force and effect in accordance with the terms thereof, other than those
indemnities and provisions which by their terms shall survive); or
(k) There shall occur and be continuing any Event of Default
under and as defined in the indenture or other document evidencing the
Subordinated Debt or any of the Credit Party Obligations for any reason
shall cease to be designated as senior indebtedness thereunder.
SECTION 7.2 ACCELERATION; REMEDIES.
Upon the occurrence of an Event of Default, then, and in any such
event, (a) if such event is an Event of Default specified in Section 7.1(e)
above, automatically the Commitments shall immediately terminate and the Loans
(with accrued interest thereon), and all other amounts under the Credit
Documents (including without limitation the maximum amount of all contingent
liabilities under Letters of Credit) shall immediately become due and payable,
and (b) if such event is any other Event of Default, either or both of the
following actions may be taken: (i) with the written consent of the Required
Lenders, the Agent may, or upon the written request of the Required Lenders, the
Agent shall, by notice to the Borrower declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the written consent of the Required Lenders, the Agent may, or upon the written
request of the Required Lenders, the Agent shall, by notice of default to the
Borrower, declare the Loans (with accrued interest thereon) and all other
amounts owing under this Agreement and the Notes to be due and payable forthwith
and direct the Borrower to pay to the Agent cash collateral as security for the
LOC Obligations for subsequent drawings under then outstanding Letters of Credit
an amount equal to the maximum amount of which may be drawn under Letters of
Credit then outstanding, whereupon the same shall immediately become due and
payable. Except as expressly provided above in this Section 7.2, presentment,
demand, protest and all other notices of any kind are hereby expressly waived.
ARTICLE VIII
THE AGENT
SECTION 8.1 APPOINTMENT.
Each Lender hereby irrevocably designates and appoints First Union
National Bank as the Agent of such Lender under this Agreement, and each such
Lender irrevocably authorizes First
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Union National Bank, as the Agent for such Lender, to take such action on its
behalf under the provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Agent.
SECTION 8.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. Without limiting the foregoing, the Agent
may appoint on of its affiliates as its agent to perform the functions of the
Agent hereunder relating to the advancing of funds to the Borrower and
distribution of funds to the Lenders and to perform such other related functions
of the Agent hereunder as are reasonably incidental to such functions.
SECTION 8.3 EXCULPATORY PROVISIONS.
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or the Borrower or any officer thereof contained in this Agreement
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of any of the Credit Documents or for any failure of the Company
or the Borrower to perform its obligations hereunder or thereunder. The Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance by the Company or the Borrower of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Company or the Borrower.
SECTION 8.4 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it in good faith
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company or the Borrower), independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all
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purposes unless (a) a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Agent and (b) the Agent shall have
received the written agreement of such assignee to be bound hereby as fully and
to the same extent as if such assignee were an original Lender party hereto, in
each case in form satisfactory to the Agent. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement unless it shall
first receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under any of the Credit
Documents in accordance with a request of the Required Lenders or all of the
Lenders, as may be required under this Agreement, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
SECTION 8.5 NOTICE OF DEFAULT.
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender, the Company or the Borrower referring to this
Agreement, describing 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, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided, however, 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 interests of the Lenders except to the extent that this Credit
Agreement expressly requires that such action be taken, or not taken, only with
the consent or upon the authorization of the Required Lenders, or all of the
Lenders, as the case may be.
SECTION 8.6 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representation or warranty to it and that no act by the Agent
hereinafter taken, including any review of the affairs of the Company and/or the
Borrower, shall be deemed to constitute any representation or warranty by the
Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and the
Borrower and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Company and the Borrower. Except for
notices, reports and other
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documents 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 business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Company and the Borrower which may come into the possession of the Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
SECTION 8.7 INDEMNIFICATION.
The Lenders agree to indemnify the Agent in its capacity hereunder (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought under this
Section, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes) be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of any Credit Document
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Agent under or in connection with any of the foregoing; provided, however,
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements to the extent resulting from the Agent's gross
negligence or willful misconduct. The agreements in this Section 8.7 shall
survive the termination of this Agreement and payment of the Notes and all other
amounts payable hereunder.
SECTION 8.8 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company and the Borrower
as though the Agent were not the Agent hereunder. With respect to its Loans made
or renewed by it and any Note issued to it, the Agent shall have the same rights
and powers under this Agreement as any Lender and may exercise the same as
though it were not the Agent, and the terms "Lender" and "Lenders" shall include
the Agent in its individual capacity.
SECTION 8.9 SUCCESSOR AGENT.
The Agent may resign as Agent upon 30 days' prior notice to the Company
and the Lenders. If the Agent shall resign as Agent under this Agreement and the
Notes, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Company, whereupon such successor agent shall succeed to the rights, powers and
duties of the Agent, and the term "Agent" shall mean such successor agent
effective upon such appointment and approval, and the former Agent's rights,
powers and duties as Agent shall be terminated, without any other or further act
or deed on the part of such former Agent or any of the parties to this Agreement
or any holders of the Notes. After any retiring Agent's resignation as Agent,
the provisions of this Section 8.9 shall inure to its
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benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 AMENDMENTS, WAIVERS AND RELEASE OF COLLATERAL.
Neither this Agreement, nor any of the Notes, nor any of the other
Credit Documents (including the Wachovia JEDA Letter of Credit and the Wachovia
JEDA Reimbursement Agreement), nor any terms hereof or thereof may be amended,
supplemented, waived or modified except in accordance with the provisions of
this Section nor may be released except as specifically provided herein or in
the Security Documents or in accordance with the provisions of this Section 9.1.
The Required Lenders may, or, with the written consent of the Required Lenders,
the Agent may, from time to time, (a) enter into with the Company and the
Borrower written amendments, supplements or modifications hereto and to the
other Credit Documents for the purpose of adding any provisions to this
Agreement or the other Credit Documents or changing in any manner the rights of
the Lenders or of the Company and the Borrower hereunder or thereunder or (b)
waive, on such terms and conditions as the Required Lenders may specify in such
instrument, any of the requirements of this Agreement or the other Credit
Documents or any Default or Event of Default and its consequences or (c) release
collateral in accordance with the terms hereof or of any Security Document or on
such other terms and conditions as the Required Lenders may agree; provided,
however, that no such waiver and no such amendment, waiver, supplement,
modification or release shall (i) reduce the amount or extend the scheduled date
of maturity of any Loan or Note or any installment thereon, or reduce the stated
rate of any interest or fee payable hereunder (other than interest at the
increased post-default rate) or extend the scheduled date of any payment thereof
or increase the amount or extend the expiration date of any Lender's Commitment,
in each case without the written consent of each Lender directly affected
thereby, or (ii) amend, modify or waive any provision of this Section 9.1 or
reduce the percentage specified in the definition of Required Lenders, without
the written consent of all the Lenders, or (iii) amend, modify or waive any
provision of Article VIII without the written consent of the then Agent, or (iv)
release any of the Guarantors from their obligations under the Guaranty, without
the written consent of all of the Lenders, or (v) release all or substantially
all of the collateral without the written consent of all of the Lenders, or (vi)
amend, modify or waive any provision of the Credit Documents requiring consent,
approval or request of the Required Lenders or all Lenders and, provided,
further, that no amendment, waiver or consent affecting the rights or duties of
the Agent or the Issuing Lender under any Credit Document shall in any event be
effective, unless in writing and signed by the Agent and/or the Issuing Lender,
as applicable, in addition to the Lenders required hereinabove to take such
action. Any such waiver, any such amendment, supplement or modification and any
such release shall apply equally to each of the Lenders and shall be binding
upon the Company, the Borrower, the other Credit Parties, the Lenders, the Agent
and all future holders of the Notes. In the case of any waiver, the Company, the
Borrower, the other Credit Parties, the Lenders and the Agent shall be restored
to their former
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position and rights hereunder and under the outstanding Loans and Notes and
other Credit Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.
Notwithstanding any of the foregoing to the contrary, the consent of
the Company or the Borrower shall not be required for any amendment,
modification or waiver of the provisions of Article VIII (other than the
provisions of Section 8.9); provided, however, that the Agent will provide
written notice to the Company and the Borrower of any such amendment,
modification or waiver. In addition, the Company, the Borrower and the Lenders
hereby authorize the Agent to modify this Credit Agreement by unilaterally
amending or supplementing Schedule 2.1(a) from time to time in the manner
requested by the Borrower, the Agent or any Lender in order to reflect any
assignments or transfers of the Loans as provided for hereunder; provided,
however, that the Agent shall promptly deliver a copy of any such modification
to the Borrower and each Lender.
SECTION 9.2 NOTICES.
Except as otherwise provided in Article II, all notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made (a) when delivered by
hand, (b) when transmitted via telecopy (or other facsimile device) to the
number set out herein, (c) the 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, addressed as follows in the
case of the Company, the Borrower, the other Credit Parties and the Agent, and
as set forth on Schedule 9.2 in the case of the Lenders, or to such other
address as may be hereafter notified by the respective parties hereto and any
future holders of the Notes:
The Borrower: Galey & Lord Industries, Inc.
7736 McCloud Road
One Triad Center
Suite 300
Greensboro, North Carolina 27409
Attn: Michael R. Harmon
Telecopier: (910) 665-3113
Telephone: (910) 665-3037
The Company Galey & Lord, Inc.
and the other 7736 McCloud Road
Credit One Triad Center
Parties: Suite 300
Greensboro, North Carolina 27409
Attn: Michael R. Harmon
Telecopier: (910) 665-3113
Telephone: (910) 665-3037
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The Agent: First Union National Bank
One First Union Center, TW10
Charlotte, North Carolina 28288-0608
Attention: Syndication Agency Services
Telecopier: (704) 383-0288
Telephone: (704) 374-2698
with a copy to:
First Union National Bank
One First Union Center, DC-5
Charlotte, North Carolina 28288-0737
Attention: Jorge A. Gonzalez
Sr. Vice President
Telecopier: (704) 374-3300
Telephone: (704) 383-8461
SECTION 9.3 NO WAIVER; CUMULATIVE REMEDIES.
No failure to exercise and no delay in exercising, on the part of the
Agent or any Lender, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
SECTION 9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All representations and warranties made hereunder and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Notes and the
making of the Loans, provided that all such representations and warranties shall
terminate on the date upon which the Commitments have been terminated and all
amounts owing hereunder and under any Notes have been paid in full.
SECTION 9.5 PAYMENT OF EXPENSES AND TAXES.
The Company and the Borrower agree (a) to pay or reimburse the Agent
for all its reasonable out-of-pocket costs and expenses incurred in connection
with the development, preparation, negotiation, printing and execution of, and
any amendment, supplement or modification to, this Agreement and the other
Credit Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, together with the reasonable fees and
disbursements of counsel to the Agent, (b) to pay or reimburse each Lender and
the Agent for all its costs and expenses incurred in connection with the
enforcement or preservation of any rights
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under this Agreement, the Notes and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the Agent and to
the Lenders (including reasonable allocated costs of in-house legal counsel),
and (c) on demand, to pay, indemnify, and hold each Lender and the Agent
harmless from, any and all recording and filing fees and any and all liabilities
with respect to, or resulting from any delay in paying, stamp, excise and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or administration
of any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, the Credit
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Agent and their Affiliates harmless from and against, any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of the Credit Documents and any such other documents and the use, or proposed
use, of proceeds of the Loans (all of the foregoing, collectively, the
"indemnified liabilities"); provided, however, that neither the Company nor the
Borrower shall have any obligation hereunder to the Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of the Agent or any such Lender. The agreements in this Section 9.5
shall survive repayment of the Loans, Notes and all other amounts payable
hereunder.
SECTION 9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING LENDERS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company, the Borrower, the Lenders, the Agent, all
future holders of the Notes and their respective successors and
assigns, except that neither the Company nor the Borrower, may assign
or transfer any of its rights or obligations under this Agreement or
the other Credit Documents without the prior written consent of each
Lender.
(b) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants")
participating interests in any Loan owing to such Lender, any Note held
by such Lender, any Commitment of such Lender, or any other interest of
such Lender hereunder. In the event of any such sale by a Lender of
participating interests to a Participant, such Lender's obligations
under this Agreement to the other parties to this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement, and the Borrower and the
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. No Lender shall transfer or grant any participation under
which the Participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Credit Document except to the
extent such amendment or waiver would (i) extend the scheduled maturity
of any Loan or Note or any installment thereon in which such
Participant is participating, or reduce the stated rate or extend the
time of payment of interest or fees thereon (except in connection with
a waiver of interest at the increased post-default rate) or reduce the
principal amount thereof, or increase the
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amount of the Participant's participation over the amount thereof then
in effect (it being understood that a waiver of any Default or Event of
Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be
permitted without consent of any participant if the Participant's
participation is not increased as a result thereof), (ii) release the
Company from its obligations under the Guaranty, or release any of the
Guarantors from their obligations under the Guaranty, (iii) release all
or substantially all of the collateral, or (iv) consent to the
assignment or transfer by the Company or the Borrower of any of its
rights and obligations under this Agreement. In the case of any such
participation, the Participant shall not have any rights under this
Agreement or any of the other Credit Documents (the Participant's
rights against such Lender in respect of such participation to be those
set forth in the agreement executed by such Lender in favor of the
Participant relating thereto) and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such
participation, provided that each Participant shall be entitled to the
benefits of Sections 2.16, 2.17, 2.18 and 9.5 with respect to its
participation in the Commitments and the Loans outstanding from time to
time; provided, that no Participant shall be entitled to receive any
greater amount pursuant to such Sections than the transferor Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its commercial
banking business and in accordance with applicable law, at any time,
sell or assign to any Lender or any affiliate thereof and with the
consent of the Agent and, so long as no Event of Default has occurred
and is continuing, the Borrower (in each case, which consent shall not
be unreasonably withheld), to one or more additional banks or financial
institutions ("Purchasing Lenders"), all or any part of its rights and
obligations under this Agreement and the Notes in minimum amounts of
$5,000,000 unless to an existing Lender (or, if less, the entire amount
of such Lender's obligations), pursuant to a Commitment Transfer
Supplement, executed by such Purchasing Lender and such transferor
Lender (and, in the case of a Purchasing Lender that is not then a
Lender or an affiliate thereof, the Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower), and delivered to
the Agent for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the
Transfer Effective Date specified in such Commitment Transfer
Supplement, (x) the Purchasing Lender thereunder shall be a party
hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with
a Commitment as set forth therein, and (y) the transferor Lender
thereunder shall, to the extent provided in such Commitment Transfer
Supplement, be released from its obligations under this Agreement (and,
in the case of a Commitment Transfer Supplement covering all or the
remaining portion of a transferor Lender's rights and obligations under
this Agreement, such transferor Lender shall cease to be a party
hereto). Such Commitment Transfer Supplement shall be deemed to amend
this Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Lender and the resulting
adjustment of Commitment Percentages arising from the purchase by such
Purchasing Lender of all or a portion of the rights and obligations of
such transferor Lender under this
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Agreement and the Notes. On or prior to the Transfer Effective Date
specified in such Commitment Transfer Supplement, the Borrower, at its
own expense, shall execute and deliver to the Agent in exchange for the
Notes delivered to the Agent pursuant to such Commitment Transfer
Supplement new Notes to the order of such Purchasing Lender in an
amount equal to the Commitment assumed by it pursuant to such
Commitment Transfer Supplement and, unless the transferor Lender has
not retained a Commitment hereunder, new Notes to the order of the
transferor Lender in an amount equal to the Commitment retained by it
hereunder. Such new Notes shall be dated the Closing Date and shall
otherwise be in the form of the Notes replaced thereby. The Notes
surrendered by the transferor Lender shall be returned by the Agent to
the Borrower marked "canceled".
(d) The Agent shall maintain at its address referred to in
Section 9.2 a copy of each Commitment Transfer Supplement delivered to
it and a register (the "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 entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded therein for
all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly executed Commitment Transfer
Supplement, together with payment to the Agent by the transferor Lender
or the Purchasing Lender, as agreed between them, of a registration and
processing fee of $3,000 for each Purchasing Lender listed in such
Commitment Transfer Supplement and the Notes subject to such Commitment
Transfer Supplement, the Agent shall (i) accept such Commitment
Transfer Supplement, (ii) record the information contained therein in
the Register and (iii) give prompt notice of such acceptance and
recordation to the Lenders and the Borrower.
(f) The Company and the Borrower each authorizes each Lender
to disclose to any Participant or Purchasing Lender (each, a
"Transferee") and any prospective Transferee any and all financial
information in such Lender's possession concerning the Company and its
Affiliates which has been delivered to such Lender by or on behalf of
the Company or the Borrower pursuant to this Agreement or which has
been delivered to such Lender by or on behalf of the Company or the
Borrower in connection with such Lender's credit evaluation of the
Company and its Affiliates prior to becoming a party to this Agreement,
in each case subject to Section 9.15.
(g) At the time of each assignment pursuant to this Section
9.6 to a Person which is not already a Lender hereunder and which is
not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the
respective assignee Lender shall provide to the Borrower and the Agent
the appropriate Internal Revenue Service Forms (and, if applicable, a
2.18 Certificate) described in Section 2.18.
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(h) Nothing herein shall prohibit any Lender from pledging or
assigning any of its rights under this Agreement (including, without
limitation, any right to payment of principal and interest under any
Note) to any Federal Reserve Bank in accordance with applicable laws.
SECTION 9.7 ADJUSTMENTS; SET-OFF.
(a) Each Lender agrees that if any Lender (a "benefitted
Lender") shall at any time receive any payment of all or part of its
Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to
events or proceedings of the nature referred to in Section 7.1(e), or
otherwise) in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in
such portion of each such other Lender's Loan, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably
with each of the Lenders; provided, however, that if all or any portion
of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but
without interest. The Company and the Borrower agree that each Lender
so purchasing a portion of another Lender's Loans may exercise all
rights of payment (including, without limitation, rights of set-off)
with respect to such portion as fully as if such Lender were the direct
holder of such portion.
(b) In addition to any rights and remedies of the Lenders
provided by law (including, without limitation, other rights of
set-off), each Lender shall have the right, without prior notice to the
Company or the Borrower, any such notice being expressly waived by the
Company and the Borrower to the extent permitted by applicable law,
upon the occurrence of any Event of Default, to setoff and appropriate
and apply any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for
the credit or the account of the Company and/or the Borrower, or any
part thereof in such amounts as such Lender may elect, against and on
account of the obligations and liabilities of the Company and/or the
Borrower to such Lender hereunder and claims of every nature and
description of such Lender against the Company and/or the Borrower, in
any currency, whether arising hereunder, under the Notes or under any
documents contemplated by or referred to herein or therein, as such
Lender may elect, whether or not such Lender has made any demand for
payment and although such obligations, liabilities and claims may be
contingent or unmatured. The aforesaid right of set-off may be
exercised by such Lender against the Company and/or the Borrower or
against any trustee in bankruptcy, debtor in possession, assignee for
the benefit of creditors, receiver or execution, judgment or attachment
creditor of the Company and/or the Borrower, or against anyone else
claiming through or against the Company and/or the Borrower or any such
trustee in bankruptcy, debtor in possession, assignee for the benefit
of creditors, receiver, or execution, judgment or attachment
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creditor, notwithstanding the fact that such right of set-off shall not
have been exercised by such Lender prior to the occurrence of any Event
of Default. Each Lender agrees promptly to notify the Company, the
Borrower and the Agent 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.
SECTION 9.8 TABLE OF CONTENTS AND SECTION HEADINGS.
The table of contents and the Section and subsection headings herein
are intended for convenience only and shall be ignored in construing this
Agreement.
SECTION 9.9 COUNTERPARTS.
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Company, the Borrower and the Agent.
SECTION 9.10 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 9.11 INTEGRATION.
This Agreement and the Notes represent the agreement of the Company,
the Borrower, the Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent, the Company, the Borrower or any Lender relative to the subject
matter hereof not expressly set forth or referred to herein or in the Notes.
SECTION 9.12 GOVERNING LAW.
This Agreement and the Notes and the rights and obligations of the
parties under this Agreement and the Notes shall be governed by, and construed
and interpreted in accordance with, the law of the State of North Carolina.
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SECTION 9.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
All judicial proceedings brought against the Company, the Borrower
and/or any other Credit Party with respect to this Agreement, any Note or any of
the other Credit Documents may be brought in any state or federal court of
competent jurisdiction in the State of North Carolina, and, by execution and
delivery of this Agreement, each of the Company, the Borrower and the other
Credit Parties accepts, for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any final judgment rendered thereby
in connection with this Agreement from which no appeal has been taken or is
available. Each of the Company, the Borrower and the other Credit Parties
irrevocably agrees that all service of process in any such proceedings in any
such court may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to it at its
address set forth in Section 9.2 or at such other address of which the Agent
shall have been notified pursuant thereto, such service being hereby
acknowledged by the each of the Company, the Borrower and the other Credit
Parties to be effective and binding service in every respect. Each of the
Company, the Borrower, the other Credit Parties, the Agent and the Lenders
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens which it
may now or hereafter have to the bringing of any such action or proceeding in
any such jurisdiction. Nothing herein shall affect the right to serve process in
any other manner permitted by law or shall limit the right of any Lender to
bring proceedings against the Company, the Borrower or the other Credit Parties
in the court of any other jurisdiction.
SECTION 9.14 ARBITRATION.
(a) Notwithstanding the provisions of Section 9.14 to the
contrary, upon demand of any party hereto, whether made before or
within three (3) months after institution of any judicial proceeding,
any dispute, claim or controversy arising out of, connected with or
relating to this Agreement and other Credit Documents ("Disputes")
between or among parties to this Agreement shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration
hereunder. Disputes may include, without limitation, tort claims,
counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from
Credit Documents executed in the future, or claims arising out of or
connected with the transaction reflected by this Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title 9
of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. A hearing shall begin within 90 days of
demand for arbitration and all hearings shall be concluded within 120
days of demand for arbitration. These time limitations may not be
extended unless a party shows cause for extension and then no more than
a total extension of 60 days. The expedited procedures set forth in
Rule 51 et seq. of the Arbitration Rules shall be applicable to claims
of less than $1,000,000. All applicable statutes of limitation shall
apply to any Dispute. A
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judgment upon the award may be entered in any court having
jurisdiction. The panel from which all arbitrators are selected shall
be comprised of licensed attorneys selected from the Commercial
Financial Dispute Arbitration Panel of the AAA. The single arbitrator
selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state
where the hearing will be conducted or if such person is not available
to serve, the single arbitrator may be a licensed attorney. The parties
hereto do not waive applicable Federal or state substantive law except
as provided herein. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to Hedging
Agreements or the Wachovia JEDA Letter of Credit.
(b) Notwithstanding the preceding binding arbitration
provisions, the Agent, the Lenders, the Company, the Borrower and the
other Credit Parties agree to preserve, without diminution, certain
remedies that the Agent on behalf of the Lenders may employ or exercise
freely, independently or in connection with an arbitration proceeding
or after an arbitration action is brought. The Agent on behalf of the
Lenders shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following
remedies, as applicable (i) all rights to foreclose against any real or
personal property or other security by exercising a power of sale
granted under Credit Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii)
all rights of self-help including peaceful occupation of real property
and collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment, appointment
of receiver and filing an involuntary bankruptcy proceeding; and (iv)
when applicable, a judgment by confession of judgment. Preservation of
these remedies does not limit the power of an arbitrator to grant
similar remedies that may be requested by a party in a Dispute.
(c) The parties hereto agree that they shall not have a remedy
of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
(d) By execution and delivery of this Agreement, each of the
parties hereto accepts, for itself and in connection with its
properties, generally and unconditionally, the non-exclusive
jurisdiction relating to any arbitration proceedings conducted under
the Arbitration Rules in Charlotte, North Carolina and irrevocably
agrees to be bound by any final judgment rendered thereby in connection
with this Agreement from which no appeal has been taken or is
available.
SECTION 9.15 CONFIDENTIALITY.
The Agent and each of the Lenders agrees that it will use its best
efforts not to disclose without the prior consent of the Company (other than to
its employees, affiliates, auditors or counsel or to another Lender) any
information with respect to the Company and its Subsidiaries which is furnished
pursuant to this Agreement, any other Credit Document or any documents
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contemplated by or referred to herein or therein and which is designated by the
Company to the Lenders in writing as confidential or as to which it is otherwise
reasonably clear such information is not public, except that any Lender may
disclose any such information (a) as has become generally available to the
public other than by a breach of this Section 9.15, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or federal regulatory body having or claiming to have jurisdiction over
such Lender or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or the OCC or similar organizations (whether in the United States or
elsewhere) or their successors, (c) as may be required or appropriate in
response to any summons or subpoena or any law, order, regulation or ruling
applicable to such Lender, (d) to any prospective Participant or assignee in
connection with any contemplated transfer pursuant to Section 9.6, provided that
such prospective transferee shall have been made aware of this Section 9.15 and
shall have agreed to be bound by its provisions as if it were a party to this
Agreement or (e) to Gold Sheets and other similar bank trade publications; such
information to consist of deal terms and other information regarding the credit
facilities evidenced by this Credit Agreement customarily found in such
publications.
SECTION 9.16 ACKNOWLEDGMENTS.
The Company, the Borrower and the other Credit Parties each hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of each Credit Document;
(b) neither the Agent nor any Lender has any fiduciary
relationship with or duty to the Company, the Borrower or any other
Credit Party arising out of or in connection with this Agreement and
the relationship between Agent and Lenders, on one hand, and the
Company, the Borrower and the other Credit Parties, on the other hand,
in connection herewith is solely that of debtor and creditor; and
(c) no joint venture exists among the Lenders or among the
Company and/or the Borrower or the other Credit Parties and the
Lenders.
SECTION 9.17 WAIVERS OF JURY TRIAL.
The Company, the Borrower, the other Credit Parties, the Agent and the
Lenders hereby irrevocably and unconditionally waive, to the extent permitted by
applicable law, trial by jury in any legal action or proceeding relating to this
Agreement or any other Credit Document and for any counterclaim therein.
SECTION 9.18 FINANCIAL COVENANTS AND DETERMINATION OF BORROWING BASE.
THE AGENT AND THE BORROWER SHALL NEGOTIATE IN GOOD FAITH (A) THE
COVENANT LEVELS TO BE SET FORTH IN SECTION 5.9 HEREOF AND THE INCLUSION OF
ADDITIONAL FINANCIAL COVENANTS, AS DEEMED PRUDENT BY THE AGENT, IN SAID SECTION
5.9 PRIOR TO THE SUBSEQUENT
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TRANSACTIONS CLOSING DATE AND (B) THE ELIGIBILITY CRITERIA FOR ACCOUNTS
RECEIVABLE AND INVENTORY OF THE BORROWER AND ITS SUBSIDIARIES TO BE INCLUDED IN
THE BORROWING BASE; SUCH COVENANTS AND ELIGIBILITY CRITERIA TO BECOME EFFECTIVE
ON THE SUBSEQUENT TRANSACTIONS CLOSING DATE (OR IF EARLIER, THE ACQUISITION
FUNDING TERMINATION DATE) FOR THE PERIOD COMMENCING WITH DECEMBER 31, 1997 AND
ENDING WITH THE TERMINATION OF THE CREDIT AGREEMENT. AS A CONDITION TO
COMPLETING THE NEGOTIATION OF THE AFORESAID FINANCIAL COVENANTS AND ELIGIBILITY
CRITERIA, THE AGENT SHALL HAVE (1) RECEIVED (A) THE UNAUDITED FINANCIAL
STATEMENTS OF THE APPAREL DIVISION FOR THE TWELVE-MONTH PERIOD ENDED OCTOBER 3,
1997, (B) THE REVISED FIVE-YEAR PROJECTIONS OF THE COMPANY AND ITS SUBSIDIARIES
(INCLUDING THE APPAREL DIVISION) FOR FISCAL YEARS 1998 THROUGH 2002 IN FORM AND
SUBSTANCE REASONABLY ACCEPTABLE TO THE AGENT AND (C) A DETAILED ITEMIZATION OF
ANTICIPATED COST SAVINGS DERIVED FROM THE G&L ACQUISITION (I) PREPARED BY THE
COMPANY IN ACCORDANCE WITH REGULATION S-X PROMULGATED UNDER THE SECURITIES ACT
OF 1933 OR AS OTHERWISE AGREED TO BY THE AGENT AND (II) REVIEWED BY ERNST &
YOUNG LLP OR AS OTHERWISE AGREED TO BY THE AGENT AND (2) COMPLETED ALL
REASONABLY NECESSARY FIELD AUDITS TO ENABLE IT TO DETERMINE THE ELIGIBILITY
CRITERIA FOR ACCOUNTS RECEIVABLE AND INVENTORY TO BE INCLUDED IN THE BORROWING
BASE. IN THE EVENT THAT THE BORROWER AND THE AGENT SHALL BE UNABLE TO NEGOTIATE
THE FINANCIAL COVENANTS OF SECTION 5.9 OR THE ELIGIBILITY CRITERIA FOR THE
BORROWING BASE TO THEIR MUTUAL SATISFACTION WITHIN FIVE (5) BUSINESS DAYS
FOLLOWING THE CONSUMMATION OF THE G&L ACQUISITION, THE LOANS AND ALL OTHER
OBLIGATIONS HEREUNDER SHALL BECOME AND BE IMMEDIATELY DUE AND PAYABLE WITHOUT
FURTHER ACT OR NOTICE BY THE AGENT TO THE BORROWER OR ANY OTHER PERSON ON SUCH
DATE.
ARTICLE X
GUARANTY
SECTION 10.1 THE GUARANTY.
In order to induce the Lenders to enter into this Agreement and to
extend credit hereunder and in recognition of the direct benefits to be received
by the Guarantors from the Extensions of Credit hereunder, each of the
Guarantors hereby agrees with the Agent and the Lenders as follows: the
Guarantor hereby unconditionally and irrevocably jointly and severally
guarantees as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, by acceleration or otherwise, of any
and all indebtedness of the Borrower to the Agent
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and the Lenders. If any or all of the indebtedness of the Borrower to the Agent
and the Lenders becomes due and payable hereunder, each Guarantor
unconditionally promises to pay such indebtedness to the Agent and the Lenders,
or order, on demand, together with any and all reasonable expenses which may be
incurred by the Agent or the Lenders in collecting any of the indebtedness. The
word "indebtedness" is used in this Article X in its most comprehensive sense
and includes any and all advances, debts, obligations and liabilities of the
Borrower arising in connection with this Agreement, in each case, heretofore,
now, or hereafter made, incurred or created, whether voluntarily or
involuntarily, absolute or contingent, liquidated or unliquidated, determined or
undetermined, whether or not such indebtedness is from time to time reduced, or
extinguished and thereafter increased or incurred, whether the Borrower may be
liable individually or jointly with others, whether or not recovery upon such
indebtedness may be or hereafter become barred by any statute of limitations,
and whether or not such indebtedness may be or hereafter become otherwise
unenforceable.
Notwithstanding any provision to the contrary contained herein or in
any other of the Credit Documents, to the extent the obligations of a Guarantor
other than the Company shall be adjudicated to be invalid or unenforceable for
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of each such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
SECTION 10.2 BANKRUPTCY.
Additionally, each of the Guarantors unconditionally and irrevocably
guarantees jointly and severally the payment of any and all indebtedness of the
Borrower to the Lenders whether or not due or payable by the Borrower upon the
occurrence of any of the events specified in Section 7.1(e), and unconditionally
promises to pay such indebtedness to the Agent for the account of the Lenders,
or order, on demand, in lawful money of the United States. Each of the
Guarantors further agrees that to the extent that the Borrower or a Guarantor
shall make a payment or a transfer of an interest in any property to the Agent
or any Lender, which payment or transfer or any part thereof is subsequently
invalidated, declared to be fraudulent or preferential, or otherwise is avoided,
and/or required to be repaid to the Borrower or a Guarantor, the estate of the
Borrower or a Guarantor, a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such avoidance or repayment, the obligation or part thereof intended
to be satisfied shall be revived and continued in full force and effect as if
said payment had not been made.
SECTION 10.3 NATURE OF LIABILITY.
The liability of each Guarantor hereunder is exclusive and independent
of any security for or other guaranty of the indebtedness of the Borrower
whether executed by any such Guarantor, any other guarantor or by any other
party, and no Guarantor's liability hereunder shall be affected or impaired by
(a) any direction as to application of payment by the Borrower or by any other
party, or (b) any other continuing or other guaranty, undertaking or maximum
liability of a
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guarantor or of any other party as to the indebtedness of the Borrower, or (c)
any payment on or in reduction of any such other guaranty or undertaking, or (d)
any dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Agent or the Lenders on the
indebtedness which the Agent or such Lenders repay the Borrower pursuant to
court order in any bankruptcy, reorganization, arrangement, moratorium or other
debtor relief proceeding, and each of the Guarantors waives any right to the
deferral or modification of its obligations hereunder by reason of any such
proceeding.
SECTION 10.4 INDEPENDENT OBLIGATION.
The obligations of each Guarantor hereunder are independent of the
obligations of any other guarantor or the Borrower, and a separate action or
actions may be brought and prosecuted against each Guarantor whether or not
action is brought against any other guarantor or the Borrower and whether or not
any other Guarantor or the Borrower is joined in any such action or actions.
SECTION 10.5 AUTHORIZATION.
Each of the Guarantors authorizes the Agent and each Lender without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing its liability hereunder, from
time to time to (a) renew, compromise, extend, increase, accelerate or otherwise
change the time for payment of, or otherwise change the terms of the
indebtedness or any part thereof in accordance with this Agreement, including
any increase or decrease of the rate of interest thereon, (b) take and hold
security from any guarantor or any other party for the payment of this Guaranty
or the indebtedness and exchange, enforce waive and release any such security,
(c) apply such security and direct the order or manner of sale thereof as the
Agent and the Lenders in their discretion may determine and (d) release or
substitute any one or more endorsers, guarantors, the Borrower or other
obligors.
SECTION 10.6 RELIANCE.
It is not necessary for the Agent or the Lenders to inquire into the
capacity or powers of the Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any indebtedness made or
created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
SECTION 10.7 WAIVER.
(a) Each of the Guarantors waives any right (except as shall
be required by applicable statute and cannot be waived) to require the
Agent or any Lender to (i) proceed against the Borrower, any other
guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other guarantor or any other
party, or (iii) pursue any other remedy in the Agent's or any Lender's
power whatsoever. Each of the Guarantors waives any defense based on or
arising out of any defense of the Borrower, any other guarantor or any
other party other than payment in full of the
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indebtedness, including without limitation any defense based on or
arising out of the disability of the Borrower, any other guarantor or
any other party, or the unenforceability of the indebtedness or any
part thereof from any cause, or the cessation from any cause of the
liability of the Borrower other than payment in full of the
indebtedness. Without limiting the generality of the provisions of this
Article X, each of the Guarantors hereby specifically waives the
benefits of N.C. Gen. Stat. ss. 26-7 through 26-9, inclusive. The Agent
or any of the Lenders may, at their election, foreclose on any security
held by the Agent or a Lender by one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially
reasonable (to the extent such sale is permitted by applicable law), or
exercise any other right or remedy the Agent and any Lender may have
against the Borrower or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the indebtedness has been paid. Each of
the Guarantors waives any defense arising out of any such election by
the Agent and each of the Lenders, even though such election operates
to impair or extinguish any right of reimbursement or subrogation or
other right or remedy of the Guarantors against the Borrower or any
other party or any security.
(b) Each of the Guarantors waives all presentments, demands
for performance, protests and notices, including without limitation
notices of nonperformance, notice of protest, notices of dishonor,
notices of acceptance of this Guaranty, and notices of the existence,
creation or incurring of new or additional indebtedness. Each Guarantor
assumes all responsibility for being and keeping itself informed of the
Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the indebtedness
and the nature, scope and extent of the risks which such Guarantor
assumes and incurs hereunder, and agrees that neither the Agent nor any
Lender shall have any duty to advise such Guarantor of information
known to it regarding such circumstances or risks.
(c) Each of the Guarantors hereby agrees it will not exercise
any rights of subrogation which it may at any time otherwise have as a
result of this Guaranty (whether contractual, under Section 509 of the
U.S. Bankruptcy Code, or otherwise) to the claims of the Lenders
against the Borrower or any other guarantor of the indebtedness of the
Borrower owing to the Lenders (collectively, the "Other Parties") and
all contractual, statutory or common law rights of reimbursement,
contribution or indemnity from any Other Party which it may at any time
otherwise have as a result of this Guaranty until such time as the
Loans hereunder shall have been paid and the Commitments have been
terminated. Each of the Guarantors hereby further agrees not to
exercise any right to enforce any other remedy which the Agent and the
Lenders now have or may hereafter have against any Other Party, any
endorser or any other guarantor of all or any part of the indebtedness
of the Borrower and any benefit of, and any right to participate in,
any security or collateral given to or for the benefit of the Lenders
to secure payment of the indebtedness of the Borrower until such time
as the Loans hereunder shall have been paid and the Commitments have
been terminated.
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SECTION 10.8 LIMITATION ON ENFORCEMENT.
The Lenders agree that this Guaranty may be enforced only by the action
of the Agent acting upon the instructions of the Required Lenders and that no
Lender shall have any right individually to seek to enforce or to enforce this
Guaranty, it being understood and agreed that such rights and remedies may be
exercised by the Agent for the benefit of the Lenders upon the terms of this
Agreement. The Lenders further agree that this Guaranty may not be enforced
against any director, officer, employee or stockholder of the Guarantors.
SECTION 10.9 CONFIRMATION OF PAYMENT.
The Agent and the Lenders will, upon request after payment of the
indebtedness and obligations which are the subject of this Guaranty and
termination of the commitments relating thereto, confirm to the Borrower, the
Guarantors or any other Person that the such indebtedness and obligations have
been paid and the commitments relating thereto terminated, subject to the
provisions of Section 10.2.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Charlotte, North Carolina by its proper and duly
authorized officers as of the day and year first above written.
BORROWER: GALEY & LORD INDUSTRIES, INC.
By: /s/ Michael R. Harmon
Title: Executive Vice-President
COMPANY: GALEY & LORD, INC.
By: /s/ Michael R. Harmon
Title: Executive Vice-President
GUARANTORS: G&L SERVICE COMPANY, NORTH
AMERICA, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Title: Vice-President
FIRST UNION NATIONAL BANK,
as Administrative Agent and as a
Lender
By: /s/ Braxton B. Comer
Title: Senior Vice-President
Exhibit 6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as
of December 19, 1997 among Galey & Lord Industries, Inc., a Delaware corporation
(the "Borrower"), Galey & Lord, Inc., a Delaware corporation (the "Company"),
the subsidiaries of the Borrower and of the Company listed on the signature
pages attached hereto (the "Subsidiary Guarantors" and together with the
Company, the "Guarantors") and such other subsidiaries of the Borrower and of
the Company as may from time to time become party hereto (hereinafter, the
Borrower and the Guarantors are collectively referred to as the "Obligors" and,
individually, as an "Obligor") and FIRST UNION NATIONAL BANK, in its capacity as
agent (in such capacity, the "Agent") for the financial institutions from time
to time party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Borrower, the Company, the Subsidiary
Guarantors, the Lenders and the Agent, the Lenders have agreed to make Loans and
issue Letters of Credit upon the terms and subject to the conditions set forth
therein;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Obligors shall
have executed and delivered this Security Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement, and the following terms which are defined in the Uniform
Commercial Code in effect in the State of North Carolina on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Deposit
Accounts, Documents, Equipment, Farm Products, Fixtures, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds.
For purposes of this Security Agreement, the term "Lender" shall
include any affiliate of any Lender which has entered into any Hedging
Agreement permitted to be entered into pursuant to Section 6.1 of the
Credit Agreement.
(b) In addition, the following terms shall have the following
meanings:
"Copyright Licenses": any written agreement, naming any
Obligor as licensor, granting any right under any Copyright including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
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"Copyrights": (a) all registered United States copyrights in
all Works, now existing or hereafter created or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations,
recordings and applications in the United States Copyright office
including, without limitation, any thereof referred to in Schedule 1(b)
hereto, and (b) all renewals thereof including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Material Copyright Licenses": all Copyright Licenses
constituting Material Intellectual Property.
"Material Copyrights": all Copyrights constituting Material
Intellectual Property.
"Material Intellectual Property": all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses
in which the failure by an Obligor to own or have the legal right to
use such Copyright, Copyright License, Patent, Patent License,
Trademark or Trademark License could have a Material Adverse Effect.
"Material Patent Licenses": all Patent Licenses constituting
Material Intellectual Property.
"Material Patents": all Patents constituting Material
Intellectual Property.
"Material Trademark Licenses": all Trademark Licenses
constituting Material Intellectual Property.
"Material Trademarks": all Trademarks constituting Material
Intellectual Property.
"Patent License": all agreements, whether written or oral,
providing for the grant by or to an Obligor of any right to
manufacture, use or sell any invention covered by a Patent, including,
without limitation, any thereof referred to in Schedule 1(b) hereto.
"Patents": (a) all letters patent of the United States or any
other country and all reissues and extensions thereof, including,
without limitation, any thereof referred to in Schedule 1(b) hereto,
and (b) all applications for letters patent of the United States or any
other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Secured Obligations": (a) all Credit Party Obligations and
(b) all expenses and charges, legal and otherwise, reasonably incurred
by the Agent and/or the Lenders in collecting or enforcing any Credit
Party Obligations or in realizing on or protecting any security
therefor, including without limitation the security afforded hereunder.
"Trademark License": means any agreement, written or oral,
providing for the grant by or to an Obligor of any right to use any
Trademark, including, without limitation, any thereof referred to in
Schedule 1(b) hereto.
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"Trademarks": (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade
styles, service marks, logos and other source or business identifiers,
and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all
applications in connection therewith, whether in the United States
Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, any
thereof referred to in Schedule 1(b) hereto, and (b) all renewals
thereof.
"Work": any work which is subject to copyright protection
pursuant to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time, acceleration
or otherwise, of the Secured Obligations, each Obligor hereby grants to the
Agent, for the benefit of the Lenders, a continuing security interest in, and a
right to set off against, any and all right, title and interest of such Obligor
in and to the following, whether now owned or existing or owned, acquired, or
arising hereafter (collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles;
(j) all Instruments;
(k) all Inventory;
(l) all Investment Property;
(m) all Patents;
(n) all Patent Licenses;
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(o) all Trademarks;
(p) all Trademark Licenses;
(q) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and
related data processing software (owned by such
Obligor or in which it has an interest) that at any
time evidence or contain information relating to any
Collateral or are otherwise necessary or helpful in
the collection thereof or realization thereupon; and
(r) to the extent not otherwise included,
all Proceeds and products of any and all of the
foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not to be
construed as an assignment of any Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks or Trademark Licenses.
3. Representations and Warranties. Each Obligor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Secured Obligations remain outstanding or any Credit Document is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each Obligor's
chief executive office and chief place of business is (and, except for
any Obligor acquired pursuant to the G&L Acquisition, for the prior
four months have been) located at the locations set forth on Schedule
3(a) hereto, and each Obligor keeps its books and records at such
locations.
(b) Location of Collateral. The location of all Collateral
owned by each Obligor is as shown on Schedule 3(b) hereto.
(c) Ownership. Each Obligor is the legal and beneficial owner
of its Collateral and has the right to pledge, sell, assign or transfer
the same. Each Obligor's legal name is as shown in this Security
Agreement and no Obligor has in the past four months changed its name,
been party to a merger, consolidation or other change in structure or
used any tradename except as set forth in Schedule 3(c) attached
hereto. Schedule 3(c) may be updated by the Company and the Borrower to
reflect changes resulting from the G&L Acquisition.
(d) Security Interest/Priority. This Security Agreement
creates a valid security interest in favor of the Agent, for the
benefit of the Lenders, in the Collateral of such Obligor and, when
properly perfected by filing, shall constitute a valid perfected
security interest in such Collateral, to the extent such security can
be perfected by filing under the UCC, free and clear of all Liens
except for Permitted Liens.
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(e) Farm Products. None of the Collateral constitutes, or is
the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and the papers
and documents relating thereto are genuine and in all material respects
what they purport to be, (ii) each Account arises out of (A) a bona
fide sale of goods sold and delivered by such Obligor (or is in the
process of being delivered) or (B) services theretofore actually
rendered by such Obligor to, the account debtor named therein, (iii) no
Account of an Obligor is evidenced by any Instrument or Chattel Paper
unless such Instrument or Chattel Paper has been theretofore endorsed
over and delivered to the Agent and (iv) no surety bond was required or
given in connection with any Account of an Obligor or the contracts or
purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor pursuant to
consignment, sale or return, sale on approval or similar arrangement.
(h) Copyrights, Patents and Trademarks.
(i) Schedule 1(b) hereto includes all
Material Copyrights, Material Copyright Licenses, Material
Patents, Material Patent Licenses, Material Trademarks and
Material Trademark Licenses owned by the Obligors in their own
names as of the date hereof.
(ii) To the best of each Obligor's
knowledge, each Material Copyright, Material Patent and
Material Trademark of such Obligor is valid, subsisting,
unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b)
hereto, none of such Material Copyrights, Material Patents and
Material Trademarks is the subject of any licensing or
franchise agreement.
(iv) No holding, decision or judgment has
been rendered which would limit, cancel or question the
validity of any Material Copyright, Material Patent or
Material Trademark.
(v) No action or proceeding is pending
seeking to limit, cancel or question the validity of any
Material Copyright, Material Patent or Material Trademark, or
which, if adversely determined, would have a material adverse
effect on the value of any Material Copyright, Material Patent
or Material Trademark.
(vi) All applications pertaining to the
Material Copyrights, Material Patents and Material Trademarks
of each Obligor have been duly and properly filed, and all
registrations or letters pertaining to such Material
Copyrights, Material Patents and Material Trademarks have been
duly and properly filed and issued, and all of such Material
Copyrights, Material Patents and Material Trademarks are valid
and enforceable.
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<PAGE>
(vii) No Obligor has made any assignment or
agreement in conflict with the security interest in the
Copyrights, Patents or Trademarks of each Obligor hereunder
except for any such assignment or agreement that would not
have a Material Adverse Effect.
4. Covenants. Each Obligor covenants that, so long as any of the
Secured Obligations remain outstanding or any Credit Document is in effect or
any Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not
sell, exchange, transfer, assign, lease or otherwise dispose of the
Collateral or any interest therein, except as permitted under the
Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good
order, condition and repair and not use the Collateral in violation of
the provisions of this Security Agreement or any other agreement
relating to the Collateral or any policy insuring the Collateral or any
applicable statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable under or
in connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper, immediately deliver such Instrument
or Chattel Paper to the Agent, duly indorsed in a manner satisfactory
to the Agent, to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location. Not, without providing 30 days prior
written notice to the Agent and without filing such amendments to any
previously filed financing statements as the Agent may require, (a)
change the location of its chief executive office and chief place of
business (as well as its books and records) from the locations set
forth on Schedule 3(a) hereto, (b) change the location of its
Collateral from the locations set forth for such Obligor on Schedule
3(b) hereto, or (c) change its name, be party to a merger,
consolidation or other change in structure or use any tradename other
than as set forth on Schedule 3(c) attached hereto.
(e) Inspection. Upon reasonable notice, at such reasonable
times during normal business hours and as often as may be reasonably
desired, allow the Agent, any Lender or their respective
representatives free access to and right of inspection of the tangible
Collateral.
(f) Perfection of Security Interest. Execute and deliver to
the Agent such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of
existing documents, as the Agent may reasonably request) and do all
such other things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security interests
hereunder, including (A) such financing statements (including renewal
statements) or amendments thereof or supplements thereto or other
instruments as the Agent may from time to time reasonably request in
order to perfect and
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<PAGE>
maintain the security interests granted hereunder in accordance with
the UCC, (B) with regard to Material Copyrights, a Notice of Grant of
Security Interest in Copyrights in the form of Schedule 4(f)(i), (C)
with regard to Material Patents, a Notice of Grant of Security Interest
in Patents for filing with the United States Patent and Trademark
Office in the form of Schedule 4(f)(ii) attached hereto and (D) with
regard to Material Trademarks, a Notice of Grant of Security Interest
in Trademarks for filing with the United States Patent and Trademark
Office in the form of Schedule 4(f)(iii) attached hereto, (ii) to
consummate the transactions contemplated hereby and (iii) to otherwise
protect and assure the Agent of its rights and interests hereunder. To
that end, each Obligor agrees that the Agent may file one or more
financing statements disclosing the Agent's security interest in any or
all of the Collateral of such Obligor without, to the extent permitted
by law, such Obligor's signature thereon, and further each Obligor also
hereby irrevocably makes, constitutes and appoints the Agent, its
nominee or any other person whom the Agent may designate, as such
Obligor's attorney in fact with full power and for the limited purpose
to sign in the name of such Obligor any such financing statements, or
amendments and supplements to financing statements, renewal financing
statements, notices or any similar documents which in the Agent's
reasonable discretion would be necessary, appropriate or convenient in
order to perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable so long as the Credit Agreement is in effect
or any amounts payable thereunder or under any other Credit Document or
any Letter of Credit shall remain outstanding, and until all of the
Commitments thereunder shall have terminated. Each Obligor hereby
agrees that a carbon, photographic or other reproduction of this
Security Agreement or any such financing statement is sufficient for
filing as a financing statement by the Agent without notice thereof to
such Obligor wherever the Agent may in its sole discretion desire to
file the same. In the event for any reason the law of any jurisdiction
other than North Carolina becomes or is applicable to the Collateral of
any Obligor or any part thereof, or to any of the Secured Obligations,
such Obligor agrees to execute and deliver all such instruments and to
do all such other things as the Agent in its sole discretion reasonably
deems necessary or appropriate to preserve, protect and enforce the
security interests of the Agent under the law of such other
jurisdiction (and, if an Obligor shall fail to do so promptly upon the
request of the Agent, then the Agent may execute any and all such
requested documents on behalf of such Obligor pursuant to the power of
attorney granted hereinabove). If any Collateral is in the possession
or control of an Obligor's agents and the Agent so requests, such
Obligor agrees to notify such agents in writing of the Agent's security
interest therein and, upon the Agent's request, instruct them to hold
all such Collateral for the Lenders' account and subject to the Agent's
instructions. Each Obligor agrees to mark its books and records to
reflect the security interest of the Agent in the Collateral.
(g) Covenants Relating to Accounts.
(i) Comply with all reporting requirements set forth
in the Credit Agreement with respect to Accounts.
(ii) Upon the occurrence of any Event of Default and
during the continuation thereof, set aside and hold as trustee
for the Agent any merchandise which is returned by a customer
or account debtor or otherwise recovered. Unless
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<PAGE>
and until an Event of Default occurs and is continuing, each
Obligor may settle and adjust disputes and claims with its
customers and account debtors, handle returns and recoveries
and grant discounts, credits and allowances in the ordinary
course of its business as presently conducted and otherwise
for amounts and on terms which such Obligor in good faith
considers advisable. However, upon the occurrence of any Event
of Default and during the continuation thereof, if so
instructed by the Agent, such Obligor shall settle and adjust
disputes and claims at no expense to the Agent, but no
discount, credit or allowance other than on normal trade terms
in the ordinary course of business shall be granted to any
customer or account debtor and no returns of merchandise shall
be accepted by such Obligor without the Agent's consent. The
Agent may (but shall not be required to), at all times upon
the occurrence of any Event of Default and during the
continuance thereof, settle or adjust disputes and claims
directly with customers or account debtors for amounts and
upon terms which the Agent considers advisable.
(h) Covenants Relating to Inventory.
(i) Maintain, keep and preserve the Inventory in good
salable condition at its own cost and expense.
(ii) Comply with all reporting requirements set forth
in the Credit Agreement with respect to Inventory.
(iii) If any of the Inventory is at any time
evidenced by a document of title, immediately upon request by
the Agent, deliver such document of title to the Agent.
(i) Covenants Relating to Copyrights.
(i) Employ the Copyright for each Work with
such notice of copyright as may be required by law to secure
copyright protection except to the extent the failure to so
employ the Copyright would not have a Material Adverse Effect.
(ii) Not do any act or knowingly omit to do
any act whereby any Material Copyright may become invalidated
and (A) not do any act, or knowingly omit to do any act,
whereby any Material Copyright may become injected into the
public domain; (B) notify the Agent immediately if it knows,
or has reason to know, that any Material Copyright may become
injected into the public domain or of any adverse
determination or development (including, without limitation,
the institution of, or any such determination or development
in, any court or tribunal in the United States or any other
country) regarding an Obligor's ownership of any such Material
Copyright or its validity; (C) take all necessary steps as it
shall deem appropriate under the circumstances, to maintain
and pursue each application (and to obtain the relevant
registration) and to maintain each registration of each
Material Copyright owned by an Obligor including, without
limitation, filing of applications for renewal where
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<PAGE>
necessary; and (D) promptly notify the Agent of any material
infringement of any Material Copyright of an Obligor of which
it becomes aware and take such actions as it shall reasonably
deem appropriate under the circumstances to protect such
Material Copyright, including, where appropriate, the bringing
of suit for infringement, seeking injunctive relief and
seeking to recover any and all damages for such infringement.
(iii) Not make any assignment or agreement
in conflict with the security interest in the Copyrights of
each Obligor hereunder except for any such assignment or
agreement that would not have a Material Adverse Effect.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Material
Trademark on each and every trademark class of goods
applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such
Material Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under such Material
Trademark, (C) employ such Material Trademark with the
appropriate notice of registration, (D) not adopt or use any
mark which is confusingly similar or a colorable imitation of
such Material Trademark unless the Agent, for the ratable
benefit of the Lenders, shall obtain a perfected security
interest in such mark pursuant to this Security Agreement, and
(E) not (and not permit any licensee or sublicensee thereof
to) do any act or knowingly omit to do any act whereby any
such Material Trademark may become invalidated.
(ii) Not do any act, or omit to do any act,
whereby any Material Patent may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders
immediately if it knows, or has reason to know, that any
application or registration relating to any Material Patent or
Material Trademark may become abandoned or dedicated, or of
any adverse determination or development (including, without
limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office or any court or tribunal in any country)
regarding an Obligor's ownership of any Material Patent or
Material Trademark or its right to register the same or to
keep and maintain the same.
(iv) Whenever an Obligor, either by itself
or through an agent, employee, licensee or designee, shall
file an application for the registration of any Material
Patent or Material Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, an Obligor shall
report such filing to the Agent and the Lenders within five
Business Days after the last day of the fiscal quarter in
which such filing occurs. Upon request of the Agent, an
Obligor shall execute and deliver any and all agreements,
instruments, documents and papers as the Agent may reasonably
request to evidence the Agent's and the Lenders' security
interest in any Material Patent or Material Trademark and the
goodwill and general intangibles of an Obligor relating
thereto or represented thereby.
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<PAGE>
(v) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before the
United States Patent and Trademark Office, or any similar
office or agency in any other country or any political
subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each
registration of the Material Patents and Material Trademarks,
including, without limitation, filing of applications for
renewal, affidavits of use and affidavits of incontestability.
(vi) Promptly notify the Agent and the
Lenders after it learns that any Material Patent or Material
Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly sue
for infringement, misappropriation or dilution, to seek
injunctive relief where appropriate and to recover any and all
damages for such infringement, misappropriation or dilution,
or take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such Material
Patent or Material Trademark.
(vii) Not make any assignment or agreement
in conflict with the security interest in the Patents or
Trademarks of each Obligor hereunder except for any such
assignment or agreement that would not have a Material Adverse
Effect.
(k) New Material Patents, Material Copyrights and Material
Trademarks. Promptly provide the Agent with (i) a listing of all
applications, if any, for new Material Copyrights, Material Patents or
Material Trademarks (together with a listing of the issuance of
registrations or letters on present applications), which new
applications and issued registrations or letters shall be subject to
the terms and conditions hereunder, and (ii) (A) with respect to
Material Copyrights, a duly executed Notice of Security Interest in
Copyrights, (B) with respect to Material Patents, a duly executed
Notice of Security Interest in Patents, (C) with respect to Material
Trademarks, a duly executed Notice of Security Interest in Trademarks
or (D) such other duly executed documents as the Agent may reasonably
request in a form acceptable to counsel for the Agent and suitable for
recording to evidence the security interest in the Material Copyright,
Material Patent or Material Trademark which is the subject of such new
application.
(l) Insurance. Have and maintain at all times with respect to
the Collateral the same types and amounts of insurance as the Obligors
are required to maintain pursuant to the Credit Agreement. All
insurance proceeds shall be subject to the Lien of the Agent hereunder;
provided that any such insurance proceeds may be retained by the
Obligors to the extent permitted under the Credit Agreement.
(m) [Intentionally Omitted]
5. Special Provisions Relating to Accounts. Anything herein to the
contrary notwithstanding, each of the Obligors shall remain liable under each of
the Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Agent nor
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<PAGE>
any Lender shall have any obligation or liability under any Account (or any
agreement giving rise thereto) by reason of or arising out of this Security
Agreement or the receipt by the Agent or any Lender of any payment relating to
such Account pursuant hereto, nor shall the Agent or any Lender be obligated in
any manner to perform any of the obligations of an Obligor under or pursuant to
any Account (or any agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any payment received by it or
as to the sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
6. Special Provisions Regarding Inventory.
(a) Notwithstanding anything to the contrary contained in this
Security Agreement, each Obligor may, unless and until an Event of
Default occurs and is continuing and the Agent instructs such Obligor
otherwise, without further consent or approval of the Agent, use,
consume, sell, lease and exchange the Inventory in the ordinary course
of its business as presently conducted (and as will be conducted after
giving effect to the G&L Acquisition), whereupon, in the case of such a
sale or exchange, the security interest created hereby in the Inventory
so sold or exchanged (but not in any proceeds arising from such sale or
exchange) shall cease immediately without any further action on the
part of the Agent.
(b) Upon the Lenders' making any Loan pursuant to the Credit
Agreement or the Issuing Bank issuing any Letter of Credit pursuant to
the Credit Agreement, each Obligor shall be deemed to have warranted
that all warranties of such Obligor set forth in this Security
Agreement with respect to its Inventory are true and correct in all
material respects with respect to such Inventory, including without
limitation that such Inventory is located at a location permitted by
Section 3(b) or 4(d) hereof.
7. Advances by Lenders. On failure of any Obligor to perform any of the
covenants and agreements contained herein, the Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the payment of any
taxes, a payment to obtain a release of a Lien or potential Lien (other than a
Permitted Lien), expenditures made in defending against any adverse claim (other
than a Permitted Lien) and all other expenditures which the Agent or the Lenders
may make for the protection of the security hereof or which may be compelled to
make by operation of law. All such sums and amounts so expended shall be
repayable by the Obligors on a joint and several basis promptly upon timely
notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are expended at
the default rate specified in Section 2.9 of the Credit Agreement for Loans that
are not LIBOR Rate Loans. No such performance of any covenant or agreement by
the Agent or the Lenders on behalf of any Obligor, and no such advance or
expenditure therefor, shall relieve the Obligors of any default under the terms
of this Security Agreement or the other Credit Documents. The Lenders may make
any payment hereby authorized in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or estimate
or into the validity of
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any tax assessment, sale, forfeiture, tax lien, title or claim except to the
extent such payment is being contested in good faith by an Obligor in
appropriate proceedings and against which adequate reserves are being maintained
in accordance with GAAP.
8. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an "Event
of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during continuation thereof (unless and until such Event of
Default has been waived or cured in accordance with the terms of the
Credit Agreement), the Lenders shall have, in addition to the rights
and remedies provided herein, in the Credit Documents or by law
(including, but not limited to, the rights and remedies set forth in
the Uniform Commercial Code of the jurisdiction applicable to the
affected Collateral), the rights and remedies of a secured party under
the UCC (regardless of whether the UCC is the law of the jurisdiction
where the rights and remedies are asserted and regardless of whether
the UCC applies to the affected Collateral), and further, the Agent
may, with or without judicial process or the aid and assistance of
others, (i) enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the Obligors, take
possession of the Collateral, (ii) dispose of any Collateral on any
such premises, (iii) require the Obligors to assemble and make
available to the Agent at the expense of the Obligors any Collateral at
any place and time designated by the Agent which is reasonably
convenient to both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other disposition
thereof, and/or (v) without demand and without advertisement, notice,
hearing or process of law, all of which each of the Obligors hereby
waives to the fullest extent permitted by law, at any place and time or
times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more
parcels, for cash, upon credit or otherwise, at such prices and upon
such terms as the Agent deems advisable, in its sole discretion
(subject to any and all mandatory legal requirements). In addition to
all other sums due the Agent and the Lenders with respect to the
Secured Obligations, the Obligors shall pay the Agent and each of the
Lenders all reasonable documented costs and expenses incurred by the
Agent or any such Lender, including, but not limited to, reasonable
attorneys' fees and court costs, in obtaining or liquidating the
Collateral, in enforcing payment of the Secured Obligations, or in the
prosecution or defense of any action or proceeding by or against the
Agent or the Lenders or the Obligors concerning any matter arising out
of or connected with this Security Agreement, any Collateral or the
Secured Obligations, including, without limitation, any of the
foregoing arising in, arising under or related to a case under any
bankruptcy, insolvency or similar law. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor agrees that any
requirement of reasonable notice shall be met if such notice is
personally served on or mailed, postage prepaid, to the Obligors in
accordance with the notice provisions of Section 9.2 of the Credit
Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other disposition of
the Collateral regardless of notice having been given. To the extent
permitted by
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law, any Lender may be a purchaser at any such sale. To the extent
permitted by applicable law, each of the Obligors hereby waives all of
its rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Agent and the Lenders may postpone or
cause the postponement of the sale of all or any portion of the
Collateral by announcement at the time and place of such sale, and such
sale may, without further notice, to the extent permitted by law, be
made at the time and place to which the sale was postponed, or the
Agent and the Lenders may further postpone such sale by announcement
made at such time and place.
(b) Remedies relating to Accounts. Upon the occurrence of an
Event of Default and during the continuation thereof (unless and until
such Event of Default has been waived or cured in accordance with the
terms of the Credit Agreement), whether or not the Agent has exercised
any or all of its rights and remedies hereunder, the Agent or its
designee may notify any Obligor's customers and account debtors that
the Accounts of such Obligor have been assigned to the Agent or of the
Agent's security interest therein, and may (either in its own name or
in the name of an Obligor or both) demand, collect, receive, take
receipt for, sell, sue for, compound, settle, compromise and give
acquittance for any and all amounts due or to become due on any
Account, and, in the Agent's discretion, file any claim or take any
other action or proceeding to protect and realize upon the security
interest of the Lenders in the Accounts. Each Obligor acknowledges and
agrees that the Proceeds of its Accounts remitted to or on behalf of
the Agent in accordance with the provisions hereof shall be solely for
the Agent's own convenience and that such Obligor shall not have any
right, title or interest in such Accounts or in any such other amounts
except as expressly provided herein. The Agent may apply all or any
part of any Proceeds of Accounts or other Collateral received by it
from any source to the payment of the Secured Obligations (whether or
not then due and payable). The Agent shall have no obligation to apply
or give credit for any item included in proceeds of Accounts or other
Collateral until it has received final payment therefor at its offices
in cash. However, if the Agent does permit credit to be given for any
item prior to receiving final payment therefor and the Agent fails to
receive such final payment or an item is charged back to the Agent for
any reason, the Agent may at its election in either instance charge the
amount of such item back against the Obligors, together with interest
thereon at a rate per annum equal to the Alternate Base Rate, plus two
percent (2.0%). Each Obligor hereby indemnifies the Agent from and
against all liabilities, damages, losses, actions, claims, judgments,
costs, expenses, charges and reasonable attorneys' fees (except such as
result from the Agent's gross negligence or willful misconduct)
suffered or incurred by the Agent because of the maintenance of the
foregoing arrangements. The Agent shall have no liability or
responsibility to any Obligor for accepting any check, draft or other
order for payment of money bearing the legend "payment in full" or
words of similar import or any other restrictive legend or endorsement
whatsoever or be responsible for determining the correctness of any
remittance.
(c) Access. In addition to the rights and remedies hereunder,
upon the occurrence of an Event of Default and during the continuance
thereof (unless and until such Event of Default has been waived or
cured in accordance with the terms of the Credit Agreement), the Agent
shall have the right to take physical possession of any and all of the
Collateral and anything found therein, the right for that purpose to
enter without legal process and without breach of the peace any
premises where the Collateral may be found (provided
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<PAGE>
such entry be done lawfully), and the right to maintain such possession
on any Obligor's premises (each Obligor hereby agreeing to lease
warehouses and storage facilities to the Agent or its designee if the
Agent so requests) or to remove the Collateral or any part thereof to
such other places as the Agent may desire. Upon the occurrence of any
Event of Default and at any time thereafter, unless and until such
Event of Default has been waived by the Lenders or cured to the
satisfaction of the Lenders, each Obligor shall, upon the Agent's
demand, assemble the Collateral and make it available to the Agent at a
place reasonably designated by the Agent. If the Agent exercises its
right to take possession of the Collateral, each Obligor shall also at
its expense perform any and all other steps reasonably requested by the
Agent to preserve and protect the security interest hereby granted in
the Collateral, such as placing and maintaining signs indicating the
security interest of the Agent, appointing overseers for the Collateral
and maintaining inventory records.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or
the Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document or as provided by law, or any
delay by the Agent or the Lenders in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No waiver
hereunder shall be effective unless it is in writing, signed by the
party against whom such waiver is sought to be enforced and then only
to the extent specifically stated, which in the case of the Agent or
the Lenders shall only be granted as provided herein. To the extent
permitted by law, neither the Agent, the Lenders, nor any party acting
as attorney for the Agent or the Lenders, shall be liable hereunder for
any acts or omissions or for any error of judgment or mistake of fact
or law other than their gross negligence or willful misconduct
hereunder. The rights and remedies of the Agents and the Lenders under
this Security Agreement shall be cumulative and not exclusive of any
other right or remedy which the Agent or the Lenders may have.
(e) Retention of Collateral. The Agent may, after providing
the notices required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the relevant
jurisdiction, to the extent the Agent is in possession of any of the
Collateral, retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Agent shall have provided such
notices, however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Agent or the Lenders are legally entitled, the Obligors shall be
jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in Section 2.9 of the Credit
Agreement for Revolving Loans that are Base Rate Loans, together with
the costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Secured Obligations
shall be returned to the Obligors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
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10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Obligor hereby designates and appoints the
Agent, on behalf of the Lenders, and each of its designees or agents,
as attorney-in-fact of such Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default (unless and until such Event of Default has been waived or
cured in accordance with the terms of the Credit Agreement):
(i) to demand, collect or settle, compromise, adjust,
give discharges and releases, all as the Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any Collateral and
enforcing any other right in respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to
an Obligor and endorse checks, notes, drafts, acceptances,
money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such Obligor, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in
respect of, or otherwise deal with or exercise rights in
respect of, any Collateral or the goods or services which have
given rise thereto, as fully and completely as though the
Agent were the absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance
policy relating thereto;
(vii) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, security agreements, affidavits, notices
and other agreements, instruments and documents that the Agent
may reasonably determine to be necessary in order to perfect
and maintain the security interests and liens granted in this
Security Agreement and in order to fully consummate all of the
transactions contemplated therein;
(viii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
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(ix) do and perform all such other acts and things as
the Agent may reasonably deem to be necessary, proper or
convenient in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding or any Credit Document is in effect or any Letter of Credit
shall remain outstanding and (ii) until all of the Commitments shall
have been terminated. The Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Agent in this Security
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any act or
omission or for any error of judgment or any mistake of fact or law in
its individual capacity or its capacity as attorney-in-fact except acts
or omissions resulting from its gross negligence or willful misconduct.
This power of attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in the Collateral.
(b) Performance by the Agent of Obligations. If any Obligor
fails to perform any agreement or obligation contained herein, the
Agent itself may perform, or cause performance of, such agreement or
obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Obligors on a joint and several basis
pursuant to Section 25 hereof.
(c) Assignment by the Agent. Subject to Section 9.6 of the
Credit Agreement, the Agent may from time to time assign the Secured
Obligations and any portion thereof and/or the Collateral and any
portion thereof, and the assignee shall be entitled to all of the
rights and remedies of the Agent under this Security Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while
being held by the Agent hereunder, the Agent shall have no duty or
liability to preserve rights pertaining thereto, it being understood
and agreed that the Obligors shall be responsible for preservation of
all rights in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or tendering the
surrender of it to the Obligors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Agent accords its own property,
which shall be no less than the treatment employed by a reasonable and
prudent agent in the industry, it being understood that the Agent shall
not have responsibility for taking any necessary steps to preserve
rights against any parties with respect to any of the Collateral.
11. Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, the Proceeds and avails of the Collateral
at any time received by the Agent shall, when received by the Agent in cash or
its equivalent, be applied as follows: first, to all reasonable costs and
expenses of the Agent (including without limitation reasonable attorneys' fees
and expenses) incurred in connection with the implementation and/or enforcement
of this Security Agreement and/or any of the other Credit Documents; second, to
all costs and expenses of the Lenders (including without limitation reasonable
attorneys' fees and expenses) incurred in
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connection with the implementation and/or enforcement of this Security Agreement
and/or any of the other Credit Documents; third, to the principal amount of the
Secured Obligations; fourth, to such of the Secured Obligations consisting of
accrued but unpaid interest and fees; fifth, to all other amounts payable with
respect to the Secured Obligations; and sixth, to the payment of the surplus, if
any, to whoever may be lawfully entitled to receive such surplus. The Obligors
shall remain liable to the Agent and the Lenders for any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the
Collateral, or to protect the Collateral or exercise any rights or remedies
under this Security Agreement or with respect to the Collateral, then the
Obligors agree to promptly pay upon demand any and all such reasonable
documented costs and expenses of the Agent or the Lenders, all of which costs
and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long as the
Credit Agreement is in effect or any amounts payable thereunder or
under any other Credit Document or any Letter of Credit shall remain
outstanding, and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the indemnities
and the representations and warranties set forth in the Credit
Documents). Upon such payment and termination, this Security Agreement
shall be automatically terminated and the Lenders shall, upon the
request and at the expense of the Obligors, forthwith release all of
its liens and security interests hereunder and shall execute and
deliver all UCC termination statements and/or other documents
reasonably requested by the Obligors evidencing such termination.
Notwithstanding the foregoing all releases and indemnities provided
hereunder shall survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be effective or
be automatically reinstated, as the case may be, if at any time
payment, in whole or in part, of any of the Secured Obligations is
rescinded or must otherwise be restored or returned by the Agent or any
Lender as a preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such payment had
not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed to
be included as a part of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
15. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Obligor, its successors and assigns and shall
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inure, together with the rights and remedies of the Agent and the Lenders
hereunder, to the benefit of the Agent and the Lenders and their successors and
permitted assigns; provided, however, that none of the Obligors may assign its
rights or delegate its duties hereunder without the prior written consent of the
Agent. To the fullest extent permitted by law, each Obligor hereby releases the
Agent and each Lender, and its successors and permitted assigns, from any
liability for any act or omission relating to this Security Agreement or the
Collateral, except for any liability arising from the gross negligence or
willful misconduct of the Agent, or such Lender, or its officers, employees or
agents.
16. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
17. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
19. Governing Law; Submission to Jurisdiction; Venue. THIS SECURITY
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NORTH CAROLINA. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OBLIGOR AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS SECURITY AGREEMENT, THE CREDIT
DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of any of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Security Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Obligors
hereunder shall survive the execution and delivery of this Security Agreement
and the other Credit Documents, the delivery of the
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Notes and the making of the Loans and the issuance of the Letters of Credit
under the Credit Agreement.
24. Other Security. To the extent that any of the Secured Obligations
are now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by an Obligor), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence and during the continuance of any Event of
Default (unless waived or cured in accordance with the Credit Agreement), and
the Agent and the Lenders have the right, in their sole discretion, to determine
which rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Secured Obligations under this
Security Agreement, under any other of the Credit Documents.
25. Joint and Several Obligations of Obligors.
(a) Each of the Obligors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Obligors and in
consideration of the undertakings of each of the Obligors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Obligors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Obligors with respect to the payment and performance of all of the
Secured Obligations arising under this Security Agreement or the other
Credit Documents, it being the intention of the parties hereto that all
the Obligations shall be the joint and several obligations of each of
the Obligors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, any
bankruptcy, insolvency or similar law).
26. Rights of Required Lenders. All rights of the Agent hereunder, if
not exercised by the Agent, may be exercised by the Required Lenders.
[remainder of page intentionally left blank]
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Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
OBLIGORS: GALEY & LORD INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Executive Vice-President
GALEY & LORD, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Executive Vice-President
G & L SERVICE COMPANY, NORTH
AMERICA, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Vice-President
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
FIRST UNION NATIONAL BANK,
as Agent
By: /s/ Braxton B. Comer
Name: Braxton B. Comer
Title: Senior Vice President
<PAGE>
Exhibit 7
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered into as of
December 19, 1997 among Galey & Lord Industries, Inc. a Delaware corporation
(the "Borrower"), Galey & Lord, Inc., a Delaware corporation (the "Company"),
the subsidiaries of the Borrower and of the Company listed on the signature
pages attached hereto (the "Subsidiary Guarantors" and together with the
Company, the "Guarantors") and such other subsidiaries of the Borrower and the
Company as may from time to time become party hereto (hereinafter, the Borrower
and the Guarantors are collectively referred to as the "Pledgors" and,
individually, as a "Pledgor") and FIRST UNION NATIONAL BANK, in its capacity as
agent (in such capacity, the "Agent") for the financial institutions from time
to time party to the Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the
date hereof (as amended, modified, extended, renewed or replaced from time to
time, the "Credit Agreement"), among the Borrower, the Company, the Subsidiary
Guarantors, the Lenders and the Agent, the Lenders have agreed to make Loans and
issue Letters of Credit upon the terms and subject to the conditions set forth
therein;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Pledgors shall
have executed and delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to such terms in the Credit
Agreement.
(b) In addition, the following terms shall have the following
meanings:
"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.
"Foreign Subsidiary" means, with respect to any Person, any
Subsidiary of such Person which is not a Domestic Subsidiary of such
Person.
2. Pledge and Grant of Security Interest. To secure the prompt payment
and performance in full when due, whether by lapse of time or otherwise, of the
Pledgor Obligations
<PAGE>
(as defined in Section 3 hereof), each Pledgor hereby pledges and assigns to the
Agent, for the benefit of the Lenders, and grants to the Agent, for the benefit
of the Lenders, a continuing security interest in any and all right, title and
interest of such Pledgor in and to the following, whether now owned or existing
or owned, acquired, or arising hereafter (collectively, the "Pledged
Collateral"):
(a) Pledged Shares. (i) 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding shares of capital
stock owned by such Pledgor of each Domestic Subsidiary set forth on
Schedule 2(a) attached hereto and (ii) 65% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding shares of
each class of capital stock or other ownership interests entitled to
vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) ("Voting
Equity") and 100% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding shares of each class of capital stock or
other ownership interests not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) ("Non-Voting Equity") owned by such
Pledgor of each Foreign Subsidiary set forth on Schedule 2(a) attached
hereto, in each case together with the certificates (or other
agreements or instruments), if any, representing such shares, and all
options and other rights, contractual or otherwise, with respect
thereto (collectively, together with the shares of capital stock
described in Section 2(b) and 2(c) below, the "Pledged Shares"),
including, but not limited to, the following:
(y) all shares or securities representing a dividend
on any of the Pledged Shares, or representing a distribution
or return of capital upon or in respect of the Pledged Shares,
or resulting from a stock split, revision, reclassification or
other exchange therefor, and any subscriptions, warrants,
rights or options issued to the holder of, or otherwise in
respect of, the Pledged Shares; and
(z) without affecting the obligations of such Pledgor
under any provision prohibiting such action hereunder, in the
event of any consolidation or merger in which a Pledgor is not
the surviving corporation, all shares of each class of the
capital stock of the successor corporation formed by or
resulting from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full amount
owned by such Pledgor) of the issued and outstanding shares of capital
stock owned by such Pledgor of any Person which hereafter becomes a
Domestic Subsidiary and 65% (or, if less, the full amount owned by such
Pledgor) of the Voting Equity and 100% (or, if less, the full amount
owned by such Pledgor) of the Non-Voting Equity owned by such Pledgor
of any Person which hereafter becomes a Foreign Subsidiary, including,
without limitation, the certificates representing such shares.
(c) Other Equity Interests. Any and all other equity interests
of each Pledgor in any Domestic Subsidiary or any Foreign Subsidiary.
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<PAGE>
(d) Proceeds. All proceeds and products of the foregoing,
however and whenever acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional shares of stock to the Agent as collateral security
for the Pledgor Obligations. Upon delivery to the Agent, such additional shares
of stock shall be deemed to be part of the Pledged Collateral of such Pledgor
and shall be subject to the terms of this Pledge Agreement whether or not
Schedule 2(a) is amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security interest created
hereby in the Pledged Collateral of each Pledgor constitutes continuing
collateral security for all of the following, whether now existing or hereafter
incurred (the "Pledgor Obligations"):
(a) all Credit Party Obligations; and
(b) all expenses and charges, legal and otherwise, reasonably
incurred by the Agent and/or the Lenders in collecting or enforcing any
Credit Party Obligations or in realizing on or protecting any security
therefor, including without limitation the security afforded hereunder.
4. Delivery of the Pledged Collateral. Each Pledgor hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i) simultaneously
with or prior to the execution and delivery of this Pledge Agreement,
all certificates representing the Pledged Shares of such Pledgor and
(ii) promptly upon the receipt thereof by or on behalf of a Pledgor,
all other certificates and instruments constituting Pledged Collateral
of a Pledgor. Prior to delivery to the Agent, all such certificates and
instruments constituting Pledged Collateral of a Pledgor shall be held
in trust by such Pledgor for the benefit of the Agent pursuant hereto.
All such certificates shall be delivered in suitable form for transfer
by delivery or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form provided in
Schedule 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall receive by
virtue of its being or having been the owner of any Pledged Collateral,
any (i) stock certificate, including without limitation, any
certificate representing a stock dividend or distribution in connection
with any increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock splits,
spin-off or split-off, promissory notes or other instrument; (ii)
option or right, whether as an addition to, substitution for, or an
exchange for, any Pledged Collateral or otherwise; (iii) dividends
payable in securities; or (iv) distributions of securities in
connection with a partial or total liquidation, dissolution or
reduction of capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument, option, right
or distribution in trust for the benefit of the Agent, shall segregate
it from such Pledgor's other property and shall deliver it forthwith to
the Agent in the exact form received together with any necessary
endorsement and/or appropriate stock power duly executed in blank,
substantially in the
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form provided in Schedule 4(a), to be held by the Agent as Pledged
Collateral and as further collateral security for the Pledgor
Obligations.
(c) Financing Statements. Each Pledgor shall execute and
deliver to the Agent such UCC or other applicable financing statements
as may be reasonably requested by the Agent in order to perfect and
protect the security interest created hereby in the Pledged Collateral
of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Pledgor Obligations remain outstanding or any Credit Document is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged Shares are
duly authorized and validly issued, are fully paid and nonassessable
and are not subject to the preemptive rights of any Person. All other
shares of stock constituting Pledged Collateral will be duly authorized
and validly issued, fully paid and nonassessable and not subject to the
preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal
and beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no "adverse claim"
within the meaning of Section 8-302 of the Uniform Commercial Code as
in effect in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent of its
rights and remedies hereunder will not violate any law or governmental
regulation or any material contractual restriction binding on or
affecting a Pledgor or any of its property.
(d) Pledgor's Authority. No authorization, approval or action
by, and no notice or filing with any governmental authority or with the
issuer of any Pledged Stock is required either (i) for the pledge made
by a Pledgor or for the granting of the security interest by a Pledgor
pursuant to this Pledge Agreement or (ii) for the exercise by the Agent
or the Lenders of their rights and remedies hereunder (except as may be
required by laws affecting the offering and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement creates
a valid security interest in favor of the Agent for the benefit of the
Lenders, in the Pledged Collateral. The taking possession by the Agent
of the certificates representing the Pledged Shares and all other
certificates and instruments constituting Pledged Collateral will
perfect and establish the first priority of the Agent's security
interest in the Pledged Shares and, when properly perfected by filing
or registration, in all other Pledged Collateral represented by such
Pledged Shares and instruments securing the Pledgor Obligations. Except
as set forth in this Section 5(e), no action is necessary to perfect or
otherwise protect such security interest.
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(f) No Other Shares. No Pledgor owns any shares of stock other
than as set forth on Schedule 2(a) attached hereto.
6. Covenants. Each Pledgor hereby covenants, that so long as any of the
Pledgor Obligations remain outstanding or any Credit Document is in effect or
any Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Pledgor shall:
(a) Books and Records. Mark its books and records (and shall
cause the issuer of the Pledged Shares of such Pledgor to mark its
books and records) to reflect the security interest granted to the
Agent, for the benefit of the Lenders, pursuant to this Pledge
Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its own expense
against the claims and demands of all other parties claiming an
interest therein, keep the Pledged Collateral free from all Liens,
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit Agreement and
the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver at its
expense all further instruments and documents and take all further
action that may be reasonably necessary and desirable or that the Agent
may reasonably request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including without limitation any and all action necessary to satisfy
the Agent that the Agent has obtained a first priority perfected
security interest in any capital stock); (ii) enable the Agent to
exercise and enforce its rights and remedies hereunder in respect of
the Pledged Collateral of such Pledgor; and (iii) otherwise effect the
purposes of this Pledge Agreement, including, without limitation and if
requested by the Agent, delivering to the Agent irrevocable proxies in
respect of the Pledged Collateral of such Pledgor.
(d) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the Pledged Collateral of such
Pledgor other than pursuant hereto or as may be permitted under the
Credit Agreement.
(e) Compliance with Securities Laws. File all reports and
other information now or hereafter required to be filed by such Pledgor
with the United States Securities and Exchange Commission and any other
state, federal or foreign agency in connection with the ownership of
the Pledged Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to perform any of the
covenants and agreements contained herein, the Agent may, at its sole option and
in its sole discretion, perform the same and in so doing may expend such sums as
the Agent may reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the
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payment of any taxes, a payment to obtain a release of a Lien or potential Lien
(other than a Permitted Lien), expenditures made in defending against any
adverse claim (other than a Permitted Lien) and all other expenditures which the
Agent or the Lenders may make for the protection of the security hereof or which
may be compelled to make by operation of law. All such sums and amounts so
expended shall be repayable by the Pledgors on a joint and several basis
promptly upon timely notice thereof and demand therefor, shall constitute
additional Pledgor Obligations and shall bear interest from the date said
amounts are expended at the default rate specified in Section 2.9 of the Credit
Agreement for Loans that are not LIBOR Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of any Pledgor, and
no such advance or expenditure therefor, shall relieve the Pledgors of any
default under the terms of this Pledge Agreement or the other Credit Documents.
The Lenders may make any payment hereby authorized in accordance with any bill,
statement or estimate procured from the appropriate public office or holder of
the claim to be discharged without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such payment is being
contested in good faith by a Pledgor in appropriate proceedings and against
which adequate reserves are being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which under the Credit
Agreement would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of
Default and during the continuation thereof (unless and until such
Event of Default has been waived or cured in accordance with the terms
of the Credit Agreement), the Agent and the Lenders shall have, in
respect of the Pledged Collateral of any Pledgor, in addition to the
rights and remedies provided herein, in the Credit Documents or by law,
the rights and remedies of a secured party under the UCC or any other
applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an
Event of Default and during the continuation thereof (unless and until
such Event of Default has been waived or cured in accordance with the
terms of the Credit Agreement), without limiting the generality of this
Section and without notice, the Agent may, in its sole discretion, sell
or otherwise dispose of or realize upon the Pledged Collateral, or any
part thereof, in one or more parcels, at public or private sale, at any
exchange or broker's board or elsewhere, at such price or prices and on
such other terms as the Agent may deem commercially reasonable, for
cash, credit or for future delivery or otherwise in accordance with
applicable law. To the extent permitted by law, any Lender may in such
event, bid for the purchase of such securities. Each Pledgor agrees
that, to the extent notice of sale shall be required by law and has not
been waived by such Pledgor, any requirement of reasonable notice shall
be met if notice, specifying the place of any public sale or the time
after which any private sale is to be made, is personally served on or
mailed, postage prepaid, to such Pledgor, in accordance with the notice
provisions of Section 9.2 of the Credit Agreement at least 10 days
before the time of such sale. The Agent shall not be obligated to make
any sale of Pledged Collateral of such Pledgor regardless of notice of
sale having been
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given. The Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default
and during the continuation thereof (unless and until such Event of
Default has been waived or cured in accordance with the terms of the
Credit Agreement), the Pledgors recognize that the Agent may deem it
impracticable to effect a public sale of all or any part of the Pledged
Shares or any of the securities constituting Pledged Collateral and
that the Agent may, therefore, determine to make one or more private
sales of any such securities to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges that any
such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained
at a public sale and, notwithstanding the foregoing, agrees that such
private sale shall be deemed to have been made in a commercially
reasonable manner and that the Agent shall have no obligation to delay
sale of any such securities for the period of time necessary to permit
the issuer of such securities to register such securities for public
sale under the Securities Act of 1933. Each Pledgor further
acknowledges and agrees that any offer to sell such securities which
has been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of
New York, New York (to the extent that such offer may be advertised
without prior registration under the Securities Act of 1933), or (ii)
made privately in the manner described above shall be deemed to involve
a "public sale" under the UCC, notwithstanding that such sale may not
constitute a "public offering" under the Securities Act of 1933, and
the Agent may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to the rights
and remedies hereunder, upon the occurrence and during the continuance
of an Event of Default (unless and until such Event of Default has been
waived or cured in accordance with the terms of the Credit Agreement),
the Agent may, after providing the notices required by Section 9-505(2)
of the UCC or otherwise complying with the requirements of applicable
law of the relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Pledgor Obligations. Unless
and until the Agent shall have provided such notices, however, the
Agent shall not be deemed to have retained any Pledged Collateral in
satisfaction of any Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Agent or the Lenders are legally entitled, the Pledgors shall be
jointly and severally liable for the deficiency, together with interest
thereon at the default rate specified in Section 2.9 of the Credit
Agreement for Revolving Loans that are Base Rate Loans, together with
the costs of collection and the reasonable fees of any attorneys
employed by the Agent to collect such deficiency. Any surplus remaining
after the full payment and satisfaction of the Pledgor Obligations
shall be returned to the Pledgors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.
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10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the
Agent, on behalf of the Lenders, and each of its designees or agents as
attorney-in-fact of such Pledgor, irrevocably and with power of
substitution, with authority to take any or all of the following
actions upon the occurrence and during the continuance of an Event of
Default (unless and until such Event of Default has been waived or
cured in accordance with the terms of the Credit Agreement):
(i) to demand, collect or settle, compromise, adjust
and give discharges and releases concerning the Pledged
Collateral of such Pledgor, all as the Agent may reasonably
determine;
(ii) to commence and prosecute any actions at any
court for the purposes of collecting any of the Pledged
Collateral of such Pledgor and enforcing any other right in
respect thereof;
(iii) to defend, settle or compromise any action
brought and, in connection therewith, give such discharge or
release as the Agent may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security
interests, or other encumbrances levied or placed on or
threatened against the Pledged Collateral of such Pledgor;
(v) to direct any parties liable for any payment
under any of the Pledged Collateral to make payment of any and
all monies due and to become due thereunder directly to the
Agent or as the Agent shall direct;
(vi) to receive payment of and receipt for any and
all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Pledged
Collateral of such Pledgor;
(vii) to sign and endorse any drafts, assignments,
proxies, stock powers, verifications, notices and other
documents relating to the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or adjust any suit,
action or proceeding described above and, in connection
therewith, to give such discharges or releases as the Agent
may deem reasonably appropriate;
(ix) execute and deliver all assignments,
conveyances, statements, financing statements, renewal
financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the Agent
may
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determine necessary in order to perfect and maintain the
security interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the transactions
contemplated therein;
(x) to exchange any of the Pledged Collateral of such
Pledgor or other property upon any merger, consolidation,
reorganization, recapitalization or other readjustment of the
issuer thereof and, in connection therewith, deposit any of
the Pledged Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other designated
agency upon such terms as the Agent may determine;
(xi) to vote for a shareholder resolution, or to sign
an instrument in writing, sanctioning the transfer of any or
all of the Pledged Shares of such Pledgor into the name of the
Agent or one or more of the Lenders or into the name of any
transferee to whom the Pledged Shares of such Pledgor or any
part thereof may be sold pursuant to Section 10 hereof; and
(xii) to do and perform all such other acts and
things as the Agent may reasonably deem to be necessary,
proper or convenient in connection with the Pledged Collateral
of such Pledgor.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Pledgor Obligations remain
outstanding, any Credit Document is in effect or any Letter of Credit
shall remain outstanding and (ii) until all of the Commitments shall
have been terminated. The Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and
options expressly or implicitly granted to the Agent in this Pledge
Agreement, and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any act or
omission or for any error of judgment or any mistake of fact or law in
its individual capacity or its capacity as attorney-in-fact except acts
or omissions resulting from its gross negligence or willful misconduct.
This power of attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in Pledged Collateral.
(b) Performance by the Agent of Pledgor's Obligations. If any
Pledgor fails to perform any agreement or obligation contained herein,
the Agent itself may perform, or cause performance of, such agreement
or obligation, and the expenses of the Agent incurred in connection
therewith shall be payable by the Pledgors on a joint and several basis
pursuant to Section 25 hereof.
(c) Assignment by the Agent. Subject to Section 9.6 of the
Credit Agreement, the Agent may from time to time assign the Pledgor
Obligations and any portion thereof and/or the Pledged Collateral and
any portion thereof, and the assignee shall be entitled to all of the
rights and remedies of the Agent under this Pledge Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Pledged Collateral
while being held by the Agent hereunder,
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the Agent shall have no duty or liability to preserve rights pertaining
thereto, it being understood and agreed that Pledgors shall be
responsible for preservation of all rights in the Pledged Collateral of
such Pledgor, and the Agent shall be relieved of all responsibility for
Pledged Collateral upon surrendering it or tendering the surrender of
it to the Pledgors. The Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which the Agent accords its own
property, which shall be no less than the treatment employed by a
reasonable and prudent agent in the industry, it being understood that
the Agent shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether or
not the Agent has or is deemed to have knowledge of such matters; or
(ii) taking any necessary steps to preserve rights against any parties
with respect to any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing, to the extent permitted by law,
each Pledgor may exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral of such
Pledgor or any part thereof for any purpose not inconsistent
with the terms of this Pledge Agreement or the Credit
Agreement; and
(ii) Upon the occurrence and during the continuance
of an Event of Default (unless and until such Event of Default
has been waived or cured in accordance with the terms of the
Credit Agreement), all rights of a Pledgor to exercise the
voting and other consensual rights which it would otherwise be
entitled to exercise pursuant to clause (i) of this paragraph
(e) shall cease and all such rights shall thereupon become
vested in the Agent which shall then have the sole right to
exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have
occurred and be continuing and subject to Section 4(b) hereof,
each Pledgor may receive and retain any and all dividends
(other than stock dividends and other dividends constituting
Pledged Collateral which are addressed hereinabove) or
interest paid in respect of the Pledged Collateral to the
extent they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the continuance
of an Event of Default (unless and until such Event of Default
has been waived or cured in accordance with the terms of the
Credit Agreement):
(A) all rights of a Pledgor to receive the
dividends and interest payments which it would
otherwise be authorized to receive and retain
pursuant to paragraph (i) of this Section shall cease
and all such rights shall thereupon be vested in the
Agent which shall then have the sole right to
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receive and hold as Pledged Collateral such
dividends and interest payments; and
(B) all dividends and interest payments
which are received by a Pledgor contrary to the
provisions of paragraph (A) of this Section shall be
received in trust for the benefit of the Agent, shall
be segregated from other property or funds of such
Pledgor, and shall be forthwith paid over to the
Agent as Pledged Collateral in the exact form
received, to be held by the Agent as Pledged
Collateral and as further collateral security for the
Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may release any
of the Pledged Collateral from this Pledge Agreement or may substitute
any of the Pledged Collateral for other Pledged Collateral without
altering, varying or diminishing in any way the force, effect, lien,
pledge or security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien on all Pledged
Collateral not expressly released or substituted.
11. Application of Proceeds. Upon the occurrence of and during the
continuance of an Event of Default, any payments in respect of the Pledgor
Obligations and any proceeds of any Pledged Collateral, when received by the
Agent or any of the Lenders in cash or its equivalent, will be applied as
follows: first, to all reasonable costs and expenses of the Agent (including
without limitation reasonable attorneys' fees and expenses) incurred in
connection with the implementation and/or enforcement of this Pledge Agreement
and/or any of the other Credit Documents; second, to all costs and expenses of
the Lenders (including without limitation reasonable attorneys' fees and
expenses) incurred in connection with the implementation and/or enforcement of
this Pledge Agreement and/or any of the other Credit Documents; third, to the
principal amount of the Pledgor Obligations; fourth, to such of the Pledgor
Obligations consisting of accrued but unpaid interest and fees; fifth, to all
other amounts payable with respect to the Pledgor Obligations; and sixth, to the
payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus. The Pledgors shall remain liable to the Agent and the Lenders for
any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Pledge
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Pledge Agreement or relating to the
Pledged Collateral, or to protect the Pledged Collateral or exercise any rights
or remedies under this Pledge Agreement or with respect to the Pledged
Collateral, then the Pledgors agree to promptly pay upon demand any and all such
reasonable documented costs and expenses of the Agent or the Lenders, all of
which costs and expenses shall constitute Pledgor Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect so long the
Credit Agreement is in effect or any
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amounts payable thereunder or under any other Credit Document or any
Letter of Credit shall remain outstanding, and until all of the
Commitments thereunder shall have terminated (other than any
obligations with respect to the indemnities and the representations and
warranties set forth in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically terminated
and the Lenders shall, upon the request and at the expense of the
Pledgors, forthwith release all of its liens and security interests
hereunder and shall executed and deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgors evidencing
such termination. Notwithstanding the foregoing all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment,
in whole or in part, of any of the Pledgor Obligations is rescinded or
must otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been
made; provided that in the event payment of all or any part of the
Pledgor Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the Agent or any
Lender in defending and enforcing such reinstatement shall be deemed to
be included as a part of the Pledgor Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 9.1 of the Credit Agreement.
15. Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding upon
each Pledgor, its successors and assigns and shall inure, together with the
rights and remedies of the Agent and the Lenders hereunder, to the benefit of
the Agent and the Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or delegate its duties
hereunder without the prior written consent of the Agent. To the fullest extent
permitted by law, each Pledgor hereby releases the Agent and each Lender, and
its successors and permitted assigns, from any liability for any act or omission
relating to this Pledge Agreement or the Pledged Collateral, except for any
liability arising from the gross negligence or willful misconduct of the Agent,
or such Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Pledge Agreement shall be in conformance with Section 9.2 of the Credit
Agreement.
17. Counterparts. This Pledge Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.
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18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.
19. Governing Law; Submission to Jurisdiction; Venue. THIS PLEDGE
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NORTH CAROLINA. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH PLEDGOR AND THE AGENT HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS PLEDGE AGREEMENT, THE CREDIT DOCUMENTS
OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of any of the Pledge Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Pledge Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement and
the other Credit Documents, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
24. Other Security. To the extent that any of the Pledgor Obligations
are now or hereafter secured by property other than the Pledged Collateral
(including, without limitation, real and other personal property owned by a
Pledgor), or by a guarantee, endorsement or property of any other Person, then
the Agent and the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence and during the
continuance of any Event of Default (unless and until such Event of Default has
been waived or cured in accordance with the terms of the Credit Agreement), and
the Agent and the Lenders have the right, in their sole discretion, to determine
which rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or any of
the Agent's and the Lenders' rights or the Pledgor Obligations under this Pledge
Agreement or under any other of the Credit Documents.
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25. Joint and Several Obligations of Pledgors.
(a) Each of the Pledgors is accepting joint and several
liability hereunder in consideration of the financial accommodation to
be provided by the Lenders under the Credit Agreement, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in
consideration of the undertakings of each of the Pledgors to accept
joint and several liability for the obligations of each of them.
(b) Each of the Pledgors jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several liability with the other
Pledgors with respect to the payment and performance of all of the
Pledgor Obligations arising under this Pledge Agreement and the other
Credit Documents, it being the intention of the parties hereto that all
the Pledgor Obligations shall be the joint and several obligations of
each of the Pledgors without preferences or distinction among them.
(c) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
obligations of a Guarantor shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of
any applicable state or federal law relating to fraudulent conveyances
or transfers) then the obligations of each Guarantor hereunder shall be
limited to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, any
bankruptcy, insolvency or similar law).
26. Rights of Required Lenders. All rights of the Agent hereunder, if
not exercised by the Agent, may be exercised by the Required Lenders.
[remainder of page intentionally left blank]
-14-
<PAGE>
Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.
PLEDGORS: GALEY & LORD INDUSTRIES, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Executive Vice-President
GALEY & LORD, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Executive Vice-President
G & L SERVICE COMPANY, NORTH AMERICA, INC.,
a Delaware corporation
By: /s/ Michael R. Harmon
Name: Michael R. Harmon
Title: Vice-President
Accepted and agreed to in Charlotte, North Carolina as of the date
first above written.
FIRST UNION NATIONAL BANK,
as Agent
By: /s/ Braxton B. Comer
Name: Braxton B. Comer
Title: Senior Vice-President
<PAGE>
Exhibit 8
[EXECUTION COPY]
$250,000,000
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
December 19, 1997
among
GALEY & LORD INDUSTRIES, INC.,
as Borrower,
GALEY & LORD, INC.,
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE LENDERS PARTIES HERETO
AND
FIRST UNION CORPORATION, as Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1 DEFINITIONS ............................................................................................1
1.1 Certain Defined Terms................................................................................1
1.2 Accounting Terms....................................................................................25
1.3 Other Definitional Provisions.......................................................................26
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; NOTES............................................26
2.1 Bridge Loan and Bridge Note.........................................................................26
2.2 Interest on the Bridge Loan.........................................................................28
2.3 Fees ...............................................................................................28
2.4 Prepayments and Payments............................................................................29
2.5 Use of Proceeds.....................................................................................32
SECTION 3 CONDITIONS ............................................................................................33
3.1 Conditions to Initial Bridge Loan and Final Bridge Loan.............................................33
3.2 Additional Conditions to Initial Bridge Loan........................................................35
3.3 Additional Conditions to Final Bridge Loan..........................................................37
SECTION 4 REPRESENTATIONS AND WARRANTIES.........................................................................38
4.1 Organization and Good Standing; Capitalization......................................................38
4.2 Authorization and Power.............................................................................38
4.3 No Conflicts or Consents............................................................................38
4.4 Enforceable Obligations.............................................................................39
4.5 Properties: Liens...................................................................................39
4.6 Financial Condition.................................................................................40
4.7 Full Disclosure.....................................................................................41
4.8 No Default..........................................................................................41
4.9 Compliance with Contracts, Etc......................................................................41
4.10 No Litigation......................................................................................42
4.11 Use of Proceeds; Margin Stock, Etc.................................................................42
4.12 Taxes..............................................................................................42
4.13 ERISA..............................................................................................42
4.14 Compliance with Law................................................................................43
4.15 Government Regulation..............................................................................43
4.16 Intellectual Property..............................................................................43
4.17 Environmental Matters..............................................................................43
4.18 Survival of Representations and Warranties.........................................................45
i
<PAGE>
4.19 Permits............................................................................................45
4.20 Insurance..........................................................................................46
4.21 Labor Matters......................................................................................46
4.22 Guarantees.........................................................................................46
4.23 Senior Subordinated Indenture; Etc.................................................................47
4.24 Broker's or Finder's Fees..........................................................................47
SECTION 5 AFFIRMATIVE COVENANTS..................................................................................47
5.1 Financial Statements and Other Reports..............................................................48
5.2 Corporate Existence, Etc............................................................................52
5.3 Payment of Taxes and Claims; Tax Consolidation......................................................52
5.4 Maintenance of Properties; Insurance................................................................52
5.5 Inspection..........................................................................................53
5.6 Equal Security for Bridge Loan......................................................................53
5.7 Compliance with Laws, Etc...........................................................................53
5.8 Maintenance of Accurate Records, Etc................................................................53
5.9 Exchange of Bridge Notes............................................................................53
5.10 ERISA Compliance...................................................................................54
5.11 Payments in U.S. Dollars...........................................................................54
5.12 Register...........................................................................................55
5.13 Lenders Meeting....................................................................................55
5.14 Additional Guarantors..............................................................................55
5.15 Marketing Take-Out Securities......................................................................55
5.16 Environmental Matters..............................................................................56
SECTION 6 NEGATIVE COVENANTS.....................................................................................56
6.1 Indebtedness........................................................................................56
6.2 Liens...............................................................................................58
6.3 Restricted Payments.................................................................................60
6.4 Investments.........................................................................................60
6.5 Contingent Obligations..............................................................................61
6.6 Layering of Indebtedness............................................................................62
6.7 Restriction on Fundamental Changes..................................................................62
6.8 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries........................62
6.9 Transactions with Shareholders and Affiliates.......................................................63
6.10 Subsidiary Stock; Company Restrictions.............................................................63
6.11 Business Activities................................................................................64
6.12 Amendment or Waivers of Certain Documents..........................................................64
6.13 Amendment to Charter Documents.....................................................................64
6.14 Asset Sales........................................................................................64
6.15 Transfer of Assets to Subsidiaries.................................................................64
6.16 Sale and Leaseback Transactions....................................................................65
ii
<PAGE>
SECTION 7 EVENTS OF DEFAULT......................................................................................65
7.1 Failure to Make Payments When Due...................................................................65
7.2 Default in Other Agreements.........................................................................65
7.3 Breach of Certain Covenants.........................................................................66
7.4 Breach of Warranty..................................................................................66
7.5 Other Defaults Under Agreement or Loan Documents....................................................66
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc...............................................66
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.................................................66
7.8 Judgments and Attachments...........................................................................67
7.9 Dissolution.........................................................................................67
7.10 Guarantee..........................................................................................67
7.11 ERISA..............................................................................................67
7.12 Foreclosure........................................................................................68
7.13 Failure to Purchase Remaining Dominion Shares......................................................68
SECTION 8 SUBORDINATION .........................................................................................69
8.1 Obligations Subordinated to Senior Indebtedness of the Borrower.....................................69
8.2 Priority and Payment Over of Proceeds in Certain Events.............................................69
8.3 Payments May Be Paid Prior to Dissolution...........................................................71
8.4 Rights of Holders of Senior Indebtedness of the Borrower Not To Be Impaired.........................71
8.5 Subrogation.........................................................................................72
8.6 Obligations of the Borrower Unconditional...........................................................72
8.7 Lenders Authorize Agent to Effectuate Subordination.................................................73
SECTION 9 THE AGENT .............................................................................................73
9.1 Appointment.........................................................................................73
9.2 Delegation of Duties................................................................................74
9.3 Exculpatory Provisions..............................................................................74
9.4 Reliance by Agent...................................................................................74
9.5 Notice of Default...................................................................................75
9.6 Non-Reliance on Agent and Other Lenders.............................................................75
9.7 Indemnification.....................................................................................76
9.8 Agent in Its Individual Capacity....................................................................76
9.9 Resignation of the Agent; Successor Agent...........................................................76
SECTION 10 GUARANTEE ............................................................................................77
10.1 Unconditional Guarantee............................................................................77
10.2 Subordination of Guarantee.........................................................................77
10.3 Severability.......................................................................................78
10.4 Limitation of Guarantor's Liability................................................................78
10.5 Guarantors May Consolidate, etc., on Certain Terms.................................................78
10.6 Contribution.......................................................................................79
iii
<PAGE>
10.7 Waiver of Subrogation..............................................................................79
10.8 Evidence Guarantee.................................................................................80
10.9 Waiver of Stay, Extension or Usury Laws............................................................80
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS................................................................80
11.1 Guarantee Obligations Subordinated to Guarantor Senior Indebtedness................................80
11.2 Priority and Payment Over of Proceeds in Certain Events............................................80
11.3 Payments May Be Paid Prior to Dissolution..........................................................82
11.4 Rights of Holders of Guarantor Senior Indebtedness Not To Be Impaired..............................83
11.5 Subrogation........................................................................................83
11.6 Obligations of the Guarantors Unconditional........................................................84
11.7 Lenders Authorize Agent to Effectuate Subordination................................................84
SECTION 12 MISCELLANEOUS ........................................................................................85
12.1 Representation of the Lenders......................................................................85
12.2 Participations in and Assignments of Bridge Loan...................................................85
12.3 Expenses...........................................................................................87
12.4 Indemnity..........................................................................................87
12.5 Setoff.............................................................................................88
12.6 Amendments and Waivers.............................................................................88
12.7 Independence of Covenants..........................................................................89
12.8 Entirety...........................................................................................89
12.9 Notices............................................................................................89
12.10 Survival of Warranties and Certain Agreements.....................................................90
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative.............................................90
12.12 Severability......................................................................................90
12.13 Headings..........................................................................................90
12.14 Applicable Law....................................................................................91
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes........................................91
12.16 Counterparts; Effectiveness.......................................................................91
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial..............................................91
12.18 Payments Pro Rata.................................................................................92
12.19 Taxes.............................................................................................92
12.20 Waiver of Stay, Extension or Usury Laws...........................................................93
12.21 Requirements of Law...............................................................................94
12.22 Confidentiality...................................................................................94
12.23 Compensation......................................................................................95
</TABLE>
iv
<PAGE>
SCHEDULES
A EXISTING LIENS
B SUBSIDIARIES
C [RESERVED]
D [RESERVED]
E [RESERVED]
F ENVIRONMENTAL MATTERS
G [RESERVED]
H EXISTING INDEBTEDNESS
I [RESERVED]
J [RESERVED]
K [RESERVED]
L [RESERVED]
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF COMPLIANCE CERTIFICATE
III FORM OF NOTICE OF BORROWING
IV FORM OF REGISTRATION RIGHTS AGREEMENT
V FORM OF OPINION OF ROSENMAN & COLIN LLP - COUNSEL
FOR THE: COMPANY AND THE GUARANTORS
VI FORM OF OPINION OF CLEARY, GOTTLIEB, STEEN & HAMILTON -
COUNSEL FOR THE LENDERS
VII FORM OF NOTATION OF GUARANTEE
VIII FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
IX FORM OF SECTION 12.2E(ii) CERTIFICATE
v
<PAGE>
[EXECUTION COPY]
This Senior Subordinated Credit Agreement is dated as of December 19,
1997, and entered into by and among Galey & Lord Industries, Inc., a Delaware
corporation (the "Borrower"), Galey & Lord, Inc., a Delaware corporation (the
"Company"), G&L Service Company, North America, Inc., a Delaware corporation
("Service Co."), such other Subsidiaries as may from time to time become a party
hereto (together with the Company and Service Co., the "Guarantors"), the banks
and other financial institutions from time to time parties hereto (the "Lenders"
and individually a "Lender") and First Union Corporation ("First Union"), as
agent for the Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower desires that the Lenders extend a senior
subordinated credit facility to the Borrower in connection with the Tender Offer
and Acquisition (as defined herein);
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Acquired Assets" means all or substantially all of the assets
constituting the Apparel Fabric Business.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Acquisition" means the acquisition by the Borrower of the Acquired
Assets pursuant to the Purchase Agreement.
"Acquisition Purchase Price" means the purchase price to be paid by the
Borrower for the Acquired Assets (which shall include all related fees and
expenses and the refinancing of the existing indebtedness of the Acquired
Assets).
"Adjusted Net Assets" shall have the meaning provided in Section 10.6.
"Affiliate," as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
<PAGE>
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise, or (ii) the ownership of more than 10% of the voting
securities of that Person; provided that none of First Union or any of its
Affiliates shall be treated as an Affiliate of the Company or of any Subsidiary
of the Company.
"Agent" has the meaning ascribed to it in the introduction to this
Agreement.
"Agreement" means this Senior Subordinated Credit Agreement dated as of
December 19, 1997, as it may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"Amount of Unfunded Benefit Liability" means, with respect to any
Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a) (18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(1) (7) of
the Internal Revenue Code) or the actuarial present value of the accrued
benefits with respect to such Pension Plan over (b) the market value of the
assets of such Pension Plan.
"Apparel Fabric Business" has the meaning assigned to it in the Initial
Purchase Agreement.
"Applicable Interest Rate" means for each Interest Period, the
Applicable LIBOR Rate then in effect; provided, however, that in no event shall
the Applicable Interest Rate exceed l8% per annum.
"Applicable LIBOR Rate" means for any Interest Period, (i) an interest
rate per annum equal to the rate of interest appearing on Telerate Page 3750 (or
any successor page) or if no such rate is available, the rate of interest
determined by the Agent to be the rate or the arithmetic mean of rates (rounded
upward, if necessary, to the nearest 1/16 of one percentage point) at which
Dollar deposits in immediately available funds are offered by First Union to
first-tier banks in the London interbank Euro-dollar market, at approximately
11:00 a.m., London time, on the Interest Rate Determination Date for such
Interest Period at the amount of the Bridge Loan outstanding plus (ii) the
Applicable LIBOR Rate Spread.
"Applicable LIBOR Rate Spread" means (i) 4.50% per annum for the
Interest Period commencing on the Initial Takedown Closing Date and (ii) for
each subsequent Interest Period, the Applicable LIBOR Rate Spread in effect for
the immediately preceding Interest Period plus .25% per annum.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other person pursuant to which such Person
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
2
<PAGE>
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
lease, assignment, transfer or other disposition for value (including, without
limitation, pursuant to any amalgamation, merger or consolidation) by the
Company or by any of its Subsidiaries to any Person other than the Company or
any of its Wholly-Owned Subsidiaries (any such transaction, a "disposition") of
(i) any of the stock of any of the Company's Subsidiaries, (ii) substantially
all of the assets of any division or line of business of the Company or of any
of its Subsidiaries, or (iii) any other assets (whether tangible or intangible)
of the Company or of any of its Subsidiaries; excluding (a) any disposition of
Cash Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or any of its Subsidiaries or the lease or sublease of any real or
personal property in the ordinary course of business, (b) any disposition of
stock or assets in any single transaction or related series of transactions the
aggregate value of which does not exceed $1,000,000, (c) exchanges of properties
or assets for other properties or assets, excluding cash or Cash Equivalents but
including Capital Stock of a Person if, as a result of such exchange, such
Person becomes a Wholly-Owned Subsidiary of the Company; provided, that the
property or assets so acquired or the property or assets of the Person the
Capital Stock of which is so acquired (i) are useful in the business of the
Company and its Subsidiaries as then being conducted and (ii) have a fair market
value at least equal to the fair market value of the assets or properties being
exchanged (as evidenced by a resolution of the Company's Board of Directors) and
(d) the Darlington Sale and Leaseback Transaction.
"Bankruptcy Law" means Title 11 of the United States Code entitled
"bankruptcy", as now and hereafter in effect, or any successor statute or any
other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding pursuant
to or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a custodian of- a debtor or of all or any
substantial part of a debtor's property, or providing for the staying,
arrangement, adjustment or composition of indebtedness or other relief of a
debtor.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any duly authorized committee of that Board.
"Borrower" has the meaning ascribed to it in the introduction to this
Agreement.
"Bridge Loan" means, collectively, the loans made by the Lenders
pursuant to Section 2.1A
"Bridge Loan Commitment" means the commitment of the Lenders to make
the Bridge Loan as set forth in Section 2.1A.
"Bridge Notes" has the meaning ascribed to it in Section 2.1D.
3
<PAGE>
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of Charlotte, North Carolina or New
York, New York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to close provided,
however, that when used in connection with a rate determination, borrowing or
payment with respect to the Bridge Notes, the term "Business Day" shall also
exclude any day on which banks in London, England are not open for dealings in
Dollar deposits in the London interbank market.
"Capital Lease," as applied to any person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means obligations under a Capital Lease,
and the amount of Indebtedness represented by such obligations shall be the
capitalized amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service,
Inc. ("Moody's); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; (v) shares of any money market
mutual fund that (a) has its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P's or Moody's; and (vi) repurchase agreements with respect to, and which are
fully secured by a perfected security interest in, obligations of a type
described in clause (i) or clause (ii) above and are with any commercial bank
described in clause (iv) above.
"Cash Proceeds" means, with respect to any Asset sale, cash payments
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when so
received) received from such Asset Sale.
4
<PAGE>
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company or the Borrower to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together
with any Affiliates thereof; (ii) the approval by the holders of Capital Stock
of the Company or the Borrower of any plan or proposal for the liquidation or
dissolution of the Company or the Borrower; (iii) any Person or Group (other
than the Permitted Holders) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 45% of the Voting
Stock of the Company; (iv) the Company shall cease to own beneficially all of
the Voting Stock of the Borrower, free and clear of all Liens other than Liens
granted to secure the Senior Credit Facility or (v) the replacement of a
majority of the Board of Directors of the Company over a two-year period from
the directors who constituted the Board of Directors of the Company at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Company then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Date" has the meaning ascribed to it in Section
2.4A(iv).
"Change of Control Offer" has the meaning ascribed to it in Section
2.4A(iv).
"Commission" means the Securities and Exchange Commission.
"Commitment Letter" means the (i) letter agreement dated November 17,
1997, between the Borrower and First Union pursuant to which First Union
committed to provide the Bridge Loan to the Borrower, subject to the terms and
conditions thereof, (ii) the letter agreement dated November 17, 1997 between
the Borrower and First Union (and the supplement thereto dated as of December
16, 1997) pursuant to which the Borrower committed to pay First Union certain
fees and to satisfy certain other obligations to First Union in respect of the
commitment set forth in (i) above.
"Common Stock" of any person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Closing Date or issued after the Closing Date, and includes, without limitation,
all series and classes of such common stock
"Company" has the meaning ascribed to it in the introduction to this
Agreement.
"Company Junior Capital Contribution" means the unsecured subordinated
loan to be made by the Company or the Borrower to DT Acquisition on or prior to
the Initial Takedown Closing Date as contemplated by the Purchase Agreement.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit II delivered to the Agent by the Company pursuant to Section 5.l (iv)
(b).
5
<PAGE>
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense and (C) Consolidated Non-Cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a PRO
FORMA basis, in accordance with Article II of Regulation S-X under the
Securities Act of 1933, as amended, for the period of such calculation to (a)
the incurrence or repayment of any Indebtedness of the Company or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of its Subsidiaries incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including any Consolidated EBITDA
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
occurred on the first day of the Four Quarter Period. If the Company or any of
its Subsidiaries directly or indirectly guarantees Indebtedness of a third
Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Company or such Subsidiary, as the case may
be, had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (i) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate PER ANNUM
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (ii) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the
6
<PAGE>
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period; and (iii) notwithstanding clause (i)
above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap Obligations
shall be deeded to accrue at the rate PER ANNUM resulting after giving effect to
the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness), PLUS (b) the
product of (i) the amount of all dividend payments on any series of Preferred
Stock of the Company (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then-current effective consolidated federal, state and local income
tax rate of the Company, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of all cash and
non-cash interest expense (minus amortization or write-off of deferred financing
costs included in cash or non-cash interest expense) of such person and its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount,
(b) the net costs under Interest Swap Obligations, (c) all capitalized interest
and (d) the interest portion of any deferred payment obligation; and (ii) the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the consolidated net income (or loss) of such person and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
and losses from Asset Sales or abandonment or reserves relating thereto, (b)
items classified as extraordinary, nonrecurring or unusual gains, losses or
charges, and the related tax effects, each determined in accordance with GAAP,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary of the referent
Person or is merged or consolidated with the referent person or any Subsidiary
of the referent person, (d) the net income (but not loss) of any Subsidiary of
the referent Person to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by a contract,
operation of law or otherwise, (e) the net income of any other Person, other
than a Subsidiary of the referent Person, except to the extent of cash dividends
or distributions paid to the referent Person or to a Wholly Owned Subsidiary of
the referent Person by such Person, (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time after September 30,
1997, (g) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued), and (h) in the case of a
successor to the
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referent Person by consolidation or merger or as a transferee of the referent
Person's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-Cash Charges" means, with respect to the Company, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of the Company and its Subsidiaries reducing Consolidated Net Income of the
Company for such period, determined on a consolidated basis in accordance with
GAAP (excluding any such charges constituting an extraordinary item or loss or
any such charge which requires an accrual of or a reserve for cash charges for
any future period).
"Contested Claim" means any Tax, Indebtedness or other claim or
liability (i) the validity or amount of which is being diligently contested in
good faith, (ii) for which adequate reserve, or other appropriate provision, if
any, as required in conformity with GAAP shall have been made, and (iii) with
respect to which any right to execute upon or sell any assets of the Company or
of any of its Subsidiaries has not matured or has been and continues to be
effectively enjoined, superseded or stayed.
"Contingent Obligation," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Contractual Obligation", as applied to any Person, means any provision
of any Security issued by that Person or of any indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.
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"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and manager,
trustee, assignee, liquidator, sequestrator or similar official charged with
maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Darlington Sale and Leaseback Transaction" means the transaction
involving the sale and leaseback of the Borrower's textile manufacturing
facility located in Darlington County, South Carolina pursuant to an Inducement
and Millage Rate Agreement and a Lease Purchase Agreement, in each case between
the Borrower and Darlington County, South Carolina and dated as of December 1,
1997.
"Definitive Purchase Agreement" means the definitive agreement or
agreements contemplated by Section 2 of the Initial Purchase Agreement, as
amended or modified from time to time.
"Depositary" means the Montreal Trust Company of Canada.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except upon the occurrence of a Change
of Control), in whole or in part, on or prior to the final maturity date of the
Bridge Loan.
"Dollars" or the sign "$" means the lawful money of the United States
of America.
"Dominion" means Dominion Textile, Inc., a corporation organized under
the laws of Canada.
"Dominion Public Filings" means, collectively, (i) the prospectus dated
October 25, 1993, prepared in connection with the offering by Dom Tex USA of its
8.875% Guaranteed Senior Notes due 2003, (ii) the prospectus dated March 26,
1996 prepared in connection with the offering by Dom Tex USA of its 9.25%
Guaranteed Senior Notes due 2006, (iii) the Annual Report to Shareholders of
Dominion for the fiscal year ended June 30, 1997, and (iv) Form 40F for Dominion
for the fiscal year ended June 30, 1996 filed with the Securities and Exchange
Commission.
"Dom Tex USA" shall mean Dominion Textile (U.S.A.), a corporation
organized under the laws of the State of Delaware.
"DT Acquisition" means DT Acquisition, Inc., a corporation organized
under the laws of Canada.
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"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States of America or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is reasonably acceptable to the Agent; and
(B) any Lender and any Affiliate of any Lender.
"Employee Pension Benefit Plan" means any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time within
the five calendar years immediately preceding the date hereof, was at any time,
sponsored, maintained or contributed to by the Company or its Subsidiaries or
any of their respective ERISA Affiliates or (ii) with respect to which the
Company or its Subsidiaries retains any liability, including any potential joint
and several liability as a result of an affiliation with an ERISA Affiliate or a
party that would be an ERISA Affiliate except for the fact the affiliation
ceased more than five calendar years prior to the date hereof.
"Environmental Claim" means any allegation, notice of violation, claim,
demand, abatement order or other order or direction (conditional or otherwise)
by any governmental authority or any person for any response or corrective
action, any damage, including, without limitation, personal injury (including
sickness, disease or death), property damage, contribution, indemnity, indirect
or consequential damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, in each case arising under any Environmental Law,
including without limitation, relating to, resulting from or in connection with
Hazardous Materials and relating to the Company, any of its Subsidiaries or any
of their respective Facilities or predecessors in interest.
"Environmental Laws" means the common law and all statutes, ordinances,
orders, rules, regulations, requirements, judgments, plans, policies or decrees
relating to (i) the Release or threatened Release of Hazardous Materials, (ii)
the generation, use, storage, transportation or disposal of Hazardous Materials
including, without limitation, investigation, study, assessment, testing,
monitoring, containment, removal, remediation, or clean-up of any such Release,
or (iii) occupational safety and health, industrial hygiene or the protection of
the environment, natural resources, human, plant or animal health or welfare,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et. seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.
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11001 et seq.), each as amended or supplemented, and any analogous future or
present statutes, orders, rules, regulations, requirements, judgments or decrees
promulgated pursuant thereto, each as in effect as of the date of determination.
"Environmental Liabilities and Costs" means any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the actual and reasonable fees and disbursements of counsel
in connection with any investigative, administrative or judicial proceeding
commenced or threatened), suffered by, imposed on, incurred by or asserted
against the Lenders, the Agent, and any holders of the Bridge Notes and their
respective officers, directors, employees, agents, representatives and
affiliates arising from or relating to any: (1) Environmental Claim; (2) failure
of the Company and its Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities) to comply with applicable
Environmental Laws, including without limitation fines, penalties, and costs or
expenses incurred to achieve compliance with applicable Environmental Laws; (3)
presence of Hazardous Materials on or related to or generated by the operations
at or in the Facilities; or (4) assertion or attachment of any lien under
Environmental Laws on any of the Facilities.
"Environmental Lien" means a Lien in favor of a Tribunal or other
Person (i) for any liability under an Environmental Law or (ii) for damages
arising from or costs incurred by such Tribunal or other Person in response to a
release or threatened release of Hazardous Materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder and any successor statute, regulations and rulings.
"ERISA Affiliate," as applied to any Person, means (i) any corporation
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that Person
is, or was at any time within the five calendar years immediately preceding the
date hereof, a member; (ii) any trade or business (whether or not incorporated)
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is, or was at
any time within the five calendar years immediately preceding the date hereof, a
member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived) or the failure to make any required
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contribution within 30 days of its due date with respect to any Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041 (a) (2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by the Company or any of its Subsidiaries or any of their respective ERISA
Affiliates from any Multiple Employer Plan or the termination of any such
Multiple Employer Plan resulting in liability pursuant to Sections 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might reasonably
be expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by the Company
or any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor,
or the receipt by the Company or any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Company or any of its Subsidiaries or any
of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 406, 409
or 502(i) or (1) of ERISA in respect of any Employee Benefit Pension Plan; (ix)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Pension Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan or Employee Pension Benefit Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(x) the imposition of a Lien pursuant to Section 401(a) (29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time and any successor statute.
"Exchange Notes" has the meaning ascribed to it in Section 5.9(ii).
"Exchange Request" has the meaning ascribed to it in Section 5.9.
"Existing Senior Credit Facility" means the Amended and Restated Credit
Agreement dated as of June 4, 1996 among the Borrower, the lenders named therein
and First Union National Bank of North Carolina, as agent pursuant to which the
Borrower may borrow up to $218,000,000 in the aggregate at any one time
outstanding, together with the documents related thereto (including, without
limitation, the Wachovia Letter of Credit, any guarantee agreements and security
documents), as such agreements have been or may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time,
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including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company, its
Subsidiaries or any of their respective predecessors in interest.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
"Final Bridge Loan" has the meaning assigned to it in Section 2.1A.
"Final Takedown Closing Date" means the date on or before the earlier
of 364 days after the consummation of the Tender Offer and 180 days after the
Merger, on which all the conditions set forth in Section 3.1 and 3.3 to the
making of the Final Bridge Loan are satisfied or waived in accordance with
Section 12.6.
"First Union" has the meaning assigned to it in the recitals hereto.
"First Union Currency Agreement" means the currency agreement number
144A207 dated as of November 19, 1997 between the Borrower and First Union
National Bank.
"Foreign Plan" means any employee benefit plan maintained outside the
U.S. by the Company, any of its Subsidiaries or any of their respective
Affiliates for employees substantially all of whom are non-resident aliens of
the U.S. and for which the Company or any of its Subsidiaries may be directly or
indirectly liable.
"FUCMC" means First Union Capital Markets Corp.
"Funding Guarantor" has the meaning ascribed to it in Section 10.6.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by The Financial Accounting Standards
Board and which are consistently applied for all periods after the date hereof
so as to properly reflect the financial condition, and the results of operations
and changes in financial position, of the Company and its Subsidiaries, except
that any accounting principle or practice required to be changed in order to
continue as a generally accepted accounting principle or practice may be so
changed.
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"Guarantee Obligations" has the meaning ascribed to it in Section 11.1.
"Guarantees" means, collectively, the guarantees delivered to the
Lenders by the Guarantors pursuant to Section 10 which are evidenced by
notations of guarantee substantially in the form of Exhibit VII.
"Guarantor Payment Blockage Period" has the meaning ascribed to it in
Section 11.2(b).
"Guarantor Senior Indebtedness" means, with respect to any Guarantor,
the principal of, premium, if any, and interest on, and all amounts payable in
respect of, all obligations of every nature of such Guarantor from time to time
owed to the lenders under the Senior Credit Facility, including, without
limitation, all obligations with respect to letters of credit and principal of
and interest on, and all fees, indemnities and expenses payable under, the
Senior Credit Facility and all obligations under Interest Rate Agreements
entered into with lenders under the Senior Credit Facility and their respective
Affiliates and any guarantees thereof including any agreement refinancing all or
any portion of the Indebtedness under such Senior Credit Facility but only to
the extent such Indebtedness is fully and adequately secured. Without limiting
the generality of the foregoing, "Guarantor Senior Indebtedness" shall include
interest accruing thereon subsequent to the occurrence of any Event of Default
specified in Sections 7.6 and 7.7 relating to the Guarantors, whether or not the
claim for such interest is allowed under any applicable Bankruptcy Law.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not include
that portion of any Indebtedness which is incurred by such Guarantor in
violation of this Agreement.
"Guarantors" means the Company, Service Co. and each future
Wholly-Owned Subsidiary of the Borrower that is organized under the laws of the
United States or any state or commonwealth thereof or under the laws of the
District of Columbia.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any flammable substances or
explosives; (iv) any radioactive materials; (v) asbestos in any form; (vi) urea
formaldehyde foam insulation; (vii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (viii) pesticides; and (ix) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to human health
or safety or the environment.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required
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pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on
the balance sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided that any
amendment, modification or waiver of any document pursuant to which Indebtedness
was previously Incurred shall only be deemed to be an Incurrence of Indebtedness
if and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable thereon or (ii) changes to
an earlier date the stated maturity thereof or the date of any scheduled or
required principal payment thereon or the time or circumstances under which such
Indebtedness shall be redeemed; provided, further, that any Indebtedness of a
Person existing at the time such Person becomes a Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary of the
Company.
"Indebtedness" means, with respect to any Person, (i) all indebtedness,
obligations and liabilities of such Person for borrowed money, (ii) that portion
of obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet of such person in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit, whether or not
representing obligations for borrowed money, of such Person, (iv) any
indebtedness, obligation or liability of such Person owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more than six
months (or a longer period of up to one year, if such terms are available from
suppliers in the ordinary course of business) from the date of incurrence of the
obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (v) all indebtedness, obligations and liabilities secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person except that "Indebtedness" shall not
include trade payables and accrued liabilities Incurred in the ordinary course
of business for the purchase of goods or services which are not secured by a
Lien other than a Lien permitted pursuant to Section 6.2(ii) and obligations
under Interest Rate Agreements and Currency Agreements (which constitute
Contingent Obligations, not Indebtedness), (vi) guarantees of such Person in
respect of Indebtedness of other Persons and (vii) all Disqualified Capital
Stock issued by such Person with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value to be
determined reasonably and in good faith by the board of directors of the issuer
of such Disqualified Capital Stock.
"Indemnified Liabilities" has the meaning ascribed to it in Section
12.4.
"Indemnitees" has the meaning ascribed to it in Section 12.4.
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"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company or any of its Subsidiaries and (ii)
which, in the judgment of the Board of Directors of the Company or any of its
Subsidiaries is otherwise independent and qualified to perform the task for
which it is to be engaged.
"Initial Bridge Loan" has the meaning assigned to it in Section 2.1A.
"Initial Purchase Agreement" means the Purchase Agreement dated as of
October 27, 1997 among the Company, Polymer and DT Acquisition, as amended or
modified from time to time.
"Initial Takedown Closing Date" means the date that is on or before
February 26, 1998 on which all of the conditions contained in Section 3.1 and
3.2 to the making of the Initial Bridge Loan are satisfied or waived in
accordance with Section 12.6.
"Initial Transactions" means, collectively, (i) the incurrence of the
Initial Bridge Loan hereunder on the Initial Takedown Closing Date, (ii) the
taking-up and acceptance for payment by DT Acquisition of the Remaining Dominion
Shares validly deposited with the Depositary pursuant to the Offer to Purchase,
(iii) the placement of the Junior Capital, (iv) any other transaction on or
prior to the Initial Takedown Closing Date contemplated in relation to the
foregoing and (v) the payment of fees and expenses in connection with the
foregoing.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Company as currently conducted that are material
to the condition (financial or otherwise), business, operations or prospects of
the Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" shall mean, in respect of the Bridge Loan and subject
to Section 2.2E, (a) the period commencing on the Initial Takedown Closing Date
and ending one month thereafter on the same day of the month as the Initial
Takedown Closing Date and (b) each subsequent period beginning on the last day
of the preceding Interest Period and ending one month thereafter on the same day
of the month as that last day.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collateral agreement or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day on which banks in New York and London are open
prior to the first Business Day of such Interest Period.
"Interest Swap Obligations" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed
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rate of interest on a stated notional amount in exchange for periodic payments
made by such other Person calculated by applying a fixed or floating rate of
interest on the same notional amount.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor code or statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition of, or of a beneficial interest in, any Securities of any other
Person or (ii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit or
capital contribution to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Junior Capital" means, collectively, (i) the Company Junior Capital
Contribution, (ii) the Polymer Junior Capital Contribution and (iii) the ZB
Holdings Junior Capital Contribution.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that, as to any such arrangement in corporate form, such corporation shall not,
as to any Person of which such corporation is a Subsidiary, be considered to be
a Joint Venture to which such Person is a party
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, orders, judgments, writs, injunctions or decrees of any state,
commonwealth, nation, territory, possession, province, county, parish, township,
village, municipality or Tribunal, and "Law" means each of the foregoing.
"Lenders" has the meaning ascribed to that term in the introduction to
this Agreement and shall include any assignee of any Bridge Loan, Bridge Note or
Bridge Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Litigation" means any action, suit, proceeding, claim, lawsuit and/or
investigation conducted or threatened by or before any Tribunal.
"Loan Documents" means this Agreement, the Bridge Notes, the
Guarantees, the Senior Subordinated Indenture, the Exchange Notes and the
Registration Rights Agreement.
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"Margin Stock" has the meaning assigned to that term in Regulation U
and Regulation G of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, whether before
or after giving effect to the Transactions or (ii) a material impairment of the
ability of the Company and its Subsidiaries, taken as a whole, to perform or
consummate, or the material impairment of the ability of the Agent or Lenders to
enforce, the Obligations or the Transactions.
"Material Subsidiary" means, with respect to any accounting period, (a)
any Subsidiary of the Company (i) whose revenues constitute greater than 10% of
the aggregate dollar value of the revenues of the Company and its Subsidiaries,
taken as a whole, for such accounting period or (ii) the fair market value of
whose assets at any time during such accounting period is greater than 10% of
the fair market value of all of the assets of the Company and its Subsidiaries
at such time.
"Maturity Date" has the meaning assigned to it in Section 2.1E.
"Maximum Cash Interest Rate" means an interest rate of 14% per annum;
provided that in computing such interest rate, fees paid to the Lenders shall
not be deemed an interest payment.
"Merger" means the acquisition by DT Acquisition, directly or
indirectly, of all of the Common Stock of, or all or substantially all of the
assets or operations of, Dominion.
"Merger Agreement" means the Merger Agreement to be entered into
between DT Acquisition, Dominion and certain other parties pursuant to which DT
Acquisition, directly or indirectly, shall acquire all of the Common Stock of,
or all or substantially all of the assets or operations of, Dominion, as the
same shall be amended or modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company, its Subsidiaries or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, its Subsidiaries or any of their ERISA Affiliates and at least one
Person other than the Company, its Subsidiaries and their ERISA Affiliates or
(ii) was so maintained and in respect of which such Company, Subsidiaries or
ERISA Affiliates could have liability under Section 4064 or Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including, but
not limited to, (i) income taxes reasonably estimated to be actually payable as
a result of such Asset Sale within two years of the
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date of such Asset Sale, (ii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on, any Indebtedness that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale, (iii) out-of-pocket
expenses and fees relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions) and (iv)
any portion of cash proceeds which the Company determines in good faith should
be reserved for post-closing adjustments or liabilities relating to the Asset
Sale retained by the Company or any of its Subsidiaries, it being understood and
agreed that on the day that all such post-closing adjustments have been
determined, the amount (if any) by which the reserved amount in respect of such
Asset Sale exceeds the actual post-closing adjustments, payable by the Company
or any of its Subsidiaries, shall constitute Net Cash Proceeds on such date.
"New Senior Credit Facility" means the Loan Agreement to be entered
into on or before the Initial Takedown Closing Date as a replacement of the
Existing Senior Credit Facility between the Borrower, the lenders listed therein
and First Union National Bank, as agent, pursuant to which the Company may
borrow up to $470,000,000 in the aggregate at any one time outstanding together
with the documents related thereto (including, without limitation, the Wachovia
Letter of Credit, any guarantee agreements and security documents), as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Non-Payment Default" means any event (other than a Payment Default)
the occurrence of which entitles one or more Persons to act to accelerate the
maturity of any Senior Indebtedness.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit III with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Borrower
from time to time owed to the Lenders and the Agent under the Loan Documents,
whether for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance).
"Offer Payment Date" has the meaning ascribed to it in Section
2.4A(iv).
"Offer to Purchase" means the offers to purchase for cash all of the
outstanding Capital Stock of Dominion dated October 29, 1997 made by DT
Acquisition to all of the holders of the Capital Stock of Dominion, as extended
and varied by (i) a Notice of Extension and Variation dated November 18, 1997
and (ii) a Notice of Extension and Variation dated December 16, 1997, and as the
same may be further modified and supplemented and in effect from time to time.
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"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer, the
Secretary or Assistant Secretary of each of the Company and its Subsidiaries.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two Officers; provided
that every Officers' Certificate with respect to the compliance with a condition
precedent to the making of the Bridge Loans hereunder shall include (i) a
statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"Original Bridge Notes" has the meaning assigned to it in Section 2.1D.
"Pari Passu Indebtedness" means, with respect to the Borrower or any
Guarantor, Indebtedness of such Person which ranks pari passu in right of
payment to the Bridge Loans or the Guarantee of such Guarantor, as the case may
be.
"Payment Blockage Period" has the meaning ascribed to it in Section
8.2(b).
"Payment Default" means any default in the payment of principal,
premium, if any, or interest on any Senior Indebtedness beyond any applicable
grace period with respect thereto.
"Payment Office" shall mean the office of the Agent located at 301
South College Street, Charlotte, NC 28288 or such other office as the Agent may
designate to the Company and the Lenders from time to time.
"Payment Restriction" has the meaning ascribed to it in Section 6.8.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means a Single Employer Plan or Multiple Employer Plan.
"Permits" has the meaning ascribed to it in Section 4.19.
"Permitted Holders" means (i) Citicorp Venture Capital, Ltd., (ii) FMR
Corp., (iii) Arthur C. Weiner, his family members and any trusts, the only
beneficiaries of which are Arthur C. Weiner or his family members and (iv)
partnerships, corporations or limited liability companies which control or are
controlled by the persons or entities described in clauses (i), (ii) or (iii).
"Permitted Preferred Stock" means any Preferred Stock issued by the
Company or the Borrower in an aggregate amount not to exceed $30,000,000 at any
one time outstanding and which by its terms does not permit (i) redemption,
liquidation, mandatory sinking fund
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payments or the like by a fixed date on or prior to the Maturity Date and (ii)
the payment of cash dividends on or prior to the Maturity Date at a rate in
excess of 8.0%.
"Permitted Refinancing Indebtedness" means (A) any Refinancing by the
Company of Indebtedness of the Company or of its Subsidiaries (other than
Indebtedness Incurred or outstanding pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix) or (xi) of Section 6.1) and (B) any Indebtedness incurred
pursuant to a Refinancing by any Subsidiary of the Company of Indebtedness
Incurred by such Subsidiary (other than Indebtedness Incurred or outstanding
pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix) or (xi) of Section
6.l), in the case of each of (A) and (B), that does not (1) result in an
increase in the total of the aggregate principal amount of the Indebtedness of
such person being Refinanced as of the date of such proposed Refinancing (if
such Indebtedness that is Refinancing the existing Indebtedness is issued at a
price less than 100% of the principal amount thereof, an increase shall not be
deemed to have occurred unless the gross proceeds of such Indebtedness that is
Refinancing the existing Indebtedness is in excess of the total of the aggregate
principal amount of the Indebtedness being Refinanced as of the date of such
proposed Refinancing) or (2) create Indebtedness with a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced; provided that (x) if such Indebtedness being
Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company, (y) if such Indebtedness being
Refinanced is subordinate or junior in right of payment to the Bridge Loan or
the Guarantees, as the case may be, or if recourse in respect of the
Indebtedness being Refinanced is limited in any respect, then such Indebtedness
proposed to be Incurred to Refinance the existing Indebtedness shall be
Subordinate in right of payment to the Bridge Loan or the Guarantees, as the
case may be, and recourse with respect thereto, as the case may be, shall be
limited at least to the same extent and in the same manner as the Indebtedness
being Refinanced and (z) if such Indebtedness being Refinanced is Pari Passu
Indebtedness, then such Indebtedness proposed to be incurred to Refinance the
existing Indebtedness shall be Pari Passu Indebtedness; provided, further, that
Indebtedness incurred currently with an irrevocable offer to purchase, on a date
not more than 60 days from the date of the incurrence of such Indebtedness, an
amount of Bridge Notes equal to such Indebtedness shall be deemed refinancing
Indebtedness.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities and governments and agencies and political subdivisions thereof.
"PIK Interest Amount" has the meaning ascribed to it in Section 2.2B.
"Polymer" means Polymer Group, Inc., a Delaware corporation.
"Polymer Junior Capital Contribution" means the unsecured subordinated
loan made by Polymer to DT Acquisition on or prior to the Initial Takedown
Closing Date as contemplated by the Purchase Agreement.
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"Potential Event of Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights (as compared to any other Capital Stock of such
Person) with respect to dividends or redemptions or upon liquidation.
"Pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Agreement, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's chief financial officer or Board of Directors in consultation with its
independent certified public accountants.
"Purchase Agreement" means the Initial Purchase Agreement until the
execution and delivery of the Definitive Purchase Agreement and thereafter means
the Definitive Purchase Agreement.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Recovery Event" means the receipt by the Company, the Borrower or any
of their respective Subsidiaries of any cash insurance proceeds or condemnation
award payable by reason of theft, loss, physical destruction or damage, taking
or similar event with respect to any of their respective properties or assets.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to it in Section 5.12.
"Registration Rights Agreement" means a registration rights agreement
substantially in the form contemplated by Exhibit V (with such changes therein
as the Agent and the Company shall approve).
"Related Business" means any capital expenditure or Investment in
properties or assets, or in Capital Stock of a Person that as a result of such
capital expenditure or Investment becomes a Wholly-Owned Subsidiary of the
Company, if the property or assets so acquired, or the property and assets of
the Person the Capital Stock of which is so acquired, will be used in the
business of the Company and its Subsidiaries as existing on the Initial Takedown
Closing Date but giving effect to the Acquisition or in businesses reasonably
related thereto.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the environment (including,
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), or onto
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or out of any Facility, including the movement of any Hazardous Material through
the air, soil, surface water, groundwater or property.
"Remaining Dominion Shares" means all of the shares of common stock and
preferred stock of Dominion not beneficially owned by Polymer or DT Acquisition
immediately prior to the commencement of the Tender Offer.
"Required Lenders" means the Lender or Lenders holding at least 51% of
the aggregate outstanding principal amount of Bridge Notes.
"Restricted Payment" has the meaning ascribed to it in Section 6.3.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit
sharing agreement or arrangement, bonds, debentures, options, warrants, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Senior Credit Facility" means the Existing Senior Credit Facility
until the execution and delivery of the New Senior Credit Facility and the
repayment by the Company of all obligations under the Existing Senior Credit
Facility and thereafter means the New Senior Credit Facility.
"Senior Indebtedness" means for any Person the principal of, premium,
if any, and interest on, and all amounts payable in respect of, all obligations
of every nature of the Company from time to time owed to the lenders under the
Senior Credit Facility; including, without limitation, all obligations in
respect of letters of credit and principal of and interest on and all fees,
indemnities, and expenses payable under the Senior Credit Facility and all
obligations under Interest Rate Agreements entered into with lenders under the
Senior Credit Facility and their respective Affiliates and any guarantees
thereof including any agreement refinancing all or any portion of the
Indebtedness under such Senior Credit Facility but only to the extent such
Indebtedness is fully and adequately secured. Without limiting the generality of
the foregoing "Senior Indebtedness" shall include interest accruing thereon
subsequent to the occurrence of any Event of Default specified in Sections 7.6
and 7.7 relating to the Company, whether or not the claim for such interest is
allowed under any applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" of any Person shall not include that portion of any
Indebtedness which is incurred by such Person in violation of this Agreement.
"Senior Subordinated Indenture" means an indenture among the Borrower,
the Guarantors and a trustee substantially in the form contemplated by and in
accordance with Section 5.9 (with such changes therein as the Agent and the
Borrower shall approve, and at such time as notes issued thereunder are sold in
a public offering, with other appropriate changes to reflect such public
offering), as the same may at any time be amended, modified and supplemented and
in effect.
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"Single Employer Plan" means a "single-employer plan," as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, any of its Subsidiaries or any of their ERISA Affiliates and no Person
other than the Company, any of its Subsidiaries or any of their ERISA Affiliates
or (ii) was so maintained and in respect of which such Company, its Subsidiaries
or their ERISA Affiliates could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor which is expressly subordinated in right of payment to the Bridge
Notes or the Guarantee of such Guarantor, as the case may be.
"Subsequent Bridge Note" has the meaning ascribed to it in Section
2.1D.
"Subsequent Transactions" means, collectively, (i) the incurrence of
the revolving loans drawn down on the Final Takedown Closing Date under the
Senior Credit Facility, (ii) the incurrence of the Final Bridge Loan hereunder
on the Final Takedown Closing Date, (iii) the consummation of the Merger, (iv)
the Acquisition, (v) any other transaction on the Final Takedown Closing Date
contemplated in relation to the foregoing and (vi) the payment of fees and
expenses in connection with the foregoing.
"Subsidiary" means, with respect to any person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Take-Out Securities" means any debt securities of the Company and/or
the Guarantors the proceeds of which are used to repay the Bridge Loan in full.
"Taxes" means any present or future taxes, assessments, fees, levies,
imposts, duties, deductions, liabilities, withholdings or other charges of any
nature whatsoever, including interest, penalties and additions thereto from time
to time or at any time imposed by any Law or any Tribunal.
"Tax Return" means a report, return or other information (including any
amendments) required to be supplied to a Tribunal with respect to Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes the Company or any Subsidiary.
"Tender Credit Agreement" means the loan agreement dated as of December
17, 1997 between Chase Manhattan Bank, as administrative agent, the lenders
named therein, and DT Acquisition pursuant to which DT Acquisition may borrow up
to $600,000,000 in the aggregate, including borrowings under the Tender Term
Loan and the Tender Revolving Credit Loan.
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"Tender Offer" means the cash tender offer made by DT Acquisition,
pursuant to the terms of the Offer to Purchase, for all of the Remaining
Dominion Shares at a price of Canadian $14.50 per share of common stock and
Canadian $150.00 per share of preferred stock.
"Tender Revolving Credit Loan" means the revolving credit loan of up to
$45,000,000 in the aggregate made to DT Acquisition under the Tender Credit
Agreement.
"Tender Term Loan" means the term loan of $225,000,000 in the aggregate
made to DT Acquisition under the Tender Credit Agreement.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower pursuant hereto and other fees, costs and expenses payable by the
Company or a Subsidiary of the Company in connection with the Transactions.
"Transaction Date" means the date on which any transaction that would
give use to the need to calculate the Consolidated Fixed Change Coverage Ratio
occurs.
"Transactions" means collectively, (i) the Initial Transactions, (ii)
the Subsequent Transactions, (iii) the incurrence by DT Acquisition of the
Tender Term Loan and Tender Revolving Credit Loan and (iv) the payment by DT
Acquisition for all of the Remaining Dominion Shares validly deposited with the
Depositary at or prior to the expiry of the Tender Offer.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency, authority or
instrumentality of any state, province, commonwealth, nation, territory,
possession, county, parish, town, township, village or municipality, whether now
or hereafter constituted and/or existing.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or the governing body of such Person.
"Wachovia Letter of Credit" means that irrevocable letter of credit no.
LC 968-044594 dated May 17, 1994 issued by Wachovia Bank of North Carolina,
National Association in favor of First Citizens Bank & Trust Company, as Trustee
under those $7,200,000 South Carolina Jobs-Economic Development Authority
Tax-Exempt Adjustable Mode Economic Development Revenue Bonds (Galey & Lord
Industries, Inc. Project) Series 1994, for the account of the Borrower in the
original maximum amount of $7,830,000, as such letter of credit may be modified,
supplemented, extended and replaced from time to time.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the
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amount of each then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled
directly or indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person or a combination thereof.
"ZB Holdings" means ZB Holdings, a South Carolina corporation.
"ZB Holdings Junior Capital Contribution" means the unsecured
subordinated loan made by ZB Holdings to DT Acquisition on or prior to the
Initial Takedown Closing Date as contemplated by the Purchase Agreement.
1.2 Accounting Terms
For the purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
1.3 Other Definitional Provisions
Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; NOTES
2.1 Bridge Loan and Bridge Note
A. Bridge Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Company
and the Borrower herein set forth, the Lenders hereby agree to lend to the
Borrower on the Initial Takedown Closing Date $145,617,902.25 in the aggregate
(the "Initial Bridge Loan") and on the Final Takedown Closing Date
$104,382,007.75 in the aggregate (the "Final Bridge Loan," and together with the
Initial Bridge Loan, the "Bridge Loan"), each such Lender committing to lend the
aggregate amount set forth next to such Lender's name on the signature pages
hereto. The Lenders' commitments to make the Bridge Loan to the Borrower
pursuant to this Section 2.1 A are herein called individually, the "Bridge Loan
Commitment" and collectively, the "Bridge Loan Commitments."
B. Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.1, it shall deliver to the Agent a Notice of Borrowing no later than
11:00 A.M. (New York time), at least two Business Days in advance of the Initial
Takedown Closing Date or Final
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Takedown Closing Date, as the case may be, or, in either case, such later date
as shall be agreed to by the Agent. The Notice of Borrowing shall specify the
applicable date of borrowing (which shall be a Business Day). Upon receipt of
such Notice of Borrowing, the Agent shall promptly notify each Lender of its
share of the Bridge Loan and the other matters covered by the Notice of
Borrowing.
C. Disbursement of Funds. (a) No later than 5:00 p.m. (New York time)
on the Initial Takedown Closing Date or Final Takedown Closing Date, as the case
may be, each Lender will make available its pro rata share of the Bridge Loan
requested to be made on such date in the manner provided below. All amounts
shall be made available to the Agent in U.S. Legal Tender and immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Lender prior to the Initial Takedown Closing
Date or Final Takedown Closing Date, as the case may be, that such Lender does
not intend to make available to the Agent its portion of the Bridge Loan to be
made on such date, the Agent may assume that such Lender has made such amount
available to the Agent on such date, and the Agent, in reliance upon such
assumption, may (in its sole discretion and 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 by such Lender and the Agent
has made available same to the Borrower, the Agent shall be entitled 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 shall
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 such 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 rate per annum equal to (x)
if paid by such Lender, the overnight Federal Funds Rate or (y) if paid by the
Borrower, the then applicable rate of interest on the Bridge Loan.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any
rights which the Borrower may have against any Lender as a result of any default
by such Lender hereunder or a default by First Union under the Commitment
Letter, including, without limitation, its obligation to make available to the
Borrower the entire Bridge Loan subject to the terms and conditions therein
stated.
D. Bridge Notes. The Borrower shall execute and deliver to each Lender
on the Initial Takedown Closing Date and the Final Takedown Closing Date, as the
case may be, a bridge note dated the Initial Takedown Closing Date and the Final
Takedown Closing Date, as the case may be, substantially in the form of Exhibit
I to evidence such Lender's portion of the Bridge Loan Commitment and with
appropriate insertions (the "Original Bridge Notes"). On each interest payment
date on which the Borrower elects to pay a PIK Interest Amount pursuant to
Section 2.2B, the Borrower shall execute and deliver to each Lender on such
interest payment date a bridge note dated such interest payment date
substantially in the form of Exhibit I annexed hereto in a principal amount
equal to such Lender's pro rata portion of such PIK
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Interest Amount and with other appropriate insertions (each a "Subsequent Bridge
Note" and, together with the Original Bridge Notes, the "Bridge Notes"). A
Subsequent Bridge Note shall bear interest from the date of its issuance at the
same rate borne by all Bridge Notes.
E. Maturity of Bridge Loan. The Bridge Loan shall mature and the
Borrower shall pay in full the outstanding principal amount thereof and accrued
interest thereon on the tenth anniversary of the Initial Takedown Closing Date
(the "Maturity Date").
F. Termination of Bridge Loan Commitment. The Bridge Loan Commitment
hereunder shall terminate on the earlier of (i) termination of the Tender Offer
prior to its consummation, (ii) February 26, 1998 if the Initial Bridge Loan is
not made on or before such date or (iii) the earlier of 364 days after the
consummation of the Tender Offer and 180 days after the Merger if the Final
Bridge Loan is not made on or before such date.
G. Pro Rata Borrowings. The Bridge Loan made under this Agreement shall
be made by the Lenders pro rata on the basis of their respective Bridge Loan
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Bridge
Loan hereunder and that each Lender shall be obligated to make its portion of
the Bridge Loan hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder (subject however to the obligation of First
Union under the Commitment Letter to make available to the Borrower the entire
Bridge Loan subject to the terms and conditions therein stated).
2.2 Interest on the Bridge Loan
A. Rate of Interest. The Bridge Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
prepayment, acceleration or otherwise) at a rate per annum equal to the
Applicable Interest Rate for each Interest Period.
Notwithstanding this Section 2.2A or any other provision herein, in no
event will the combined sum of interest (cash or otherwise) on the Bridge Loan
exceeds 18.00% per annum.
B. Interest Payments. Interest shall be payable with respect to the
Bridge Loan, in arrears, on each Interest Payment Date, commencing on the first
Interest Payment Date following the Initial Takedown Closing Date and upon any
prepayment of the Bridge Loan (to the extent accrued on the amount being
prepaid) and on the Maturity Date; provided, however, that if, on any Interest
Payment Date on which interest is required to be paid (other than the Maturity
Date), the interest rate borne by the Bridge Loan exceeds the Maximum Cash
Interest Rate, the Borrower may pay all or a portion of the interest payable in
excess of the amount of interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes, in an
aggregate principal amount equal to the amount of such interest being so paid
(the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the Bridge Loan
not paid when due and, to the extent permitted by applicable law, any interest
payment on the Bridge Loan not paid when due, in each case whether at stated
maturity, by notice of prepayment, by
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acceleration or otherwise, shall thereafter bear interest payable upon demand at
a rate which is 2.00% per annum in excess of the rate of interest otherwise
payable under this Agreement for the Bridge Loan.
D. Computation of Interest. Interest on the Bridge Loan shall be
computed on the basis of a 360-day year and the actual number of days elapsed in
the period during which it accrues. In computing interest on the Bridge Loan,
the date of the making of the Bridge Loan shall be included and the date of
payment shall be excluded; provided that if the Bridge Loan is repaid on the
same day on which it is made, one day's interest shall be paid on the Bridge
Loan.
E. Making of Payments. Any payment stated to be due in respect of any
Bridge Loan, and any Interest Period stated to end, on a given day in a
specified month shall instead be made or end (as the case may be) (i) if there
is no such day in that month, on the last Business Day of that month or (ii) if
that day is not a Business Day, on the following Business Day, unless that
following Business Day falls in a different calendar month, in which case that
payment shall be made or that Interest Period shall end (as the case may be) on
the preceding Business Day.
2.3 Fees
The Borrower agrees to pay to First Union and its Affiliates all fees
and other obligations in accordance with, and at the times specified by, the
Commitment Letter.
2.4 Prepayments and Payments
A. Prepayments
(i) Voluntary Prepayments. The Borrower may, upon not less
than three Business Days' prior written or telephonic notice confirmed
in writing to the Agent at any time and from time to time, prepay the
Bridge Loan made to the Borrower in whole or in part in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in
excess of that amount at a prepayment price equal to the principal
amount thereof plus accrued and unpaid interest thereon to the date of
prepayment.
Notice of prepayment having been given as aforesaid, the
principal amount of the Bridge Loan to be prepaid shall become due and
payable on the prepayment date. Amounts of the Bridge Loan so prepaid
may not be reborrowed.
(ii) Mandatory Prepayments
(a) Prepayments from Asset Sales. Upon receipt by the Company
or any Subsidiary of the Company of Cash Proceeds of any Asset Sale
occurring after the Initial Takedown Closing Date, (A) the Company
shall, or shall cause its Subsidiaries to, apply an amount equal to the
Net Cash Proceeds of such Asset Sale to prepay loans outstanding under
the Senior Credit Facility; provided that the commitment thereunder is
permanently reduced to the extent of the prepayment; and (B) the
Company or any Subsidiary of the Company may apply any Net Cash
Proceeds remaining after any
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payment pursuant to clause (A) above to a Related Business.
Concurrently with the consummation of any such Asset Sale, the Company
shall deliver to the Agent an Officer's Certificate demonstrating the
derivation of Net Cash Proceeds from the gross sales price of such
Asset Sale.
The Borrower shall prepay the Bridge Loan in an amount equal
to the Net Cash Proceeds not used as provided in the preceding
paragraph on a date not later than the Business Day next succeeding the
180th day after the consummation of such Asset Sale if and to the
extent that such Net Cash Proceeds are not applied by the Company or
any Subsidiary of the Company within 180 days after the consummation of
such Asset Sale pursuant to the immediately preceding paragraph.
(b) Prepayments from Capital Contributions and Equity
Issuances. Concurrently with the receipt by the Company or any
Subsidiary of cash proceeds from any capital contribution or any sale
or issuance of its equity, other than any cash proceeds from any
capital contribution by, or any sale of equity to, the Company or any
of its Subsidiaries, the Borrower shall, to the extent that such
proceeds are not required by the Senior Credit Facility to prepay any
amounts outstanding thereunder, prepay the Bridge Loan in a principal
amount equal to the lesser of the cash proceeds thereof (net of
underwriting or placement discounts commission and other reasonable
costs associated therewith) or the aggregate principal amount of the
Bridge Notes then outstanding. Notwithstanding the foregoing, the
Company may retain the proceeds from the issuance of Permitted
Preferred Stock, provided that such proceeds are used for working
capital purposes.
(c) Prepayments from Issuances of Take-Out Securities and
Certain Other Indebtedness. Concurrently with the receipt by the
Borrower of proceeds from the issuance or incurrence of Take-Out
Securities or other Indebtedness for borrowed money (other than the
Senior Credit Facility), the Borrower shall, to the extent that such
proceeds are not required to be used to prepay any amounts outstanding
under the Senior Credit Facility, prepay the Bridge Loan in an amount
equal to 100% of such proceeds; it being understood, however, that the
Bridge Loan shall be prepaid in full with the proceeds of the Take-Out
Securities.
(d) Prepayments from Recovery Events. Concurrently with the
occurrence of a Recovery Event, the Borrower shall, to the extent that
such proceeds are not required to be used to prepay any amounts
outstanding under the Senior Credit Facility, prepay the Bridge Loan in
an aggregate amount equal to 100% of such cash proceeds.
(e) Prepayments from Payments of the Company Junior Capital
Contribution. Concurrently with the receipt by the Company or the
Borrower of any repayment or prepayment of the Company Junior Capital
Contribution, the Borrower shall, to the extent that any such repayment
or prepayment (i) is not required to be used to prepay amounts
outstanding under the Senior Credit Facility or (ii) is not used to
fund the Subsequent Transactions, prepay the Bridge Loan in an amount
equal to 100% of any such repayment or prepayment.
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(f) Prepayments from Adjustments to Acquisition Purchase
Price. Concurrently with the receipt by the Company or the Borrower of
any payment or refund arising from an adjustment to the Acquisition
Purchase Price which, when aggregated with any other such payments or
refunds, exceeds $25,000,000, the Borrower shall, to the extent that
any such excess is not required to be used to prepay any amounts
outstanding under the Senior Credit Facility, prepay the Bridge Loan in
an aggregate amount equal to 100% of any such excess.
(g) Any prepayment of the Bridge Loan pursuant to clause (a),
(b), (c), (d), (e) or (f) of this Section 2.4A(ii) shall be made at a
prepayment price equal to the principal amount of the Bridge Loan so
prepaid plus accrued and unpaid interest thereon to the date of
prepayment.
(h) Notice. The Borrower shall notify the Agent of any
prepayment to be made pursuant to this Section 2.4A(ii) at least two
Business Days prior to such prepayment date (unless shorter notice is
satisfactory to the Required Lenders).
(iii) Borrower's Mandatory Prepayment Obligation; Application
of Prepayments. All prepayments shall include payment of accrued
interest on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
(iv) Mandatory Offer to Purchase Notes
(a) Upon the occurrence of a Change of Control (the date of
such occurrence, the "Change of Control Date"), the Borrower shall, if
the Lenders so request, offer to purchase (the "Change of Control
Offer") all of the Bridge Notes at a purchase price equal to 103.0% of
the aggregate principal amount thereof plus accrued and unpaid interest
thereon to the date of repurchase. Prior to the mailing of the notice
to the Agent provided for in paragraphs (b) and (c) below but in any
event within 30 days following any Change of Control, the Borrower
hereby covenants to (i) repay in full all Indebtedness under the Senior
Credit Facility or to offer to repay in full all such Indebtedness and
to repay the Indebtedness of each lender under the Senior Credit
Facility who has accepted such offer or (ii) obtain the requisite
consents under the Senior Credit Facility to permit the payment of the
Bridge Notes as provided for in paragraph (d) below. The Borrower shall
first comply with the covenant in the preceding sentence before it
shall be required to pay the Notes pursuant to this Section 2.4A(iv).
(b) The notice to the Agent shall contain all instructions and
materials necessary to enable the Lenders to tender Notes.
(c) Within 30 days following any Change of Control the
Borrower shall mail a notice to the Agent stating:
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(1) that the Change of Control Offer is being made
pursuant to this Section 2.4(A) (iv) and that all Bridge Notes
validly tendered will be accepted for payment;
(2) the purchase price and the purchase date, which
shall be no earlier than 30 days nor later than 40 days from
the date such notice is mailed (the "Offer Payment Date");
(3) that any Bridge Note not tendered will continue
to accrue interest;
(4) that any Bridge Note accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Offer Payment Date unless the Borrower
shall default in the payment of the repurchase price of the
Bridge Notes;
(5) that if a Lender elects to have a Bridge Note
purchased pursuant to the Change of Control Offer it will be
required to surrender the Bridge Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Borrower prior to 5:00 p.m. New York
time on the Offer Payment Date;
(6) that a Lender will be entitled to withdraw its
election if the Borrower receives, not later than 5:00 p.m.
New York time on the Business Day preceding the Offer Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the principal amount of Bridge Notes such Lender
delivered for purchase, and a statement that such Lender is
withdrawing its election to have such Note purchased; and
(7) that if Bridge Notes are purchased only in part a
new Bridge Note of the same type will be issued in principal
amount equal to the unpurchased portion of the Notes
surrendered.
(d) On or before the Offer Payment Date, the Borrower shall
(i) accept for payment Bridge Notes or portions thereof which are to be
purchased in accordance with the above, and (ii) deposit at the Payment
Office U.S. Legal Tender sufficient to pay the purchase price of all
Notes to be purchased. The Agent shall promptly mail to the Lenders
whose Bridge Notes are so accepted payment in an amount equal to the
purchase price unless such payment is prohibited pursuant to Section 8
or otherwise.
(e) The Borrower shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are
applicable in connection with the purchase of Bridge Notes pursuant to
an offer hereunder. To the extent the provisions of any securities laws
or regulations conflict with the provisions under this Section, the
Borrower shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations
under this Section by virtue thereof.
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B. Manner and Time of Payment. All payments of principal and interest
hereunder and under the Bridge Notes by the Borrower shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Agent, unless otherwise specified, not later than 12.00 Noon (New York time) on
the date due at the Payment Office for the account of the Lenders; funds
received by the Agent after that time shall be deemed to have been paid by the
Borrower on the next succeeding Business Day. The Borrower hereby authorizes the
Agent to charge its account with the Agent in order to cause timely payment to
be made of all principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
C. Notation of Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by granting participations
therein), such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify the Borrower of the name and address of the transferee of that
Note; provided that the failure to make (or any error in the making of) such a
notation or to notify the Borrower of the name and address of such transferee
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under such Bridge Notes with respect to the Bridge Loan and payments of
principal or interest on any such Note.
2.5 Use of Proceeds
The proceeds of the Initial Bridge Loan shall be made available by the
Borrower to the Company which shall use such proceeds to make the Company Junior
Capital Contribution. The proceeds of the Final Bridge Loan shall be applied by
the Borrower, together with borrowings under the Senior Credit Facility, to
finance the Acquisition and pay the Transaction Costs.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Bridge Loan and Final Bridge Loan
The obligations of the Lenders to make the Initial Bridge Loan and
Final Bridge Loan hereunder are subject to the satisfaction of, or waiver of,
immediately prior to or concurrent with the making of such Initial Bridge Loan
or Final Bridge Loan on the Initial Takedown Closing Date or the Final Takedown
Closing Date, as the case may be, the following conditions precedent:
(1) The Agent shall have received on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Initial Takedown Closing Date
or Final Takedown Closing Date, as applicable:
(a) resolutions of the Borrower's and each Guarantor's Board
of Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents and any
other documents, instruments and certificates required to be executed
by the Borrower or such Guarantor in connection herewith and therewith
and approving and authorizing the consummation of the Transactions,
each
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certified by one of its Officers as being in full force and effect
without modification or amendment; and
(b) executed copies of this Agreement and the Original Bridge
Notes substantially in the form of Exhibit I executed in accordance
with Section 2.1D drawn to the order of the Lenders and with
appropriate insertions; and
(c) an originally executed Notice of Borrowing substantially
in the form of Exhibit III, signed by the President or a Vice President
of the Borrower on behalf of the Borrower delivered to the Agent; and
(d) a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of this Agreement, substantially in the form
of Exhibit VII, as applicable; and
(e) originally executed copies of one or more favorable
written opinions of (I) Rosenman & Colin LLP, special counsel for the
Borrower and the Guarantors, substantially in the form of Exhibit V and
addressed to the Lenders and (II) Cleary, Gottlieb, Steen & Hamilton,
special counsel for the Lenders, substantially in the form of Exhibit
VI and addressed to the Lenders; and
(f) a certificate, delivered by the Company and signed by the
President or a Vice President and the Chief Financial or Accounting
Officer of the Company and addressed to the Lenders in form and
substance reasonably satisfactory to the Agent, with appropriate
attachments, stating that, after giving effect to the consummation of
the Transactions, the fair saleable value of the assets of the Company
and its Subsidiaries will not be less than the probable liability on
their debts, that each of the Company and its Subsidiaries will be able
to pay its debts as they mature and that each will not have
unreasonably small capital to conduct its business, and the Agent shall
have received such opinions of value, other appropriate factual
information and expert advice supporting the conclusions reached in
such letter as the Agent may reasonably request, all in form and
substance reasonably satisfactory to the Agent.
(2) The Initial Transactions, in the case of the Initial Takedown
Closing Date, and the Subsequent Transactions in the case of the Final Takedown
Closing Date, and all other transactions contemplated to be consummated in
connection therewith shall have been consummated on terms reasonably
satisfactory to the Agent.
(3) All authorizations, consents and approvals necessary in connection
with the Initial Transactions in the case of the Initial Takedown Closing Date
and the Subsequent Transactions in the case of the Final Takedown Closing Date
shall have been obtained and remain in full force and effect and all applicable
waiting periods under Law shall have expired without any action being taken by
any Tribunal which restrains, prevents or imposes materially adverse conditions
upon the completion of the Transactions and evidence of the receipt of such
authorizations, consents and approvals satisfactory to the Agent shall have been
delivered to the Agent.
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(4) The Company and its Subsidiaries shall have performed in all
material respects all agreements which this Agreement provides shall be
performed prior to the Initial Takedown Closing Date or Final Takedown Closing
Date, as the case may be, except as otherwise disclosed to and agreed to in
writing by the Agent.
(5) Each of the Company and the Borrower shall have delivered to the
Agent Officers' Certificates from the Company and the Borrower in form and
substance satisfactory to the Agent to the effect that (i) the representations
and warranties in Section 4 hereof are true, correct and complete in all
material respects on and as of the Initial Takedown Closing Date or Final
Takedown Closing Date, as the case may be, to the same extent as though made on
and as of that date, (ii) the Company or the Borrower, as the case may be, has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company or the Borrower, as the
case may be, and (iii) all conditions to the consummation of the Initial
Transactions have been satisfied substantially on the terms set forth therein
and have not been waived or amended without the Agent's prior written consent
which consent shall not be unreasonably withheld.
(6) There shall not be threatened, instituted or pending any action,
suit, proceeding or application before or by any Tribunal, or any other Person,
domestic or foreign (i) challenging the Transactions or seeking to restrain,
delay or prohibit the consummation thereof; (ii) seeking to prohibit or impose
material limitations on the Company's ownership or operation of all or any
portion of the Company's business or assets (including all or any portion of the
Acquired Assets) or to compel the Company to dispose of or hold separate all or
any portion of the Company's business or assets (including all or any portion of
the Acquired Assets) as a result of the Transactions; (iii) which, in any event,
might materially adversely affect the Transactions; or (iv) seeking to impose
any materially adverse conditions upon the Transactions.
(7) The Agent and its counsel shall be reasonably satisfied that the
consummation of the Transactions shall be in compliance with all Laws
(including, without limitation, all applicable U.S. and Canadian securities and
banking laws, rules and regulations).
(8) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of Borrowing which
would constitute an Event of Default or Potential Event of Default.
(9) There shall be no bankruptcy, insolvency, liquidation or other
similar proceeding affecting, in any manner, all or a portion of the Acquired
Assets.
(10) The making of the Initial Bridge Loan or Final Bridge Loan in the
manner contemplated in this Agreement shall not violate the applicable
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve Board or any other regulation of the Board.
(11) The Borrower shall have complied with all agreements and
obligations under the Commitment Letter.
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(12) The Borrower shall have paid to First Union and its Affiliates all
fees payable pursuant to Section 2.3 hereof.
3.2 Additional Conditions to Initial Bridge Loan.
The obligation of the Lenders to make the Initial Bridge Loan is
subject to the satisfaction of, or waiver of, immediately prior to or concurrent
with the making of the Initial Bridge Loan on the Initial Takedown Closing Date,
the following additional conditions precedent:
(1) The Agent shall have received, on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Initial Takedown Closing Date:
(a) a certified copy of the Borrower's and each Guarantor's
charter, together with a certificate of status, compliance, good
standing or like certificate with respect to the Borrower and each
Guarantor issued by the appropriate government officials of the
jurisdiction of its incorporation and of each jurisdiction in which it
owns any material assets or carries on any material business; and
(b) a copy of the Borrower's and each Guarantor's bylaws,
certified by one of its Officers; and
(c) (i) executed or conformed copies of the Purchase
Agreement, (ii) an Officers' Certificate from the Company certifying
that the Purchase Agreement is in full force and effect on the Initial
Takedown Closing Date and (iii) an Officers' Certificate from the
Company to the effect that each party has performed or complied with
all agreements and conditions contained in the Purchase Agreement and
any agreements or documents related thereto to be performed or complied
with on or before the Initial Takedown Closing Date, and no party
thereto is in default in the performance or compliance with any of the
terms or provisions thereof; and
(d) (i) executed or conformed copies of the New Senior Credit
Facility and all documents and instruments related thereto, (ii) an
Officers' Certificate from the Borrower certifying that the New Senior
Credit Facility is in full force and effect on the Initial Takedown
Closing Date and no material term or condition thereof has been
amended, modified or waived from the form most recently delivered to
the Agent prior to the execution of this Agreement except with the
prior written consent of the Agent (which consent shall not be
unreasonably withheld or delayed) and (iii) Officers' Certificates from
the Company and the Borrower to the effect that the Company and the
Borrower have performed or complied with all agreements and conditions
contained in the New Senior Credit Facility and any agreements or
documents related thereto to be performed or complied with on or before
the Initial Takedown Closing Date, and neither the Company or the
Borrower is in default in the performance or compliance with any of the
terms or provisions thereof.
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(e) an Officer's Certificate from the Borrower to the effect
that the Borrower has no reason to believe that all of the agreements
and conditions contained in each of the Tender Term Loan and the Tender
Revolving Credit Loan will not be satisfied and that the loans
contemplated to be made thereunder will not be made on the day next
succeeding the Initial Takedown Closing Date.
(2) (a) The Tender Offer shall have expired pursuant to the terms of
the Offer to Purchase and (b) DT Acquisition shall have provided notice to the
Depositary that it has taken up and accepted for payment all of the Remaining
Dominion Shares validly deposited and not withdrawn pursuant to the terms of the
Offer to Purchase.
(3) (a) All of the conditions to the Polymer Junior Capital
Contribution and the ZB Holdings Junior Capital Contribution shall have been
satisfied or waived in accordance with the documentation relating thereto and
(b) the funds contemplated by such documentation to be made available to DT
Acquisition in connection with the consummation of the Tender Offer shall have
been made available.
(4) all of the conditions to the New Senior Credit Facility referred to
in this Section 3.2(1) (d) above shall have been satisfied or waived in
accordance with the terms therein.
(5) There shall not have occurred, developed, or come into effect or
existence any event, action, state, condition or major financial occurrence of
national or international consequence or any law, regulation, action, government
regulation, inquiry or other occurrence of any nature whatsoever which adversely
affects, or may adversely affect, the financial markets in Canada or the United
States generally; provided, that, a decline measured from November 15, 1997 in
The Toronto Stock Exchange 35 Index of less than 20% which continues for more
than five trading days shall not be material.
3.3 Additional Conditions to Final Bridge Loan.
The obligation of the Lenders to make the Final Bridge Loan is subject
to the satisfaction of, or waiver of, immediately prior to or concurrent with
the making of the Final Bridge Loan on the Final Takedown Closing Date, the
following additional conditions precedent:
(1) The Agent shall have received, on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Final Takedown Closing Date:
(a) bring-down certificates or similar certificates of status
or compliance with respect to the items furnished pursuant to Section
3.1 (1) (a), in each case covering the period from the Initial Takedown
Closing Date to the Final Takedown Closing Date; and
(b) executed or conformed copies of the Merger Agreement and a
copy of each legal opinion delivered in connection therewith, and all
documents and instruments relating thereto; and
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(c) (i) executed or conformed copies of the Definitive
Purchase Agreement and a copy of each legal opinion delivered in
connection with the Definitive Purchase Agreement, and all documents
and instruments related thereto, (ii) an Officers' Certificate from the
Company certifying that the Definitive Purchase Agreement is in full
force and effect on the Final Takedown Closing Date and no material
term or condition thereof has been amended, modified or waived from the
form delivered to the Agent prior to the execution thereof except with
the prior written consent of the Agent (which consent shall not be
unreasonably withheld or delayed) and (iii) an Officers' Certificate
from the Company to the effect that each party to the Definitive
Purchase Agreement has performed or complied with all agreements and
conditions contained therein and any agreements or documents related
thereto to be performed or complied with on or before the Final
Takedown Closing Date, and no party is in default in the performance or
compliance with any of the terms or provisions thereof; and
(2) the Definitive Purchase Agreement shall be in form and substance
reasonably satisfactory to the Agent.
(3) the funds contemplated to be made available to the Borrower under
the New Senior Credit Facility in connection with the Acquisition shall have
been made available and the Acquisition shall have been consummated concurrently
with the consummation of the Subsequent Transactions.
(4) All existing senior bank indebtedness and publicly issued senior
indebtedness of the Apparel Fabric Business shall have been repaid in full on or
prior to the Final Takedown Closing Date other than Indebtedness set forth on
Schedule H.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
the Bridge Loan, the Company and the Borrower represent and warrant to the
Lenders that the following statements are true and correct; it being understood
that representations and warranties made pursuant to this Section 4, insofar as
relating to the Acquired Assets and insofar as made on or before the Initial
Takedown Closing Date, are being made only to the best knowledge of the Company
and the Borrower based on publicly available sources of information.
4.1 Organization and Good Standing; Capitalization
(a) Each of the Company and the Subsidiaries is a corporation duly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation. Each of the Company and its Subsidiaries has the corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted and is duly qualified
as a foreign corporation and in good standing in all jurisdictions in which it
is doing business, except where failure to be so qualified or in good standing,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect.
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(b) All of the Subsidiaries of the Company in existence on the date of
this Agreement are identified and their respective ownership structure and
jurisdiction of incorporation disclosed in Schedule B. The Capital Stock of each
of the Subsidiaries of the Company identified in Schedule B is duly authorized,
validly issued, fully paid and nonassessable and none of such capital stock
constitutes Margin Stock.
(c) All of the Voting Stock of the Borrower is beneficially owned by
the Company free and clear of all Liens other than Liens granted to secure the
Senior Credit Facility.
4.2 Authorization and Power
Each of the Company and its Subsidiaries has the corporate power and
requisite authority, and, to the extent a party thereto, has taken all corporate
action necessary, to consummate the Transactions and to execute, deliver and
perform its obligations under the Loan Documents, the Senior Credit Facility,
the Purchase Agreement and each other document and instrument to be executed,
delivered or performed by it in connection with the Transactions.
4.3 No Conflicts or Consents
(a) The execution, delivery and performance of the Loan Documents, the
Senior Credit Facility, the Purchase Agreement and each other document and
instrument to be executed, delivered or performed by it in connection with the
Transactions, the consummation of each of the transactions herein or therein
contemplated and, the compliance with each of the terms and provisions hereof or
thereof, do not and will not (i) violate any Law applicable to any of the
Company and its Subsidiaries, the charter or bylaws of any of them or any
judgment, order, writ or decree of any Tribunal binding on any of them, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of any of the Company
and its Subsidiaries which could reasonably be expected to result in a Material
Adverse Effect (iii) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any of the Company and its Subsidiaries
(other than any Liens created under the Senior Credit Facility) or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any of the Company and its Subsidiaries except for
such approvals or consents which have been obtained and disclosed in writing to
the Agent or such approvals or consents the failure to obtain which could not
reasonably be expected to singly or in the aggregate result in a Material
Adverse Effect.
(b) No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery by the
Company or any of its Subsidiaries of the Loan Documents, the Senior Credit
Facility, the Purchase Agreement or any other document or instrument to be
delivered in connection with the Transactions or the consummation of the
transactions contemplated hereby or thereby, other than any such consent,
approval, authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Agent on behalf of
the Lenders or the failure of which to obtain would not, singly or in the
aggregate, have a Material Adverse Effect.
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4.4 Enforceable Obligations
Each of the Loan Documents, the Purchase Agreement, the Senior Credit
Facility and each other document or instrument to be delivered in connection
therewith has been duly authorized; each of the Loan Documents, the Purchase
Agreement, the Senior Credit Facility and each other document or instrument to
be delivered in connection therewith to be executed and delivered on or prior to
the date hereof has been duly executed and delivered by the Borrower and each of
the Guarantors that are a party thereto; and each of the Loan Documents, the
Purchase Agreement, the Senior Credit Facility and each other document or
instrument to be delivered in connection therewith to be executed and delivered
on or prior to the date hereof is, and each of the Loan Documents, the Purchase
Agreement, the Senior Credit Facility and each other document or instrument to
be delivered in connection therewith to be executed and delivered after the
Initial Takedown Closing Date or Final Takedown Closing Date, as the case may
be, will be, upon such execution and delivery, the legal, valid and binding
obligations of the Borrower and each of the Guarantors (to the extent a party
thereto), enforceable in accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.5 Properties: Liens
The Company and each of its Subsidiaries has, and after consummation of
the Transactions will have, good, sufficient and legal title to all their
respective properties and assets, and all properties held under lease by any of
them, are, and immediately after the consummation of the Transactions will be,
held under valid, subsisting and enforceable leases, and none of the Company or
its Subsidiaries and, to the knowledge of the Company, any other party thereto,
is in default under any lease, except in each case for such defects or defaults
that, singly or in the aggregate, would not have a Material Adverse Effect. All
such properties and assets owned or leased are so owned or leased free and clear
of Liens other than Permitted Liens.
4.6 Financial Condition
(a) The audited consolidated balance sheets of the Company and its
Subsidiaries at September 27, 1997 and September 28 1996 and the related
consolidated statements of income, shareholders equity and cash flows of the
Company and its Subsidiaries for the three-year period ended September 27, 1997,
certified by the independent certified public accountants of the Company, copies
of which have been delivered to the Agent, were prepared in accordance with
GAAP, have been prepared from, and are consistent with, the books and records of
the Company and its Subsidiaries, respectively, and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries, respectively, as at the respective dates thereof and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries, respectively, for the periods then ended. None of the Company or
any of its Subsidiaries had at September 27, 1997 any material contingent
liabilities, liabilities for Taxes or long-term leases, unusual forward or
long-term commitments or unrealized or unanticipated losses from any unfavorable
commitments which are not reflected or reserved against in the
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foregoing statements or in the notes thereto which are of a type required by
GAAP to be reflected in financial statements or the notes thereto which are not
so reflected. No events which have had or could reasonably be expected to have a
Material Adverse Effect have occurred since September 27, 1997 except as
reflected therein.
(b) Upon giving effect to the Transactions:
(i) The fair saleable value of the assets of the Company and
each of its Subsidiaries, on a stand-alone basis, exceeds the amount
that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of such Person
as they mature.
(ii) The assets of each of the Company and each of its
Subsidiaries, on a stand-alone basis, do not constitute unreasonably
small capital for any such Person to carry out its business as now
conducted and as proposed to be conducted including the capital needs
of any such Person, taking into account the particular capital
requirements of the business conducted by such Person, and projected
capital requirements and capital availability thereof.
(iii) The Company does not intend to, and will not permit any
of its Subsidiaries to, incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of debt of each of such Person).
The cash flow of the Company and each of its Subsidiaries, after taking
into account all anticipated uses of the cash of each such Person, will
at all times be sufficient to pay all amounts on or in respect of debt
of each such company when such amounts are required to be paid.
(iv) The Company does not intend, and does not believe, that
final judgments against any of the Company or its Subsidiaries in
actions for money damages will be rendered at a time when, or in an
amount such that, any such Person will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be
rendered). The cash flow of the Company and each of its Subsidiaries,
on a stand-alone basis, after taking into account all other anticipated
uses of the cash of each such Person (including the payments on or in
respect of debt referred to in paragraph (iii) of this Section 4.6(b)),
will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.
4.7 Full Disclosure
The financial projections (including, without limitation, the pro forma
financial statements included therewith) heretofore furnished to the Agent by
the Company were prepared by or under the direction of an officer of the Company
and were prepared in good faith on the basis of information and assumptions that
the Company believed to be fair and reasonable as of the date of such
information, and which assumptions are believed to be fair and reasonable as of
the date hereof. All other factual information heretofore or contemporaneously
furnished in
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writing by or on behalf of the Company or any of its Subsidiaries to the Agent
or Lenders for purposes of or in connection with the Loan Documents, the
Purchase Agreement, the Senior Credit Facility and all exhibits and appendices
thereto does not contain any untrue statement by such party or, to its
knowledge, any other party of a material fact or omit to state any material fact
necessary to keep the statements made by such party or, to its knowledge, any
other party contained herein or therein from being misleading in a material
respect. No fact is known, no condition exists nor has any event occurred which
has not been disclosed herein or in any other document, certificate or statement
furnished to the Agent or the Lenders for use in the transactions contemplated
hereby which, singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.8 No Default
No event has occurred and is continuing which constitutes a Potential
Event of Default or an Event of Default.
4.9 Compliance with Contracts, Etc.
None of the Company or any of its Subsidiaries is in violation of its
charter, by-laws or other organizational documents, and no Event of Default or
event that but for the giving of notice or the lapse of time, or both, would
constitute an Event of Default on the part of the Company or any of its
Subsidiaries exists under any material Contractual Obligation which would have a
Material Adverse Effect.
4.10 No Litigation
There is no Litigation pending or, to the best knowledge of the Company
after due investigation, threatened, by, against, or which may relate to or
affect (a) any benefit plan or any fiduciary or administrator thereof, (b) the
Transactions, or (c) the Company or any of its Subsidiaries, or the Acquired
Assets, which singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. There are no outstanding injunctions or restraining
orders prohibiting consummation of any of the Transactions or any other
transactions contemplated by the Loan Documents, the Purchase Agreement or the
Senior Credit Facility. Neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction or decree of any
Tribunal, and there are no unsatisfied judgments against the Company or any of
its Subsidiaries or their respective businesses or properties. None of the
Company or any of its Subsidiaries has been advised that there is a reasonable
likelihood of an adverse determination of any Litigation which adverse
determination, should it occur, would have a Material Adverse Effect.
4.11 Use of Proceeds; Margin Stock, Etc.
The proceeds of the Bridge Loan will be used solely for the purposes
specified herein. None of such proceeds will be used in violation of Regulation
G, T, U or X. Neither the Company nor any of its Subsidiaries has taken or will
take any action which might cause any of
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the Loan Documents to violate the applicable provisions of Regulation G, T, U or
X, or any other regulation of the Board of Governors of the Federal Reserve
System.
4.12 Taxes
All material Tax Returns, foreign and domestic, required to be filed by
the Company and each of its Subsidiaries in any jurisdiction have been filed,
and all material Taxes for which they are directly or indirectly liable or to
which any of their respective properties or assets are subject have been paid
prior to the time that such Taxes could give rise to a Lien thereon other than
Taxes being contested in good faith and for which adequate reserves have been
established in accordance with GAAP. There is no material proposed tax
assessment against the Company or any of its Subsidiaries, and, to the best
knowledge of the Company, there is no basis for such assessment, except for
Contested Claims.
4.13 ERISA
A. No ERISA Events have occurred or are reasonably expected to occur
which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates which would reasonably be expected to
have a Material Adverse Effect.
B. In accordance with the most recent actuarial valuations, the Amount
of Unfunded Benefit Liabilities individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans which have a
negative Amount of Unfunded Benefit Liabilities), is not an amount which would
reasonably be expected to have a Material Adverse Effect.
C. Neither the Company nor any of its Subsidiaries has incurred or is
reasonably expected to incur any liability with respect to any Foreign Plan or
Foreign Plans which individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect.
4.14 Compliance with Law
The Company and each of its Subsidiaries is in compliance with all
Laws, except where the failure to comply, singly or in the aggregate, would not
have a Material Adverse Effect.
4.15 Government Regulation
Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or other Law which regulates the Incurrence by the Company or any
of its Subsidiaries of indebtedness, including, but not limited to, Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
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4.16 Intellectual Property
A. The Company and its Subsidiaries own or are licensed to use all
Intellectual Property necessary to permit the operation of their businesses as
currently conducted except where the failure to own or license the use of such
Intellectual Property does not, singly or in the aggregate, have a Material
Adverse Effect.
B. To the Company's knowledge, no material claim has been asserted by
any Person with respect to the use of any such Intellectual Property, or
challenging or questioning the validity or effectiveness of any such
Intellectual Property. To the Company's knowledge, the use of such Intellectual
Property by the Company or any of its Subsidiaries does not infringe on the
rights of any Person, subject to such claims and infringements as do not, singly
or in the aggregate, have a Material Adverse Effect. The consummation of the
Transactions will not in any material manner or to any material extent impair
the ownership of (or the license to use, as the case may be) of such
intellectual property by the Company or any of its Subsidiaries.
4.17 Environmental Matters
Except as set forth on Schedule F or in the Dominion Public Filings,
and after giving effect to the Transactions:
(i) the operations of each of the Company and its Subsidiaries
(including, without limitation, as the term is used throughout this
Section 4.17, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws except for
any such noncompliance which would not reasonably be expected to have a
Material Adverse Effect;
(ii) each of the Company and its Subsidiaries has obtained all
Permits under Environmental Laws necessary to their respective
operations, and all such Permits are being maintained in good standing,
and each of the Company and its Subsidiaries is in compliance with all
material terms and conditions of such Permits except for any such
failure to obtain, maintain or comply which would not reasonably be
expected to have a Material Adverse Effect;
(iii) none of the Company or its Subsidiaries has received (a)
any notice or claim to the effect that it is or may be liable to any
Person under any Environmental Law, including without limitation, any
relating to any Hazardous Materials except as would not reasonably be
expected to have a Material Adverse Effect or (b) any letter or request
for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
comparable foreign or state laws regarding any matter which could
reasonably be expected to result in a Material Adverse Effect, and, to
the best of the Company's knowledge, none of the Company or its
Subsidiaries is involved in any investigation, response or corrective
action relating to or in connection with any Hazardous Materials at any
Facility or at any other location except for such of the foregoing
which would not reasonably be expected to have a Material Adverse
Effect;
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(iv) none of the Company or its Subsidiaries is subject to any
judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) none of the Company or its Subsidiaries or any of their
respective Facilities or operations are subject to any outstanding
written order or agreement with any governmental authority or private
party relating to (a) any actual or potential violation of or liability
under Environmental Laws or (b) any Environmental Claims except for
such of the foregoing which would reasonably be expected to have a
Material Adverse Effect;
(vi) none of the Company or its Subsidiaries has any
contingent liability in connection with any Release or threatened
Release of any Hazardous Materials by any of the Company or its
Subsidiaries except for such of the foregoing which would not
reasonably be expected to have a Material Adverse Effect;
(vii) to the best of the Company's knowledge, none of the
Company or its Subsidiaries or any predecessor of any of the Company or
its Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment, storage or disposal of hazardous
waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect, and none of
the Company or its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(ix) none of the Company or its Subsidiaries or, to the best
of the Company's knowledge, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that would reasonably
be expected to give rise to an Environmental Claim having a Material
Adverse Effect;
(x) to the best of the Company's knowledge, no underground
storage tanks or surface impoundments are on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility or other assets of the Company or any of its
Subsidiaries except for any such Lien which would not reasonably be
expected to have a Material Adverse Effect.
Notwithstanding anything in this Section 4.18 to the contrary, no event or
condition has occurred which may interfere with present compliance by the
Company or the Guarantors with any Environmental Law, or which may give rise to
any liability under any Environmental Law,
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including, without limitation, any matter disclosed on Schedule F which,
individually or in the aggregate, has had a Material Adverse Effect.
4.18 Survival of Representations and Warranties
Subject to Section 12.10(B), all representations and warranties in the
Loan Documents shall survive delivery of the Bridge Notes and the making of the
Bridge Loan and shall continue until one year after repayment of the Bridge
Notes and the Obligations, and any investigation at any time made by or on
behalf of the Lenders shall not diminish the Lenders' right to rely thereon.
4.19 Permits
The Company and its Subsidiaries have, and immediately after the
consummation of the Transactions will have, such certificates, permits,
licenses, franchises, consents, approvals, authorizations and clearances
("Permits"), and are (and will be immediately after the consummation of the
Transactions) in compliance in all material respects with all Laws as are
necessary to own, lease or operate their respective properties and to conduct
their businesses in the manner as presently conducted and to be conducted
immediately after the consummation of the Transactions except where the failure
to have such Permits or to comply with such Laws would not, singly or in the
aggregate, have a Material Adverse Effect, and all such Permits are valid and in
full force and effect and will be valid and in full force and effect immediately
upon consummation of the Transactions. The Company and its Subsidiaries are, and
immediately after the consummation of the Transactions will be, in compliance in
all material respects with their respective obligations under such Permits and
no event occurred that allows, or after notice or lapse of time would allow,
revocation or termination of such Permits, except for any such revocation or
termination as would not, singly or in the aggregate, have a Material Adverse
Effect.
4.20 Insurance
in connection with any of the Pension Plans or any Multiemployer Plans
which have resulted in or could be reasonably expec-insurance) in such amounts
and covering such risks as is generally maintained by companies of established
repute engaged in the same or similar businesses, and all such insurance is (and
will be immediately after the consummation of the Transactions) in full force
and effect, except where the failure to carry such insurance or be entitled to
the benefits of such insurance does not, singly or in the aggregate, have a
Material Adverse Effect.
4.21 Labor Matters
No labor disturbance by the employees of the Company and its
Subsidiaries exists or, to the best knowledge of the Company, is threatened and
the Company is not aware of any existing or imminent labor disturbance by the
employees of the Company's or its Subsidiaries' principal suppliers,
manufacturers or customers that could, singly or in the aggregate, have a
Material Adverse Effect.
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4.22 Guarantees
Each Guarantor shall, on the date it executes and delivers a Guarantee
hereunder, have the full corporate power, authority and capacity to execute and
deliver such Guarantee and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute such Guarantee as a valid and legally binding obligation of such
Guarantor enforceable in accordance with its terms shall have been done and
performed and shall have occurred in due compliance with all Laws; on the date
of such execution and delivery, the execution, delivery and performance of such
Guarantee by such Guarantor will not (i) violate any Law or the charter or
bylaws of such Guarantor, or (ii) result in a breach of, a default under
(including, without limitation, any event which with notice or lapse of time, or
both, would constitute a breach of or a default under), or the creation of any
Lien on the properties or assets of such Guarantor, the Company or any other
Subsidiary of the Company under any Contract to which such Guarantor or the
Company or any other Subsidiary of the Company is a party or by which the
properties or assets of such Guarantor, the Company or any other Subsidiary of
the Company may be bound or affected; on the date of such execution and
delivery, each Guarantee executed and delivered by a Guarantor shall constitute
legal, valid, binding and unconditional obligations of the Guarantor executing
and delivering it to the Lenders hereunder, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance reorganization or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and the foregoing
representations and warranties of the Company shall be deemed for all purposes
to have been made on each date when a Guarantee is delivered hereunder with
respect solely to that Guarantee and the Guarantor so issuing such Guarantee.
4.23 Senior Subordinated Indenture; Etc.
Each of the Company and the Guarantors shall (to the extent such
documents are executed), on the date it executes and delivers the Senior
Subordinated Indenture and the Exchange Notes (or the guarantees related
thereto, as the case may be), have the full corporate power, authority and
capacity to do so and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute them as valid and legally binding obligations of the Company
enforceable against the Company and the Guarantors in accordance with their
respective terms except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), shall have been
done and performed and shall have occurred in due compliance with all applicable
Laws; on the date, if any, of such execution and delivery by the Company and the
Guarantors, the Senior Subordinated Indenture and the Exchange Notes (and the
guarantees) shall constitute legal, valid, binding and unconditional obligations
of the Company and the Guarantors, as the case may be, enforceable against the
Company and the Guarantors, as the case may be, in accordance with their
respective terms, except to the extent
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that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
4.24 Broker's or Finder's Fees
No broker's or finder's fees or commissions will be payable by the
Company or any of its Subsidiaries with respect to any transaction contemplated
by any of the Loan Documents, the Purchase Agreement or the Senior Credit
Facility and no similar fees or commissions will be payable by the Company or
any of its Subsidiaries for any other services rendered to the Company or any of
its Subsidiaries in connection with the transactions contemplated hereby and
thereby, except for fees or commissions payable to Chase Securities, Inc. and
CIBC Wood Gundy Securities, Inc., which fees and commissions will not exceed
$10,000,000 in the aggregate. The Company represents, warrants, covenants and
agrees that the Company will indemnify the Lenders and the Agent against, and
hold each of them completely harmless from and against, any and all claims,
demands or liabilities for broker's or finder's fees or similar fees or
commissions asserted to have been incurred in connection with any of the Loan
Documents, the Purchase Agreement or the Senior Credit Facility or any of the
transactions contemplated thereunder.
SECTION 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Bridge Loan and the
Bridge Notes and all other amounts due under this Agreement have been
indefeasibly paid in full it shall, and shall cause each of its Subsidiaries to,
perform all covenants in this Section 5 required to be performed by it:
5.1 Financial Statements and Other Reports
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to each Lender and
the Agent:
(i) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year,
(1) the consolidated balance sheets of the Company and its Subsidiaries
as at the end of such fiscal quarter, (2) the related consolidated
statements of income, stockholders' equity and cash flows for such
fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the
current fiscal year delivered pursuant to Section 5.1(x), all in
reasonable detail and certified by the chief financial officer or the
controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries at
the dates
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indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, and (3) the company's quarterly report on
Form 10-Q for such quarterly period, and (4) only if the Company does
not file quarterly reports on Form 10-Q with the Commission, a
narrative report describing the operations of the Company and its
Subsidiaries (in the form of management's discussion and analysis of
such operations which would comply with the disclosure requirements of
the Exchange Act and rules and regulations promulgated thereunder with
respect to management's discussion and analysis set forth in quarterly
reports on Form 10-Q) prepared for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year, (1) the consolidated balance sheets
of the Company and its Subsidiaries as at the end of such fiscal year,
(2) the related consolidated statements of income, stockholders' equity
and cash flows for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year
and the corresponding figures from the consolidated plan and financial
forecast for the current fiscal year delivered pursuant to section
5.l(ix) for the fiscal year covered by such financial statements, all
in reasonable detail and certified by the chief financial officer or
the controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries,
at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (3) the Company's annual report
on Form 10-K for such year, (4) only if the Company does not file
annual reports on Form 10-K with the Commission, a narrative report
describing the operations of the Company and its Subsidiaries (in the
form of management's discussion and analysis of such operations which
would comply with the disclosure requirements of the Exchange Act and
rules and regulations promulgated thereunder with respect to
management's discussion and analysis set forth in annual reports on
Form 10-K) prepared for such fiscal year, and (5) in the case of such
consolidated financial statements, a report thereon of independent
certified public accountants of recognized national standing, which
report shall be unqualified as to scope of audit, shall express no
doubts about the ability of the Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as
at the dates indicated and the results of their operations and their
cash flows for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards;
(iii) as soon as available but in any event no more than
fifteen Business Days following the Final Takedown Closing Date and in
no event later than February 15, 1998, the audited annual financial
statements of the Apparel Fabric Business for the fiscal year ended
June 30, 1997;
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(iv) together with each delivery of financial statements
pursuant to Sections 5.1(i) and (ii) above, (a) an Officers'
Certificate of the Company stating that the signers have reviewed the
terms of this Agreement and the Bridge Notes and have made, or caused
to be made under their supervision, a review in reasonable detail of
the transactions and condition of the Company and its Subsidiaries
during the accounting period covered by such financial statements and
that such review has not disclosed the existence during or at the end
of such accounting period, and that the signers do not have knowledge
of the existence as of the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance (as determined in accordance with GAAP) during and at
the end of such accounting periods with the restrictions contained in
Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.9 and 6.14;
(v) together with each delivery of consolidated financial
statements pursuant to Section (ii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Potential
Event of Default that relates to accounting matters has come to their
attention and, if any such condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their
audit examination, and (b) stating that based on their audit
examination nothing has come to their attention that causes them to
believe that the information contained in the certificates delivered
therewith is not correct;
(vi) promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports in final form
(other than reports of a routine or ministerial nature which are not
material) submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of the Company and its Subsidiaries made by
such accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(vii) promptly upon the sending or filing thereof, copies of
(a) all financial statements, reports, notices and proxy statements
sent or made available generally by the Company to their public
security holders or by any Subsidiary of the Company to its public
security holders other than the Company or another Subsidiary of the
Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses,
if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or
any governmental authority (other than reports of a routine or
ministerial nature which are not material), and (c) all press releases
and other statements made
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available generally by the Company or any of its Subsidiaries to the
public concerning material developments in the business of the Company
or any of its Subsidiaries;
(viii) promptly upon any executive officer of the Company
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that
any Lender or Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default
under this Agreement, (b) that any Person has given any notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition which might result
in an Event of Default referred to in Section 7.2, (c) of any condition
or event which would be required to be disclosed in a current report
filed with the Commission on Form 8-K whether or not the Company is
required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed default,
Event of Default, Potential Event of Default, event or condition, and
what action the Company has taken, is taking and proposes to take with
respect thereto;
(ix) promptly upon any executive officer of the Company
obtaining knowledge of (X) the institution of, or non-frivolous threat
of, any action, suit, proceeding (whether administrative, judicial or
otherwise), Environmental Claim, governmental investigation or
arbitration against or affecting the Company or any of its Subsidiaries
or any property of the Company or any of its Subsidiaries not
previously disclosed in writing by the Company to Lenders or (Y) any
material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result
of, the Transactions;
written notice thereof together with such other information as may be
reasonably available to the Company or any of its Subsidiaries to
enable Lenders and their counsel to evaluate such matters;
(x) as soon as practicable but in any event no later than 45
days following the first day of each fiscal year a forecast for each of
the next succeeding twelve months of the consolidated balance sheet and
the consolidated statements of income, cash flow and cash position of
the Company and its Subsidiaries, together with an outline of the major
assumptions upon which the forecast is based; provided, however, that
for fiscal 1998 such forecast may be for the four fiscal quarters.
Together with each delivery of financial statements pursuant to
Sections 5.1(i) and (ii) above, the Company shall deliver
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a comparison of the current year to date financial results against the
budget required to be submitted pursuant to this Section;
(xi) in writing, promptly upon an executive officer of the
Company obtaining knowledge that the Company or any of its Subsidiaries
has received notice or otherwise learned of any Environmental Claim or
other claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability arising in connection with
(x) the non-compliance with or violation of the requirements of any
Environmental Law which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (y) the
release, threatened release or presence of any Hazardous Material in
the environment which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or which
the Company or any of its Subsidiaries would have a duty to report to a
tribunal under an Environmental Law, or (z) the existence of any
Environmental Lien on any properties or assets of the Company or any of
its Subsidiaries;
(xii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of
the Company or any of its Subsidiaries; and
(xiii) promptly upon any Person becoming a Subsidiary of the
Company, a written notice setting forth with respect to such person (a)
the date on which such person became a Subsidiary of the Company and
(b) all of the data required to be forth in Schedule B with respect to
all Subsidiaries of the Company; and
(xiv) with reasonable promptness such other information and
data with respect to the Company or any of its Subsidiaries or any of
their respective property, business or assets as from time to time may
be reasonably requested by any Lender; provided that no information or
data shall be required to be delivered hereunder or under any other
provision of this Agreement if it would violate any applicable
attorney-client or accountant-client privilege.
5.2 Corporate Existence, Etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises to its business and
those of each of its Subsidiaries, except as permitted by Section 6.7 or where
the failure to so preserve or keep will not, singly or in the aggregate, have a
Material Adverse Effect.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. The Company will, and will cause each of its Subsidiaries to, pay
all material Taxes, assessments and other governmental charges imposed upon it
or any of its material properties or assets or in respect of any of its
franchises, business, income or property before any material penalty accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by
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law have or may become a Lien upon any of its properties or assets prior to the
time when any material penalty or fine shall be incurred with respect thereto;
provided that no such charge or claim need be paid if the validity or amount of
such charge or claim is being diligently contested in good faith and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. The Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income Tax Return with any
Person (other than the Company or any of its Subsidiaries so long as the filing
of such consolidated income Tax Return is permitted by applicable law)
5.4 Maintenance of Properties; Insurance
The Company will maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of the Company and its Subsidiaries
and from time to time promptly will make or cause to be made all necessary
repairs, renewals and replacements thereof; provided that nothing in this
Section 5.4 shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any such properties, or
disposing of any of them, if such action is in the ordinary course of business
or, in the reasonable good faith judgment of the Company, necessary or desirable
in the conduct of its business or otherwise permitted by this Agreement. The
Company will maintain or cause to be maintained, with financially sound and
reputable insurers or with self insurance programs, in each case to the extent
consistent with prudent business practices and customary in its industry,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage of the kinds (including,
in any event, business interruption insurance) and in the amounts customarily
carried or maintained under similar circumstances by corporations of established
reputation engaged in similar businesses and owning similar properties in the
same general respective areas in which the Company and its Subsidiaries operate.
5.5 Inspection
The Company shall permit any authorized representatives designated by
the Agent to visit and inspect any of the properties of the Company or its
Subsidiaries, including, without limitation, its and their financial and
accounting records, and to receive copies and extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of the Company or
any of its Subsidiaries may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested.
5.6 Equal Security for Bridge Loan
If the Company or any of its Subsidiaries shall create, assume or
suffer to exist any Lien upon any of their respective property or assets,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of Section 6.2, the Company shall make or cause to be
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made effective provision whereby the Obligations under this Agreement will be
secured by such Lien equally and ratably with any and all other Indebtedness
thereby secured as long as any such Indebtedness shall be secured; provided that
this covenant shall not be construed as or deemed to be a consent by the Agent
to any violation of the provisions of Section 6.2; and provided, further, that
the Company shall under no circumstances be required to make or cause to be made
effective provision whereby the Obligations under this Agreement will be
secured, directly or indirectly, by Margin Stock.
5.7 Compliance with Laws, Etc.
The Company shall and shall cause each of its Subsidiaries to comply
with the requirements of all Laws, to the extent noncompliance, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.8 Maintenance of Accurate Records, Etc.
The Company shall, and shall cause each of its Subsidiaries to, keep
true books and records and accounts in which full and correct entries will be
made of all of its and their respective business transactions, and will reflect,
and cause each of its Subsidiaries to reflect, in its or their respective
financial statements adequate accruals and appropriations to reserves all in
accordance with GAAP and consistent with prior business practices.
5.9 Exchange of Bridge Notes
The Company will, at any time after the first anniversary of the
Initial Takedown Closing Date, on the fifth Business Day following the written
request (the "Exchange Request") of the holders of at least 10% of the aggregate
principal amount of Bridge Notes then outstanding:
(i) Execute and deliver, cause each Guarantor to execute and
deliver, and cause a bank or trust company acting as trustee thereunder
to execute and deliver, the Senior Subordinated Indenture containing
covenants, subordination provisions and other terms consistent with the
Bridge Notes, if such Senior Subordinated Indenture has not previously
been executed and delivered;
(ii) Execute and deliver to such holder or beneficial owner in
accordance with the Senior Subordinated Indenture a note in the form
attached to the Senior Subordinated Indenture (the "Exchange Notes") in
exchange for such Bridge Note dated the date of the issuance of such
Exchange Note, payable to the order of such holder or owner, as the
case may be, in the same principal amount as such Bridge Note (or
portion thereof) being exchanged, and cause each Guarantor to endorse
its guarantee thereon; and
(iii) Execute and deliver, and cause each Guarantor to execute
and deliver, to such holder or owner, as the case may be, a
Registration Rights Agreement containing terms as are generally set
forth in Exhibit IV hereto, if such Registration
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Rights Agreement has not previously been executed and delivered or, if
such Registration Rights Agreement has previously been executed and
delivered and such holder or owner is not already a party thereto,
permit such holder or owner to become a party thereto.
The Exchange Request shall specify the principal amount of the Bridge
Notes to be exchanged pursuant to this Section 5.9 which shall be at least
$5,000,000 and integral multiples of $10,000 in excess thereof. Bridge Notes
delivered to the Company under this Section 5.9 in exchange for Exchange Notes
shall be canceled by the Company and the corresponding amount or the Bridge Loan
deemed repaid and the Exchange Notes shall be governed by and construed in
accordance with the terms of the Senior Subordinated Indenture.
The bank or trust company acting as trustee under the Senior
Subordinated Indenture shall at all times be a corporation organized and doing
business under the laws of the United States of America or the State of New
York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $50,000,000.
5.10 ERISA Compliance
Each of the Company and its Subsidiaries will notify the Lenders
promptly upon becoming aware of any fact arising in connection with any of the
Pension Plans or any Multiemployer Plans which have resulted in or could be
reasonably expected to constitute or result in an ERISA Event, together with a
statement as to the action, if any, proposed to be taken with respect thereto.
5.11 Payments in U.S. Dollars
All payments of any Obligations to be made hereunder or under the
Bridge Notes by the Borrower or any other obligor with respect thereto shall be
made solely in U.S. Dollars or such other currency as is then legal tender for
public and private debts in the United States of America.
5.12 Register
The Borrower hereby designates the Agent to serve as the Borrower's
agent, solely for purposes of this Section 5.12, to maintain a register (the
"Register") on which it will record the Bridge Loan made by each of the Lenders
and each repayment in respect of the principal amount of the Bridge Loan of each
Lender. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrower's obligations in respect of such Bridge Loan. With
respect to any Lender, the transfer of the Bridge Loan Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Bridge Loan Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Agent with respect to
ownership of such Bridge Loan Commitments and Bridge Loan and prior to such
recordation all amounts owing to the transferor with respect to such Bridge Loan
Commitments and Bridge Loan shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Bridge Loan
Commitments and Bridge Loan shall be
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recorded by the Agent on the Register only upon the receipt by the Agent of a
properly executed and delivered assignment and assumption agreement pursuant to
Section 12.2A. Coincident with the delivery of such an assignment and assumption
agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note evidencing such Loan, and thereupon
one or more new Bridge Notes of the same type and in the same aggregate
principal amount shall be issued to the assigning or transferor Lender and/or
the new Lender
5.13 Lenders Meeting
The Company will participate in a meeting with the Lenders once during
each fiscal year during which any Obligations are outstanding hereunder to be
held at a location and a time selected by the Company and reasonably
satisfactory to the Lenders.
5.14 Additional Guarantors
The Company will cause any Person which becomes a Wholly-Owned
Subsidiary of the Company that is organized under the laws of the United States
or any state or commonwealth thereof or under the laws of the District of
Columbia (whether by creation, acquisition or otherwise) to execute and deliver
a guarantee, in form and substance satisfactory to the Agent (and with such
documentation relating thereto as the Agent shall require, including, without
limitation, a supplement or amendment to this Agreement and opinions of counsel
as to the enforceability of such guarantee) pursuant to which such Wholly-Owned
Subsidiary shall become a Guarantor under the Bridge Notes and this Agreement in
accordance with Section 10 with the same effect and to the same extent as if
such Person had been named herein as a Subsidiary Guarantor.
5.15 Marketing Take-Out Securities
If requested by FUCMC, the Company will make appropriate officers of
the Company and its Subsidiaries available to FUCMC for meetings with
prospective purchasers of the Take-Out Securities and preparing and presenting
to potential investors road show material in a manner consistent with other new
issuances of high yield debt securities.
5.16 Environmental Matters
(i) The Company shall and shall cause each of its Subsidiaries
(including, without limitation, all operations and conditions at or in
the Facilities) to comply with all applicable Environmental Laws and to
maintain and comply with the terms of all Permits under Environmental
Laws necessary to their respective operations.
(ii) The Company shall and shall cause each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) promptly to conduct and complete
all notifications, investigations, studies, sampling and testing, and
all remedial, cleanup, removal and other actions, required under
applicable Environmental Laws.
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(iii) The Company shall and shall cause each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) to limit the presence of Hazardous
Materials to those Hazardous Materials that are necessary to the normal
operation of a textiles business.
SECTION 6 NEGATIVE COVENANTS
The Company covenants and agrees that until the satisfaction in full of
the Bridge Loan and the Bridge Notes and all other Obligations due under this
Agreement it will fully and timely perform all covenants in this Section 6.
6.1 Indebtedness
The Company shall not, and shall not cause or permit any of the
Subsidiaries, directly or indirectly, to incur, or remain or become directly or
indirectly liable with respect to, any Indebtedness, except for the following
("Permitted Indebtedness"):
(i) Indebtedness under the Bridge Notes, the Exchange Notes
and the Guarantees;
(ii) Indebtedness (A) of up to $218,000,000 incurred pursuant
to the Existing Senior Credit Facility or (B) upon termination of, and
repayment in full of all amounts due under the Existing Senior Credit
Facility, Indebtedness of up to $470,000,000 in the aggregate at any
one time outstanding under the New Senior Credit Facility, in each
case, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction)
thereunder;
(iii) other Indebtedness of the Company and its Subsidiaries
described in Schedule H whether or not outstanding on the Initial
Takedown Closing Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon; provided, that the aggregate amount of
Indebtedness outstanding at any time under this clause (iii) shall not
exceed the aggregate amount of Indebtedness described in Schedule H.
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Subsidiaries and Interest
Swap Obligations of any Subsidiary of the Company covering Indebtedness
of such Subsidiary or any Subsidiary of such Subsidiary; provided,
however, that such Interest Swap Obligations are entered into to
protect the Company and its Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with this Agreement and
the Senior Credit Facility to the extent the notional principal amount
of such Interest Swap Obligation does not exceed the principal amount
of the Indebtedness to which such Interest Swap Obligation relates;
(v) Indebtedness under the First Union Currency Agreement and
Indebtedness of the Company and its Subsidiaries under other Currency
Agreements; provided that in
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the case of such other Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the Indebtedness
of the Company and its Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(vi) Indebtedness of a Subsidiary of the Company to the
Company or to a Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Subsidiary of the Company, in
each case subject to no Lien held by a Person other than the Company or
a Subsidiary of the Company; provided that if as of any date any Person
other than the Company or a Subsidiary of the Company owns or holds any
such Indebtedness or holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly-Owned Subsidiary
of the Company for so long as such Indebtedness is held by a
Wholly-Owned Subsidiary of the Company, subject to no Lien; provided
that (a) any Indebtedness of the Company to any Wholly-Owned Subsidiary
of the Company is unsecured and subordinated, pursuant to a written
agreement, to the Company's obligations under this Agreement and the
Bridge Notes and (b) if as of any date any Person other than a
Wholly-Owned Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of day-light overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within two
business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business; and
(x) Permitted Refinancing Indebtedness;
(xi) Additional Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount not to exceed $10,000,000
at any one time outstanding for Capital Lease Obligations or for
purposes of financing the purchase price or construction cost of
equipment, fixtures or similar property; and
(xii) At any time after the first anniversary of the Initial
Takedown Closing Date, if no Potential Event of Default with respect to
payment of principal of, or interest on, the Bridge Notes or Event of
Default shall have occurred and be continuing at the
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time of or as a consequence of the incurrence of any such Indebtedness,
additional Indebtedness of the Company and its Subsidiaries if
immediately before and immediately after giving effect to the
incurrence of such Indebtedness the Consolidated Fixed Charge Coverage
Ratio of the Company would be greater than 2.0 to 1.0.
6.2 Liens
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or of any of its Subsidiaries, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, other than the following
(collectively, the "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or the Subsidiaries
shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(v) easements, rights-of-way zoning restrictions and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of the Subsidiaries;
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(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or a Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and
shall not be secured by any property or assets of the Company or any
Subsidiary other than the property and assets so acquired and (B) the
Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or a Subsidiary, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is incurred under this
Agreement or the Senior Credit Facility;
(xii) Liens securing Indebtedness under Currency Agreements;
(xiii) Liens granted to secure the Senior Credit Facility; and
(xiv) Liens whether or not existing on the Initial Takedown
Closing Date as set forth on Schedule A or Liens securing Indebtedness
described in Schedule H; provided, that each Lien described in Schedule
H does not extend to any property or assets other than the property and
assets of the Subsidiary that is the obligor with respect to the
Indebtedness secured by such Lien and Liens to secure any Permitted
Refinancing Indebtedness secured by a Lien set forth on Schedule A;
provided that such new Lien shall not extend to any property or assets
other than the property or assets set forth on Schedule A as securing
the Indebtedness refinanced or replaced by such Permitted Refinancing
Indebtedness.
6.3 Restricted Payments
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly (i) declare or pay any dividend (other
than dividends payable with respect to Permitted Preferred Stock), or make any
distribution, on any Capital Stock of the Company or its Subsidiaries (other
than dividends or distributions payable solely in Qualified Capital Stock
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of the Company or dividends or distributions payable to the Company or any
Wholly-Owned Subsidiary of the Company), (ii) purchase, redeem or otherwise
acquire or retire for value any of the Capital Stock of the Company or any of
its Subsidiaries, or any warrants, rights or options to acquire shares of any
class of such Capital Stock or (iii) make any principal payment on, purchase,
defease, redeem, prepay, or otherwise acquire or retire for value, other than
any scheduled final maturity scheduled repayment or scheduled sinking fund
payment, any Subordinated Indebtedness or pari passu Indebtedness of the Company
or of a Subsidiary (any such dividend, distribution, purchase, redemption,
acquisition, retirement, defeasance or prepayment set forth in clauses (i), (ii)
and (iii) above a "Restricted Payment").
6.4 Investments
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, other than the following (collectively, "Permitted Investments"):
(i) Investments by the Company or any Subsidiary of the
Company in any Person that is or will become immediately after such
Investment a Wholly-Owned Subsidiary of the Company or that will merge
or consolidate into the Company or a Wholly-Owned Subsidiary of the
Company;
(ii) Investments in the Company by any Subsidiary of the
Company; provided that any Indebtedness evidencing such Investment is
unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Bridge Notes;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the
Company and its Subsidiaries in the ordinary course of business for
bona fide business purposes not in excess of $2,000,000 at any one time
outstanding;
(v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of the Company's or its Subsidiaries'
businesses and otherwise in compliance with this Agreement;
(vi) Investments in Wholly-Owned Subsidiaries;
(vii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors
or customers;
(viii) Investments made by the Company or its Subsidiaries as
a result of consideration received in connection with an Asset Sale
made in compliance with Section 6.14;
(ix) The Company Junior Capital Contribution;
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(x) The Acquisition;
(xi) Investments not to exceed $3,000,000 at any one time
outstanding; provided such Investments are made after the Initial
Takedown Closing Date.
6.5 Contingent Obligations
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations outstanding on the
Closing Date described in Schedule H and in respect of any Interest
Rate Agreements entered into with any lender under the Senior Credit
Facility or any of their respective Affiliates and any guarantees
thereof;
(ii) the Subsidiaries may become and remain liable with
respect to Contingent Obligations under the Guarantees;
(iii) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with the Acquisition, additional acquisitions of assets or
stock, Asset Sales or other sales of assets; provided that the maximum
assumable liability in respect of all such obligations shall at no time
exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sales and other sales;
(iv) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees made
under the Senior Credit Facility; and
(v) the Company and its Subsidiaries may become and remain
liable with respect to guarantees of Indebtedness or Contingent
Obligations of a Subsidiary of the Company and a Subsidiary of the
Company may become and remain liable with respect to guarantees of
Indebtedness or Contingent Obligations of the Company or a Subsidiary
of the Company.
6.6 Layering of Indebtedness
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, incur any Indebtedness that is by its terms (or by the terms of any
agreement governing such Indebtedness) subordinated in right of payment to any
other Indebtedness of the Company or of such Subsidiary unless such Indebtedness
is also by its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinate to the Bridge Notes and the Guarantees
to the same extent and in the same manner as the Bridge Notes and the Guarantees
are subordinated to the Senior Credit Facility, except for Indebtedness ranking
pari passu with
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the Bridge Loan which is subordinate to the Senior Credit Facility to the same
extent and in the same manner as the Bridge Loan and the Guarantees.
6.7 Restriction on Fundamental Changes
Subject to Section 5.2 and other than the sale of 100% of a Subsidiary
of the Company in accordance with Section 2.4A(ii) (a) and Section 6.15, the
Company shall not, and shall not cause or permit any of the Subsidiaries to,
directly or indirectly, enter into any transaction, or series of related
transactions, of merger, amalgamation, consolidation or combination, or
consolidate, or liquidate, windup or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or in a series of transactions, all or substantially all
of its business, property or assets, whether now owned or hereafter acquired,
except that any Subsidiary of the Company may be merged, amalgamated,
consolidated or combined with or into the Borrower or any Guarantor or be
liquidated, wound up or dissolved, or all or substantially all of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or in a series of transactions, to the Borrower
or to any Guarantor; provided that (A) no Potential Event of Default or Event of
Default shall have occurred and be continuing or would result therefrom, (B) in
the case of such a merger, amalgamation, consolidation or combination of the
Company or the Borrower and a Subsidiary of the Company, the Company or the
Borrower shall be the continuing or surviving corporation, and (C) the surviving
entity (I) continues to be bound as such under this Agreement or the Guarantee
of such Guarantor, as the case may be, and (II) executes and delivers to the
Agent immediately upon consummation of such transaction a written confirmation
or acknowledgment to such effect, in form and substance satisfactory to the
Agent, together with evidence of appropriate corporate power, authority and
action and a written legal opinion in form and substance satisfactory to the
Agent to the effect that this Agreement and such Guarantee continue to be a
legal, valid and binding obligation of such entity, enforceable against such
entity in accordance with its terms (subject to customary exceptions in respect
of bankruptcy, insolvency and other equitable remedies) and with respect to such
other matters as the Agent may reasonably request.
6.8 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, such Subsidiary's profits; (b) make loans or advances or pay any
Indebtedness or other obligation owed to the Company or to any Subsidiary of the
Company; or (c) transfer any of its property or assets to the Company or to any
Subsidiary of the Company (any such restriction or encumbrance a "Payment
Restriction"), except for such encumbrances or restrictions existing under or by
reason of: (1) any restrictions contained in (i) the Loan Documents, the Senior
Subordinated Indenture and any instrument governing the Take-Out Securities or
Exchange Notes to the extent Incurred in accordance with this Agreement; (ii)
the Senior Credit Facility as in effect on the Initial Takedown Closing Date or
the Final Takedown Closing Date, as the case may be; (iii) the Indebtedness
pertaining to a Subsidiary of the Company that is not a Subsidiary of the
Company on the Initial Takedown Closing Date in existence at the time such
Subsidiary becomes a Subsidiary of the Company; provided that any such
Indebtedness was not incurred as a result of, in connection with or in
anticipation of the transaction pursuant to which such entity becomes a
Subsidiary of the
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Company and it does not apply to any Person, or the properties of assets of any
Person, other than the Subsidiary acquired and such Indebtedness is otherwise
permitted to be incurred pursuant to Section 6.1; or (iv) secured Indebtedness
otherwise permitted to be incurred pursuant to Sections 6.1 and 6.2 that limits
the right of the debtor to dispose of the assets securing such Indebtedness; (2)
customary non-assignment provisions of any lease governing a leasehold interest
of any Subsidiary of the Company; (3) customary net worth provisions contained
in leases and other agreements entered into by a Subsidiary in the ordinary
course of business; (4) customary restrictions with respect to a Subsidiary
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary;
(5) applicable law; and (6) any instrument that Refinances any Indebtedness
effecting any such encumbrance or restriction pursuant to clause (1) above;
provided that the provisions relating to any such encumbrance or restriction in
any such instrument are not materially less favorable to the Company or its
Subsidiaries or the Lenders than those contained in the agreements referred to
in clause (1).
6.9 Transactions with Shareholders and Affiliates
The Company will not, and will not permit or cause any of the
Subsidiaries to, enter into any transaction (including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service)
with any officer, director, stockholder or other Affiliate of the Company or any
Subsidiary, except (a) as permitted by Section 6.4(iv) or (b) in the ordinary
course of its business and upon fair and reasonable terms that are no less
favorable to it than would obtain in a comparable arm's length transaction with
a Person other than an Affiliate of the Company or such Subsidiary.
6.10 Subsidiary Stock; Company Restrictions
(a) Except for any sale of 100% of the Capital Stock or other equity
securities of any of the Company's Subsidiaries in compliance with the
provisions of Section 6.7, the Company will not and will not permit any of the
Subsidiaries to directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity securities of
any of the Subsidiaries, except (i) to qualify directors if required by
applicable law, (ii) to the Company or to a Wholly-Owned Subsidiary of the
Company, (iii) Asset Sales made in compliance with this Agreement and (iv) Liens
in favor of the lenders under the Senior Credit Facility.
(b) The Company will not (i) hold any assets other than the Capital
Stock of the Borrower, (ii) have any liabilities other than (A) the liabilities
under the Loan Documents and the Senior Credit Facility, (B) tax liabilities in
the ordinary course of business, (C) loans and advances permitted under this
Agreement, (D) corporate, administrative and operating expenses in the ordinary
course of business and (iii) engage in any business other than (A) owning the
Capital Stock of the Borrower and activities incidental or related thereto and
(B) acting as a Guarantor hereunder and under the Senior Credit Facility.
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6.11 Business Activities
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, materially alter the nature of the
consolidated business of the Company and its Subsidiaries from that in existence
immediately after giving effect to the Transactions.
6.12 Amendment or Waivers of Certain Documents
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, enter into any amendment, modification
supplement or waiver with respect to the Senior Credit Facility as in effect on
the date hereof or, with respect to the New Senior Credit Facility, as set forth
in the form of the documents delivered to the Agent prior to the date hereof,
that would modify any of the provisions thereof or any of the definitions
relating thereof in a manner adverse to the Lenders.
6.13 Amendment to Charter Documents
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, amend its certificate of incorporation or bylaws in any respect
which could be materially adverse to the interests of the Lenders.
6.14 Asset Sales
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless (1)
the Company or such Subsidiary, as the case may be, receives consideration
therefor at the time thereof at least equal to the fair market value at the time
of such Asset Sale of the property, assets or stock that is the subject of such
Asset Sale, (2) at least 75% of the consideration received therefor by the
Company or such Subsidiary is in the form of cash or Cash Equivalents and (3)
all of the Net Cash Proceeds in respect thereof are applied by the Company or a
Subsidiary of the Company in accordance with Section 2.4A(ii)(a).
Nothing in this covenant shall be deemed to prevent the exercise of
remedies by secured creditors of the Company or any Subsidiary of the Company.
6.15 Transfer of Assets to Subsidiaries
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, transfer (other than in the ordinary
course of business and other than pursuant to a Permitted Investment) any assets
or property to any Subsidiary of the Company that is not a Guarantor unless such
Subsidiary pays fair market value therefor to the Company or to any other
Guarantor and except as provided in Sections 6.3, 6.4, 6.5, 6.7 and 6.9. For
purposes of this Section 6.15, the fair market value paid by such Subsidiary
shall not consist in whole or in part of any securities or debt instruments of
such Subsidiary or of any Affiliate of such Subsidiary.
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6.16 Sale and Leaseback Transactions
The Company will not, nor will it permit any Subsidiary 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 the Company or any Subsidiary has sold or transferred or is
to sell or transfer to a Person which is not the Company or any Subsidiary or
(b) which the Company or any Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by the Company or any Subsidiary to another Person which is not the
Company or any Subsidiary in connection with such lease; provided, however, that
this Section 6.16 will not apply to or prohibit the consummation of the
Darlington Sale and Leaseback Transaction.
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
7.1 Failure to Make Payments When Due
Failure to pay any installment of principal of the Bridge Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise (whether or not such payment is prohibited by Section 8); or failure
to pay any interest on the Bridge Loan or any other amount due under this
Agreement within five days or more after the date due (whether or not such
payment is prohibited by Section 8); or
7.2 Default in Other Agreements
Failure of the Company any of its Subsidiaries to pay at final maturity
principal on one or more issues of Indebtedness or Contingent Obligations of the
Company or of any of its Subsidiaries (other than Indebtedness referred to in
Section 7.1) or (B) breach or default by the Company or any of its Subsidiaries
with respect to any other term of any one or more issues of Indebtedness or
Contingent Obligations of the Company or of any of its Subsidiaries or any
agreement or instrument evidencing or securing such Indebtedness or Contingent
Obligations and such breach or default results in the acceleration of that
Indebtedness or Contingent Obligation prior to its stated maturity and, in any
case of (A) or (B), the principal amount of such Indebtedness or Contingent
Obligation and all other such Indebtedness or Contingent Obligations of the
Company and its Subsidiaries in respect of which there is such a failure to pay
principal or which has been so accelerated equals $5,000,000 or more; or
7.3 Breach of Certain Covenants
Failure of the Company or any Subsidiary to perform or comply with any
covenant, term or condition contained in Section 2.4A(ii), 2.4A(iv) or 5.2; or
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7.4 Breach of Warranty
Any representation, warranty or certification made by the Company or
any Subsidiary in any Loan Document or in any statement or certificate at any
time given by the Company or any Subsidiary in writing pursuant hereto or
thereto or in connection herewith or therewith shall be false or incorrect in
any material respect on the date as of which made or deemed made; or
7.5 Other Defaults Under Agreement or Loan Documents
The Company or any Subsidiary shall default in the performance of or
compliance with any covenant, term or condition contained in this Agreement or
the other Loan Documents (other than those covered by Section 7.1, 7.3, 7.4,
7.10, or 7.11) and such default shall not have been remedied or waived in
accordance with this Agreement within 30 days after the date of written notice
from the holder or holders of not less than 25% in aggregate principal amount of
the Bridge Loan then outstanding of such default; or
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc.
A court of competent jurisdiction enters a Bankruptcy Order under any
Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary in an involuntary case or proceeding, or
(B) appoints a Custodian of the Company or any Material
Subsidiary for all or substantially all of its properties, or
(C) orders the liquidation of the Company or any Material
Subsidiary,
and in each case the order or decree remains unstayed and in
effect for 60 days.
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.
The Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief
against it in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors or files a proposal or scheme of arrangement involving the
rescheduling or composition of its indebtedness, or
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(E) consents to the filing of a petition in bankruptcy against
it, or
(F) shall generally not pay its debts when such debts become
due or shall admit in writing its inability to pay its debts generally.
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or similar process
involving in any individual case or in the aggregate at any time an amount in
excess of $5,000,000 (to the extent not covered by third-party insurance as to
which the insurance company has acknowledged coverage) shall be entered or filed
against the Company or any Subsidiary or any of their respective properties or
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days or in any event later than five days prior to the date of any
proposed sale thereunder; or
7.9 Dissolution
Any order, judgment or decree shall be entered against the Company or
any Material Subsidiary decreeing the dissolution or split-up of the Company or
that Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
7.10 Guarantee
(i) Any Guarantee or any provision thereof shall cease to be in full
force and effect (other than in accordance with its express terms), or (ii) any
Guarantor or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under its Guarantee, or (iii) any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed, after giving
effect to any applicable grace periods, pursuant to its Guarantee; or
7.11 ERISA
Any ERISA Event shall have occurred with respect to any Pension Plan or
Multiemployer Plan of the Company, its Subsidiaries or their respective ERISA
Affiliates; the Amount of Unfunded Benefit Liabilities, which, when added to the
aggregate Amount of Unfunded Benefit Liabilities with respect to all other
Pension Plans, exceeds the aggregate Amount of Unfunded Benefit Liabilities that
existed on the Closing Date; or any event shall have occurred with respect to
any Foreign Plan which results in a liability to the Company or any of its
Subsidiaries; and there shall result from any such event, events or underfunding
described above the imposition of a Lien or a liability or a material risk of
incurring a liability which Lien or liability in the opinion of the Agent or the
Required Lenders has had or could reasonably be expected to have a Material
Adverse Effect; or
7.12 Foreclosure
The agent under the Senior Credit Facility or any other party entitled
to act thereunder commences judicial proceedings to foreclose on the collateral
securing the Senior Credit Facility
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or exercises any right under applicable law or any instrument evidencing a
security interest or other encumbrance in respect of such collateral to take
ownership or effect the transfer of such collateral in lieu of foreclosure.
7.13 Failure to Purchase Remaining Dominion Shares
Prior to the close of business on the second Business Day next
succeeding the Initial Takedown Closing Date, DT Acquisition (i) shall have
failed to provide the Depositary with sufficient funds to pay for all of the
Remaining Dominion Shares validly deposited with the Depositary prior to the
close of business on December 18, 1997 and (ii) shall not have prepaid the
Bridge Loan in full pursuant to Section 2.4A.
THEN (i) upon the occurrence of any Event of Default described in the
foregoing Sections 7.6 or 7.7, all of the unpaid principal amount of and accrued
interest on the Bridge Loan and all other outstanding Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company, and the commitments of the Lenders hereunder shall,
thereupon terminate, (ii) upon the occurrence of any other Event of Default, the
Agent shall upon written notice of the holder or holders of a majority in
aggregate principal amount of the Bridge Loan then outstanding, by written
notice to the Company, the Borrower and the agent under the Senior Credit
Facility, declare all of the unpaid principal amount of and accrued interest on
the Bridge Loan and all other outstanding obligations to be, and the same shall
forthwith become, due and payable, and the obligations of the Lenders hereunder
shall thereupon terminate; provided that if any declaration of acceleration
under this Agreement occurs solely because an Event of Default set forth in
Section 7.2 has occurred and is continuing, such declaration of acceleration
shall be automatically annulled if the holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within thirty days of such
acceleration of such Indebtedness and the Agent has received written notice
thereof within such time and if no other Event of Default has occurred during
such thirty-day period which has not been cured or waived in accordance with
this Agreement. Nevertheless, if at any time after acceleration of the maturity
of the Bridge Loan, the Borrower shall pay all arrears of interest and all
payments on account of the principal thereof which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement
or the Bridge Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the Bridge Notes
due and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to Section 12.6, then the Agent shall, upon written notice of the
holders of a majority in aggregate principal amount of the Bridge Loan then
outstanding, by written notice to the Company rescind and annul the acceleration
and its consequences; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right consequent thereon,
and (iii) upon the occurrence of any Event of Default (other than any Event of
Default set forth in Section 7.6 or 7.7) and for so long as it shall be
continuing, the Agent shall have, in addition to the rights and remedies set
forth herein or otherwise available to it, the right to appoint one
representative to serve as a Director on the Borrower's Board of Directors.
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SECTION 8 SUBORDINATION
8.1 Obligations Subordinated to Senior Indebtedness of the Borrower
The Lenders covenant and agree that payments in respect of the
Obligations by the Borrower shall be subordinated in accordance with the
provisions of this Section 8 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Senior Indebtedness of the
Company, whether now outstanding or hereafter created (including any interest
accruing subsequent to an event specified in Section 7.6 or 7.7 whether or not
such interest is an allowed claim against the Borrower), that the subordination
is for the benefit of the holders of Senior Indebtedness of the Borrower, and
that each holder of Senior Indebtedness of the Borrower whether now outstanding
or hereafter created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness of the Borrower in reliance upon the covenants and
provisions contained in this Agreement.
8.2 Priority and Payment Over of Proceeds in Certain Events
(a) Subordination on Dissolution, Liquidation or Reorganization of the
Borrower. Upon any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities, upon
any dissolution or winding up or total or partial liquidation or reorganization
of the Borrower, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Borrower
(including any interest accruing subsequent to an event specified in Section 7.6
or 7.7 whether or not such interest is an allowed claim enforceable against the
Borrower) shall first be paid in full in cash or Cash Equivalents, before the
Lenders shall be entitled to receive any payment by the Borrower in respect of
any Obligations and upon any such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities, to
which the Lenders would be entitled except for the provisions of this Section 8
shall be made by the Borrower or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
directly to the holders of the Senior Indebtedness of the Borrower or their
representatives to the extent necessary to pay all of the Senior Indebtedness of
the Borrower to the holders of such Senior Indebtedness of the Borrower.
(b) Subordination on Default on Senior Indebtedness. Upon the maturity
of any Senior Indebtedness of the Borrower by lapse of time, acceleration or
otherwise, all Senior Indebtedness of the Borrower then due and payable shall
first be paid in full in cash or Cash Equivalents, before any payment is made by
the Borrower or any Person acting on behalf of the Borrower with respect to the
Obligations. No direct or indirect payment by the Borrower or any Person acting
on behalf of the Borrower of any Obligations whether pursuant to the terms of
the Bridge Loan or upon acceleration or otherwise shall be made, if at the time
of such payment, there exists a Default (as defined in the document governing
any Senior Indebtedness of the Borrower) in the payment of all or any portion of
any principal, interest, fees, letter of credit reimbursement obligations or
other amounts payable in respect of any Senior Indebtedness of the Borrower and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Senior Indebtedness. In
addition, during the
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continuation of any other event of default with respect to the Senior
Indebtedness of the Borrower pursuant to which the maturity thereof may be
accelerated, upon the (i) receipt by the Agent of written notice from the agent
or representative of the holders of such Senior Indebtedness of such Default or
(ii) if such Non-Payment Default results from the acceleration of the Bridge
Loan, the date of the acceleration of the Bridge Loan, no such payment may be
made by the Borrower upon or in respect of the Obligations, for a period
("Payment Blockage Period") commencing on the date of receipt of such notice or
the date of such acceleration and ending 179 days after receipt of such notice
(unless such Payment Blockage Period shall be terminated by written notice to
the Agent from such agent or representative) or the date of such acceleration.
Notwithstanding anything herein to the contrary, (x) in no event will a Payment
Blockage Period or successive Payment Blockage Periods with respect to the same
payment on the Obligations extend beyond 179 days from the date the payment on
the Obligations was due and (y) there must be 180 consecutive days in any
365-day period during which no Payment Blockage Period is in effect. For all
purposes of this Section 8.2(b), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Senior Indebtedness of the Borrower initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a second
Payment Blockage Period by the holders or by the agent or other representative
of such Senior Indebtedness whether or not within a period of 365 consecutive
days, unless such event of default shall have been cured or waived for a period
of not less than 90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Obligation (other than as permitted by Sections (a) and (b) of this
Section 8.2) at a time when such payment is prohibited by this Section 8.2, then
and in such event such payment or distribution shall be received and held in
trust for the holders of the Senior Indebtedness of the Borrower and shall be
paid over or delivered to the holders of the Senior Indebtedness of the Borrower
remaining unpaid to the extent necessary to pay in full in cash or Cash
Equivalents all Senior Indebtedness of the Borrower in accordance with their
terms after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness of the Borrower.
If payment in respect of the Obligations is accelerated because of an
Event of Default, the Borrower shall promptly notify the agent or other
representatives for Senior Indebtedness of the Borrower of such acceleration.
Upon any payment or distribution of assets or securities referred to in
this Section 8, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lenders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness of the Borrower, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 8.
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The Borrower shall promptly give written notice to each of the Lenders
of any default or event of default under any Senior Indebtedness of the Borrower
or under any agreement pursuant to which Senior Indebtedness of the Borrower may
have been issued, and, in the event of any such event of default, shall provide
to the Agent the names and address of the trustees or other representatives of
holders of such Senior Indebtedness of the Borrower.
With respect to the holders and owners of Senior Indebtedness of the
Borrower, each Lender undertakes to perform only such obligations on the part of
such Lender as are specifically set forth in this Section 8, and no implied
covenants or obligations with respect to the holders or owners of Senior
Indebtedness of the Borrower shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Senior Indebtedness of the Borrower or to any agent under
the Senior Credit Facility or any other representative of the holders of the
Senior Indebtedness of the Borrower.
8.3 Payments May Be Paid Prior to Dissolution
Nothing contained in this Section 8 or elsewhere in this Agreement
shall prevent or delay (i) the Borrower, except under the conditions described
in Section 8.2, from making payments at any time for the purpose of making
payments in respect of its Obligations, or from depositing with the Agent any
moneys for such payments, or (ii) subject to Section 8.2, the application by the
Agent of any moneys deposited with it for the purpose of making payments in
respect of Obligations.
8.4 Rights of Holders of Senior Indebtedness of the Borrower Not To Be
Impaired
No right of any present or future holder of any Senior Indebtedness of
the Borrower to enforce subordination as provided in this Section 8 shall at any
time in any way be prejudiced or impaired by any act or failure to act by any
such holder, or by any noncompliance by the Borrower with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Senior Indebtedness of the
Borrower may, at any time and from time to time without impairing or releasing
the subordination provided in this Section 8 or the obligations of the Lenders
hereunder to the holders of Senior Indebtedness of the Borrower, do any one or
more of the following. (i) change the manner, place, terms or time of payment
of, or renew or alter, Senior Indebtedness of the Borrower or otherwise amend or
supplement in any manner Senior Indebtedness of the Borrower or any instrument
evidencing the same or any agreement under which any Senior Indebtedness of the
Borrower is outstanding; (ii) sell, exchange, release, or otherwise deal with
any property pledged, mortgaged, or otherwise securing Senior Indebtedness of
the Borrower or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness of the Borrower; and (iv) exercise or refrain
from exercising any rights against the Borrower and any other Person. Each
Lender by purchasing or accepting a Note waives any and all notice of the
creation, modification, renewal, extension or accrual of any Senior Indebtedness
of the Borrower and notice of or proof of reliance by any holder or owner of
Senior Indebtedness of the Borrower upon this Section 8 and the Senior
Indebtedness of the Borrower shall conclusively be deemed to have been created,
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contracted or incurred in reliance upon this Section 8, and all dealings between
the Borrower and the holders and owners of the Senior Indebtedness of the
Borrower shall be deemed to have been consummated in reliance upon this Section
8.
The provisions of this Section 8 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of the Senior Indebtedness of
the Borrower.
8.5 Subrogation
Upon the payment in full in accordance with the terms of Section 8.2 of
all amounts payable under or in respect of the Senior Indebtedness of the
Borrower, the Lenders shall be subrogated to the rights of the holders of such
Senior Indebtedness of the Borrower to receive payments or distributions of
assets of the Borrower made on such Senior Indebtedness of the Borrower until
the Obligations shall be paid in full in cash or Cash Equivalents; and for
purposes of such subrogation no payments or distributions to holders of such
Senior Indebtedness of the Borrower of any cash, property or securities to which
the Lenders would be entitled except for the provisions of this Section 8, and
no payment over pursuant to the provisions of this Section 8 to holders of such
Senior Indebtedness of the Borrower by the Lenders, shall, as between the
Borrower, its creditors other than holders of such Senior Indebtedness of the
Borrower and the Lenders, be deemed to be a payment by the Borrower to or on
account of such Senior Indebtedness of the Borrower, it being understood that
the provisions of this Section 8 are solely for the purpose of defining the
relative rights of the holders of such Senior Indebtedness of the Borrower, on
the one hand, and the Lenders, on the other hand. A release of any claim by any
holder of Senior Indebtedness of the Borrower shall not limit the Lenders'
rights of subrogation under this Section 8.5.
If any payment or distribution to which the Lenders would otherwise
have been entitled but for the provisions of this Section 8 shall have been
applied, pursuant to the provisions of this Section 8, to the payment of all
amounts payable under the Senior Indebtedness of the Borrower, then and in such
case, the Lenders shall be entitled to receive from the holders of such Senior
Indebtedness of the Borrower at the time outstanding the full amount of any such
payments or distributions received by such holders of Senior Indebtedness of the
Borrower in excess of the amount sufficient to pay all Senior Indebtedness of
the Borrower payable under or in respect of the Senior Indebtedness of the
Borrower in full in cash or Cash Equivalents in accordance with the terms of
Section 8.2.
8.6 Obligations of the Borrower Unconditional
Nothing contained in this Section 8 or elsewhere in this Agreement is
intended to or shall impair as between the Borrower and the Lenders the
obligations of the Borrower, which are absolute and unconditional, to pay to the
Lenders the Obligations as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Lenders and creditors of the Borrower other than the holders of
the Senior Indebtedness of the Borrower, nor shall anything herein or therein
prevent the Lenders from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 8 of the holders of such Senior
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Indebtedness of the Borrower in respect of cash, property or securities of the
Borrower received upon the exercise of any such remedy.
The failure to make a payment in respect of Obligations by reason of
any provision of this Section 8 shall not prevent the occurrence of an Event of
Default under Section 7.
8.7 Lenders Authorize Agent to Effectuate Subordination
Each Lender hereby authorizes and expressly directs the Agent on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 8 and appoints the Agent its attorney in
fact for such purpose, including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of the
Borrower, the immediate filing of a claim for the unpaid balance of the
Obligations in the form required in said proceedings and causing said claim to
be approved. If the Agent does not file proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
of the Borrower are hereby authorized to have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Lenders. In the
event of any such proceeding, until the Senior Indebtedness of the Borrower is
paid in full in cash or Cash Equivalents, without the consent of the holders of
a majority in principal amount outstanding of Senior Indebtedness of the
Borrower, no Lender shall waive, settle or compromise any such claim or claims
relating to the Obligations that such Lender now or hereafter may have against
the Borrower.
SECTION 9 THE AGENT
9.1 Appointment
Each Lender hereby irrevocably designates and appoints First Union as
Agent of such Lender to act as specified herein and in the other Loan Documents,
and each Lender hereby irrevocably authorizes First Union as the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent agrees to act as such upon the express conditions contained
in this Section 9. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in the
other Loan Documents, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agent. The provisions of this Section 9 are solely for the benefit of the Agent
and the Lenders, and neither the Company nor any of its Subsidiaries shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of
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the Lenders and the Agent does not assume and shall not be deemed to have
assumed any obligation or relationship of agent or trust with or for the Company
or any of its Subsidiaries.
9.2 Delegation of Duties
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care except to the
extent otherwise required by Section 9.3.
9.3 Exculpatory Provisions
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Company, any of its Subsidiaries or any of their
respective officers contained in this Agreement, any other Loan Documents, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for any failure of the Company, any of its Subsidiaries
or any of their respective officers to perform its or their obligations
hereunder or thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Company or any
of its Subsidiaries. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Agent to the Lenders or by or on behalf of
the Company or any of its Subsidiaries to the Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Bridge Loan or of the existence or possible
existence of any Potential Event of Default or Event of Default.
9.4 Reliance by Agent
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company or any of its Subsidiaries), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this
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Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. As between the Agent and the Lenders, the Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
9.5 Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Event of Default or Event of Default hereunder
unless the Agent has actually received notice from a Lender or the Company
referring to this Agreement, describing such Potential Event of 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, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to such
Potential Event of Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, as between the Agent and the Lenders
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 Potential Event of Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders
Each Lender expressly acknowledges that neither the Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the affairs of the Company
or any of its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries and made its own decision to make its Bridge Loan
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
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9.7 Indemnification
The Lenders agree to indemnify the Agent in its capacity as such
ratably according to their respective "percentages" as used in determining the
Required Lenders at such time, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment in full
of the Obligations) be imposed on, incurred by or asserted against the Agent in
its capacity as such in any way relating to or arising out of this Agreement or
any other Loan Document, or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted to be
taken by the Agent under or in connection with any of the foregoing, but only to
the extent that any of the foregoing is not paid by the Company or any of its
Subsidiaries; provided that no Lender shall be liable to the Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 9.7 shall
survive the payment in full of all Obligations.
9.8 Agent in Its Individual Capacity
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company and its
Subsidiaries as though the Agent were not the Agent hereunder. With respect to
the Bridge Loan made by it and all Obligations owing to it, the Agent shall have
the same rights and powers under this Agreement as any Lender and may exercise
the same as though it were not the Agent and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
9.9 Resignation of the Agent; Successor Agent
The Agent may resign as the Agent upon 20 days' notice to the Lenders
and the Company. Upon the resignation of the Agent, the Required Lenders shall
appoint from among the Lenders a successor Agent which is a bank or a trust
company for the Lenders subject to prior approval by the Company (such approval
not to be unreasonably withheld or delayed), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall include such successor agent effective upon its appointment, and
the resigning Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. After the resignation of the
Agent hereunder, the provisions of this Section 9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
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SECTION 10 GUARANTEE
10.1 Unconditional Guarantee
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "Guarantee"), subject
to Section 11, to each of the Lenders and to the Agent and their respective
successors and assigns that (i) the principal of and interest on the Bridge Loan
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Bridge Loan and all other obligations of the Company to the Lenders or the Agent
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any of the Bridge Loan or of any such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in Section 10.5. Each Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Bridge Loan or this Agreement, the absence of any action
to enforce the same, any waiver or consent by any of the Lenders with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Bridge Loan,
this Agreement and in this Guarantee. If any Lender or the Agent is required by
any court or otherwise to return to the Company, any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Guarantor, any amount paid by the Company or any Guarantor to
the Agent or such Lender, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between each Guarantor, on the one hand, and the Lenders and the Agent,
on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 7 for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Section 7, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
10.2 Subordination of Guarantee
The obligations of each Guarantor to the Lenders and to the Agent
pursuant to the Guarantee of such Guarantor and this Agreement are expressly
subordinate and subject in right of payment to the prior payment in full of all
Guarantor Senior Indebtedness of such Guarantor, to the extent and in the manner
provided in Section 11.
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10.3 Severability
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.4 Limitation of Guarantor's Liability
Each Guarantor and by its acceptance hereof each of the Lenders hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Lenders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including, but not limited
to, the Guarantor Senior Indebtedness of such Guarantor) and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.6, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
10.5 Guarantors May Consolidate, etc., on Certain Terms
(a) Nothing contained in this Agreement or in the Bridge Loan shall
prevent any consolidation or merger of a Guarantor with or into the Borrower or
another Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety, to the Borrower or
another Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.
(b) Except as set forth in Section 6.7, nothing contained in this
Agreement or in the Bridge Loan shall prevent any consolidation or merger of a
Guarantor with or into a corporation or corporations other than the Borrower or
another Guarantor (whether or not affiliated with the Guarantor); provided that,
subject to Section 10.5(a), (i) immediately after such transaction, and giving
effect thereto, no potential Event of Default or Event of Default shall have
occurred as a result of such transaction and be continuing, and (ii) upon any
such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor
set forth in this Section 10, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Agent, executed and delivered to the
Agent, by the corporation formed by such consolidation, or into which the
Guarantor shall have merged, or by the corporation that shall have acquired such
property. In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture
executed and delivered to the Agent and satisfactory in form and substance to
the Agent of the due and punctual performance of all of the covenants and
conditions of this Agreement to be performed
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by the Guarantor, such successor corporation shall succeed to and be substituted
for the Guarantor with the same effect as if it had been named herein as a
Guarantor.
10.6 Contribution
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Borrower's
obligations with respect to the Obligations. "Adjusted Net Assets" of such
Guarantor at any date shall mean the lesser of (x) the amount by which the fair
value of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving to all other
fixed and contingent liabilities incurred or assumed on such date (other than
liabilities of such Guarantor under Subordinated Indebtedness)), but excluding
liabilities under the Guarantee, of such Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Guarantor
at such date exceeds the amount that will be required to pay the probable
liabilities of such Guarantor on its debts including, without limitation,
Guarantor Senior Indebtedness (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any Subsidiary of such Guarantor in respect of the
obligations of such Subsidiary under the Guarantee), excluding debt in respect
of the Guarantee of such Guarantor, as they become absolute and matured.
10.7 Waiver of Subrogation
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under its Guarantee and this Agreement, including, without limitation, any right
of subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Lender against the Borrower, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Bridge Loan shall not have been paid in full, such
amount shall be deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Lenders, and shall, subject to the
provisions of Section 8, Section 10.2 and Section 11, forthwith be paid to the
Agent for the benefit of such Lenders to be credited and applied upon the Bridge
Loan, whether matured or unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section 10.7 is knowingly made in contemplation of
such benefits.
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10.8 Evidence Guarantee
To evidence their guarantees to the Lenders set forth in this Section
10, each of the Guarantors hereby agrees to execute the notation of Guarantee in
substantially the form included in Exhibit VII. Each such notation of Guarantee
shall be signed on behalf of each Guarantor by two Officers, or an Officer and
an assistant Secretary or one Officer shall sign and one Officer or an assistant
Secretary (each of who shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to such notation of Guarantee.
10.9 Waiver of Stay, Extension or Usury Laws
Each Guarantor covenants that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law that would prohibit or
forgive such Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and each Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS
11.1 Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness
The Lenders covenant and agree that payments in respect of the
obligations by a Guarantor in respect of its Guarantee (collectively, as to any
Guarantor, its "Guarantee Obligations") shall be subordinated in accordance with
the provisions of this Section 11 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Guarantor Senior Indebtedness
of such Guarantor whether now outstanding or hereafter created (including any
interest accruing subsequent to an event specified in Section 7.6 or 7.7 whether
or not such interest is an allowed claim against such Guarantor), that the
subordination is for the benefit of the holders of Guarantor Senior
Indebtedness, and that each holder of Guarantor Senior Indebtedness whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Guarantor Senior Indebtedness in reliance upon the
covenants and provisions contained in this Agreement.
11.2 Priority and Payment Over of Proceeds in Certain Events
(a) Subordination of Guarantee Obligations on Dissolution, Liquidation
or Reorganization of Such Guarantor. Upon any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of such Guarantor, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings
(other than a liquidation or dissolution of such Guarantor into the Borrower or
another Guarantor), all Guarantor Senior Indebtedness of such Guarantor
(including. any interest accruing subsequent to an event specified in Section
7.6 or 7.7 whether or not such interest is an
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allowed claim enforceable against such Guarantor) shall first be paid in full in
cash or Cash Equivalents, before the Lenders shall be entitled to receive any
payment with respect to any Guarantee Obligations of such Guarantor and upon any
such dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Lenders would be entitled
except for the provisions of this Section 11 shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor or their representatives to the
extent necessary to pay all of the Guarantor Senior Indebtedness of such
Guarantor to the holders of such Guarantor Senior Indebtedness.
(b) Subordination of Guarantee Obligations on Default on Senior
Indebtedness. Upon the maturity of any Guarantor Senior Indebtedness by lapse of
time, acceleration or otherwise, all such Guarantor Senior Indebtedness then due
and payable shall first be paid in full in cash or Cash Equivalents, before any
payment is made by such Guarantor or any Person acting on behalf of such
Guarantor with respect to the Guarantee Obligations of such Guarantor. No direct
or indirect payment by any Guarantor or any Person acting on behalf of such
Guarantor of any Guarantee obligations of such Guarantor whether pursuant to the
terms of the Bridge Loan or upon acceleration or otherwise shall be made, if at
the time of such payment, there exists a default (as defined in the document
governing any such Guarantor Senior Indebtedness) in the payment of all or any
portion of any principal, interest, fees, letter of credit reimbursement
obligations or other amounts payable in respect of any such Guarantor Senior
Indebtedness and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of such
Guarantor Senior Indebtedness. In addition, during the continuation of any other
event of default with respect to any such Guarantor Senior Indebtedness of such
Guarantor pursuant to which the maturity thereof may be accelerated, upon the
earlier of (i) receipt by the Agent of written notice from the agent or
representative of the holders of such Senior Indebtedness or (ii) if such
non-payment default results from the acceleration of the Bridge Loan, the date
of acceleration of the Bridge Loan, no such payment may be made by such
Guarantor under its Guarantee for a period ("Guarantor Payment Blockage Period")
commencing on the date of receipt of such notice or the date of the acceleration
referred to in clause (ii) above, as the case may be, and ending on the earlier
to occur of 179 days after receipt of such written notice by the Agent (unless
such Guarantor Payment Blockage Period shall be terminated by written notice to
the Agent from such agent) or the date of the acceleration of the Bridge Loan,
as the case may be (provided such Guarantor Senior Indebtedness shall
theretofore not have been accelerated). Notwithstanding anything herein to the
contrary, (x) in no event will a Guarantor Payment Blockage Period or successive
Guarantor Payment Blockage Periods with respect to the same payment on such
Guarantee extend beyond 179 days from the date the payment on such Guarantee was
due and (y) there must be 180 consecutive days in any 365-day period during
which no Guarantor Payment Blockage Period is in effect. For all purposes of
this Section 11.2(b), no event of default which existed or was continuing on the
date of the commencement of any Guarantor Payment Blockage Period with respect
to the Senior Indebtedness initiating such Guarantor Payment Blockage Period
shall be, or be made, the basis for the commencement of a second Guarantor
Payment Blockage Period by the holders or by the agent or other representative
of such Senior
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Indebtedness whether or not within a period of 365 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Guarantee Obligation with respect to the Bridge Loan (other than
permitted by Sections (a) and (b) of this Section 11.2) at a time when such
payment is prohibited by this Section 11.2, then and in such event such payment
or distribution shall be received and held in trust for the holders of the
Guarantor Senior Indebtedness and shall be paid over or delivered to the holders
of the Guarantor Senior Indebtedness remaining unpaid to the extent necessary to
pay in full in cash or Cash Equivalents all Guarantor Senior Indebtedness in
accordance with their terms after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior Indebtedness.
Nothing contained in this Section 11 will limit the right of the
Lenders to take any action to accelerate the maturity of the Bridge Loan
pursuant to Section 7 or to pursue any rights or remedies hereunder or
otherwise.
Upon any payment or distribution of assets or securities referred to in
this Section 11, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lender for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Guarantor Senior Indebtedness, the amount thereof or payable thereon,
the amount or amounts paid or distributed hereon and all other facts pertinent
thereto or to this Section 11.
The Guarantors shall promptly give written notice to each of the
Lenders of any default or event of default under any Guarantor Senior
Indebtedness or under any agreement pursuant to which Guarantor Senior
Indebtedness may have been issued, and, in the event of any such event of
default, shall provide to the Agent the names and address of the trustees or
other representatives of holders of such Guarantor Senior Indebtedness.
With respect to the holders and owners of Guarantor Senior
Indebtedness, each Lender undertakes to perform only such obligations on the
part of such Lender as are specifically set forth in this Section 11, and no
implied covenants or obligations with respect to the holders or owners of
Guarantor Senior Indebtedness shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Guarantor Senior Indebtedness or to the agent under the
Senior Credit Facility or any other representative of the holders of the
Guarantor Senior Indebtedness.
11.3 Payments May Be Paid Prior to Dissolution
Nothing contained in this Section 11 or elsewhere in this Agreement
shall prevent or delay (i) Guarantors, except under the conditions described in
Section 11.2, from making
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payments at any time for the purpose of making payments in respect of their
respective Guarantee Obligations, or from depositing with the Agent any moneys
for such payments, or (ii) subject to Section 11.2, the application by the Agent
of any moneys deposited with it for the purpose of making payments in respect of
Guarantee Obligations.
11.4 Rights of Holders of Guarantor Senior Indebtedness
Not To Be Impaired
No right of any present or future holder of any Guarantor Senior
Indebtedness to enforce subordination as provided in this Section 11 shall at
any time in any way be prejudiced or impaired by any act or failure to act by
any such holder, or by any noncompliance by the Guarantors with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Guarantor Senior
Indebtedness may, at any time and from time to time without impairing or
releasing the subordination provided in this Section 11 or the obligations of
the Lenders hereunder to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (i) change the manner, place, terms or time of
payment of, or renew or alter, Guarantor Senior Indebtedness or otherwise amend
or supplement in any manner Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which any Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release, or otherwise deal
with any property pledged, mortgaged, or otherwise securing Guarantor Senior
Indebtedness or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Guarantor Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Guarantors and any other Person. Each Lender
by purchasing or accepting a Note waives any and all notice of the creation,
modification, renewal, extension or accrual of any Guarantor Senior Indebtedness
and notice of or proof of reliance by any holder or owner of Guarantor Senior
Indebtedness upon this Section 11 and the Guarantor Senior Indebtedness shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Section 11, and all dealings between the Guarantors and the holders
and owners of the Guarantor Senior Indebtedness shall be deemed to have been
consummated in reliance upon this Section 11.
The provisions of this Section 11 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of the Guarantor Senior
Indebtedness.
11.5 Subrogation
Upon the payment in full in accordance with the terms of Section 11.2
of all amounts payable under or in respect of the Guarantor Senior Indebtedness,
the Lenders shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of assets of the
Guarantors made on such Guarantor Senior Indebtedness until the Guarantee
Obligations shall be paid in full in cash or Cash Equivalents in a manner
satisfactory to the holders of such Guarantor Senior Indebtedness in accordance
with the terms of Section 11.2; and for purposes of such subrogation no payments
or distributions to holders of such Guarantor Senior Indebtedness of any cash,
property or securities to which the
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Lenders would be entitled except for the provisions of this Section 11, and no
payment over pursuant to the provisions of this Section 11 to holders of such
Guarantor Senior Indebtedness by the Lenders, shall, as between such Guarantor,
its creditors other than holders of such Guarantor Senior Indebtedness and the
Lenders, be deemed to be a payment by such Guarantor to or on account of such
Guarantor Senior Indebtedness, it being understood that the provisions of this
Section 11 are solely for the purpose of defining the relative rights of the
holders of such Guarantor Senior Indebtedness, on the one hand, and the Lenders,
on the other hand. A release of any claim by any holder of Guarantor Senior
Indebtedness shall not limit the Lenders' rights of subrogation under this
Section 11.5.
If any payment or distribution to which the Lenders would otherwise
have been entitled but for the provisions of this Section 11 shall have been
applied, pursuant to the provisions of this Section 11, to the payment of all
amounts payable under the Guarantor Senior Indebtedness, then and in such case,
the Lenders shall be entitled to receive from the holders of such Guarantor
Senior Indebtedness at the time outstanding the full amount of any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to pay all Guarantor Senior Indebtedness payable
under or in respect of the Guarantor Senior Indebtedness in full in cash or Cash
Equivalents in accordance with the terms of Section 11.2.
11.6 Obligations of the Guarantors Unconditional
Nothing contained in this Section 11 or elsewhere in this Agreement or
in the Guarantees is intended to or shall impair as between the Guarantors and
the Lenders the obligations of the Guarantors, which are absolute and
unconditional, to pay to the Lenders the Guarantee Obligations as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Lenders and creditors of the
Guarantors other than the holders of the Guarantor Senior Indebtedness, nor
shall anything herein or therein prevent the Lenders from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this Section 11 of the holders
of such Guarantor Senior Indebtedness in respect of cash, property or securities
of the Guarantors received upon the exercise of any such remedy.
The failure to make a payment in respect of Guarantee Obligations by
reason of any provision of this Section 11 shall not prevent the occurrence of
an Event of Default under Section 7.
11.7 Lenders Authorize Agent to Effectuate Subordination
Each Lender hereby authorizes and expressly directs the Agent on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 11 and appoints the Agent its attorney in
fact for such purpose including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of any Guarantor (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of any
Guarantor, the immediate filing of a claim for the unpaid balance of the
Guarantee Obligations in the form
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required in said proceedings and causing said claim to be approved. If the Agent
does not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such claim
or claims, then the holders of the Guarantor Senior Indebtedness are hereby
authorized to have the right to file and are hereby authorized to file an
appropriate claim for and on behalf of the Lenders In the event of any such
proceeding, until the Guarantor Senior Indebtedness is paid in full in cash or
Cash Equivalents, without the consent of the holders of a majority in principal
amount outstanding of Guarantor Senior Indebtedness, no Lender shall waive,
settle or compromise any such claim or claims relating to the Obligations that
such Lender now or hereafter may have against the Guarantors.
SECTION 12 MISCELLANEOUS
12.1 Representation of the Lenders
Each Lender hereby represents that it is a commercial lender which
makes loans in the ordinary course of its business and that it will make the
Bridge Loan hereunder for its own account or the account of its affiliates in
the ordinary course of such business.
12.2 Participations in and Assignments of Bridge Loan
A. Each Lender shall have the right at any time to sell, assign,
transfer or negotiate all or any portion of its Bridge Notes or its Bridge Loan
Commitment in an aggregate amount of not less than $1,000,000 to any Eligible
Assignee, other than to an Eligible Assignee which has, or has an Affiliate
which has, a principal line of business similar to any principal line of
business of the Company or any of its Subsidiaries. In the case of any sale,
transfer or negotiation of all or part of the Bridge Loan or any Bridge Loan
Commitment authorized under this Section 12.2A, the assignee, transferee or
recipient shall become a party to this Agreement as a Lender by execution of an
assignment and assumption agreement; provided that (i) at such time Section 2.1A
shall be deemed modified to reflect the Bridge Loan Commitment of such new
Lender and of the existing Lenders, (ii) upon surrender of the Bridge Notes, new
Bridge Notes will be issued, at the Borrower's expense to such new Lender and to
the assigning Lender, such new Bridge Notes to be in conformity with the
requirements of Section 2.1D (with appropriate modifications) to the extent
needed to reflect the revised Bridge Loan Commitment, and (iii) the Agent shall
receive at the time of each such assignment, from the assigning or assignee
Lender, the payment of a non-refundable assignment fee of $3,500; and provided,
further, that such transfer or assignment will not be effective until recorded
by the Agent on the Register pursuant to Section 5.12. To the extent of any
assignment pursuant to this Section 12.2A, the assigning Lender shall be
relieved of its obligations hereunder with respect to assigned Bridge Loan
Commitment, and the assignee, transferee or recipient shall have, to the extent
of such sale, assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Lender with respect to such Bridge Notes or
Bridge Loan Commitment, including, without limitation, the right to approve or
disapprove actions which, in accordance with the terms hereof, require the
approval of a Lender. At the time of each assignment pursuant to this Section
12.2A to an Eligible Assignee which is not already a Lender hereunder and which
is not a United States Person (as such term is defined in Section 7701 (a) (30)
of the Internal Revenue Code) for Federal income tax purposes, the respective
Eligible Assignee shall provide
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to the Borrower and the Agent the appropriate Internal Revenue Service Forms
(and, if applicable a Section 12.2E(ii) Certificate) described in Section 12.2E.
B. Each Lender may grant participations in all or any part of its
Bridge Notes or its Bridge Loan Commitment in an aggregate amount of not less
than $1,000,000 to any Eligible Assignee, other than to an Eligible Assignee
which has, or has an Affiliate which has, a principal line of business similar
to any principal line of business of the Company or any of its Subsidiaries.
C. The Borrower shall, at its own cost and expense, provide such
certificates, acknowledgments and further assurances in respect of this
Agreement and the Bridge Loan as any Lender may reasonably require in connection
with any participation, transfer or assignment pursuant to this Section 12.2.
D. Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Bridge Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
E. Each Lender that is an assignee or transferee of an interest under
this Agreement pursuant to Section 12.2A (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer) and
that is not a United States Person (as such term is defined in Section 7701 (a)
(30) of the Internal Revenue Code) agrees to deliver to the Borrower and the
Agent, on the date of such assignment or transfer to such Lender, (i) two
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the Lender is not
a "bank" within the meaning of Section 881(c) (3) (A) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (X) a certificate substantially in the form of
Exhibit IX (a Section 12.2E(ii) Certificate") and (Y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Bridge Note. In addition, each Lender agrees that,
when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Agent two new accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001, or a Section 12.2E(ii)
Certificate and Form W-8, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Bridge Note, or it shall
immediately notify the Borrower and the Agent of its inability to deliver any
such Form or Certificate Subject to Section 12.2A and the immediately succeeding
sentence, and notwithstanding Section 12.19, the Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder or made on any other Loan Document for the account of any
Lender which is not a United States Person (as such term is defined in
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Section 7701 (a) (30) of the Internal Revenue Code) for US. Federal income tax
purposes to the extent that such Lender has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 12.2E and except as set
forth in Section 12.2A, the Borrower agrees to pay additional amounts and to
indemnify and hold harmless each Lender (without regard to the identity of the
jurisdiction requiring the deduction or withholding), and reimburse such Lender
upon its written request, in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the date of any assignment or transfer in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, to the deducting or withholding of income or similar Taxes.
12.3 Expenses
Whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and all the
costs of furnishing all opinions by counsel for the Borrower (including without
limitation any opinions requested by the Lenders as to any legal matters arising
hereunder), and of the Borrower's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with; (ii) the actual and reasonable fees, expenses and disbursements
of Cleary, Gottlieb, Steen & Hamilton in connection with the negotiation,
preparation, execution and administration of the Loan Documents and the Bridge
Loan hereunder, and any amendments, modifications and waivers hereto or thereto
and consents to departures from the terms hereof and thereof; and (iii) after
the occurrence of an Event of Default, all actual and reasonable costs and
expenses (including actual and reasonable attorneys fees, including allocated
costs of internal counsel, and costs of settlement) incurred by the Lenders or
the Agent in enforcing any Obligations of or in collecting any payments due from
the Borrower hereunder or under the Bridge Notes by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings.
12.4 Indemnity
In addition to the payment of expenses pursuant to Section 12.3,
whether or not the transactions contemplated hereby shall be consummated, the
Borrower agrees to indemnify, pay and hold each of the Lenders, the Agent and
any holder of any of the Bridge Notes, and each of their respective officers,
directors, employees, agents, representatives and affiliates (collectively
called the "Indemnitees"), harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the actual and reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated as a party thereto), which may be suffered
by, imposed on, incurred by, or asserted against that Indemnitee, in any manner
resulting from, connected with, in respect of, relating to or arising out of
this Agreement, the other Loan Documents, the Commitment Letter,
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the Lenders' agreements to make the Bridge Loan or the use or intended use of
any of the proceeds of the Bridge Loan hereunder, the issuance of the Exchange
Notes or the Take-Out Securities or the Acquisition including, without
limitation, any Environmental Liabilities and Costs or the breach of any
representation, warranty or covenant in this Agreement (the "Indemnified
Liabilities"); provided that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities (i) to the extent
such liabilities are finally judicially determined to have resulted primarily
from (A) the gross negligence or willful misconduct of that Indemnitee or (B)
the failure of such Indemnitee to perform its obligations under any Loan
Document or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document or for any transfer
fees. To the extent that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
12.5 Setoff
Subject to Section 8, in addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Lender, the Agent and each subsequent holder of any Bridge Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts or any other accounts held for the benefit of another Person) and any
other Indebtedness at any time held or owing by such Person or any such
subsequent holder to or for the credit or the account of the Company or the
Borrower against and on account of the obligations and liabilities of the
Company or the Borrower to such Person or such subsequent holder under this
Agreement and the Bridge Notes, including, but not limited to, all claims of any
nature or description arising out of or connected with this Agreement or the
Bridge Notes, irrespective of whether or not (a) such Person or such subsequent
holder shall have made any demand hereunder or (b) such Person or such
subsequent holder shall have declared the principal of or the interest on its
portion of the Bridge Loan and its Bridge Notes and other amounts due hereunder
to be due and payable as permitted by Section 7 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.
12.6 Amendments and Waivers
No amendment, modification, termination or waiver of any term or
provision of this Agreement, of the Bridge Notes, any Guarantee or, prior to the
execution and delivery thereof, of the form of Registration Rights Agreement, or
the form of the Senior Subordinated Indenture or consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective without the
prior written concurrence of the Borrower or such Guarantor, as the case may be,
and the Agent and the Required Lenders, and, upon the request of any Lender, the
receipt of a written opinion of counsel of the Borrower addressed to the Lenders
to the effect that
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such amendment, modification, termination, waiver or consent does not violate or
conflict with any of the terms and provisions of the Senior Credit Facility or
any other Contractual Obligation of the Borrower; provided that, notwithstanding
the third sentence of Section 12.15, without the prior written consent of each
Lender affected, an amendment, modification, termination or waiver of this
Agreement, any Bridge Notes, any Guarantee or, prior to the execution and
delivery thereof, of the form of Registration Rights Agreement, or the form of
the Senior Subordinated Indenture or consent to departure from a term or
provision hereof or thereof may not: (i) reduce the principal amount of Bridge
Notes whose holders must consent to any such amendment, modification,
termination, waiver or consent; (ii) reduce the rate of or extend the time for
payment of principal or interest on any Note; (iii) reduce the principal amount
of any Note; (iv) make any Note payable in money other than that stated in the
Note; (v) make any change in Section 2.4A(iv) or in the definition of Change of
Control, in the last paragraph of Section 7 or in Section 8.5, 11.5 or 12.6;
(vi) reduce the rate or extend the time of payment of fees or other compensation
payable to the Lenders hereunder; (vii) modify the provisions of Section 8 or
any of the defined terms related thereto in any manner adverse to the Lenders;
or (viii) waive performance by the Borrower of its obligations under, or consent
to any departure from any of the terms and provisions of, Section 2.4A(iv); and
provided, further, that without the consent of the Agent, no such amendment,
modification, termination or waiver may amend, modify, terminate or waive any
provision of Section 9 as the same applies to the Agent or any other provision
of this Agreement as it relates to the rights or obligations of the Agent. No
amendment, modification or waiver of any provision of this Agreement, the Bridge
Notes, any Guarantee or the form of the Senior Subordinated Indenture shall
adversely affect the rights of the holders of Senior Indebtedness or the holders
of Guarantor Senior Indebtedness without their consent. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. Notice to or demand on the Borrower in any case shall
entitle the Borrower to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.6 shall be binding upon each holder
of the Bridge Notes at the time outstanding, each further holder of the Bridge
Notes, and, if signed by the Borrower or a Guarantor, on the Borrower and such
Guarantor.
12.7 Independence of Covenants
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
12.8 Entirety
The Loan Documents and the Commitment Letter embody the entire
agreement of the parties and supersede all prior agreements and understandings,
if any, relating to the subject matter hereof and thereof.
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12.9 Notices
Unless otherwise provided herein, any notice or other communications
herein required or permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by mail and shall be deemed to
have been given when delivered in person, upon receipt of telecopy or telex
against receipt of answer back or four Business Days after depositing it in the
mail, registered or certified, with postage prepaid and properly addressed;
provided that notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 12.9) shall be set forth under each
party's name on the signature pages hereto.
12.10 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the Commitment Letter,
the making of the Bridge Loan hereunder and the execution and delivery of the
Bridge Notes and, notwithstanding the making of the Bridge Loan, the execution
and delivery of the Bridge Notes or any investigation made by or on behalf of
any party, shall continue in full force and effect. The closing of the
transactions herein contemplated shall not prejudice any right of one party
against any other party in respect of anything done or omitted hereunder or in
respect of any right to damages or other remedies.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrower set forth in Sections 12.3, 12.4,
12.14, 12.15, 12.17, 12.19, 12.22 and 12.23 shall survive the payment of the
Bridge Loan and the Bridge Notes and the termination of this Agreement.
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of the Agent or any Lender or any
holder of any Bridge Note in the exercise of any power, right or privilege
hereunder, under a Guarantee or under the Bridge Notes shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Agreement, under
a Guarantee or the Bridge Notes are cumulative to and not exclusive of any
rights or remedies otherwise available.
12.12 Severability
In case any provision in or obligation under this Agreement, under a
Guarantee or the Bridge Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
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12.13 Headings
Section and Sub-section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
12.14 Applicable Law
THIS AGREEMENT, EACH GUARANTEE AND THE NOTES SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. The terms and provisions
of this Agreement and each Guarantee shall inure to the benefit of any assignee
or transferee of the Bridge Notes pursuant to Section 12.2A, and in the event of
such transfer or assignment, the rights and privileges herein conferred upon the
Lenders shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Except as provided in
Section 12.6, in determining whether the holders of a sufficient aggregate
principal amount of the Bridge Loan shall have consented to any action under
this Agreement, any amount of the Bridge Loan owned or held by the Borrower, any
Guarantor or any of their respective Affiliates shall be disregarded. The
Borrower's rights or any interest therein hereunder may not be assigned without
the prior express written consent of each of the Lenders.
12.16 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto, and delivery
thereof to the Agent or, in the case of the Lenders, written telex or facsimile
notice or telephonic notification (confirmed in writing) of such execution and
delivery. The Agent will give the Company and each Lender prompt notice of the
effectiveness of this Agreement.
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial
A. Any legal action or proceeding with respect to this Agreement, any
Bridge Note or any Guarantee may be brought in the courts of the State of New
York or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
hereby irrevocably accepts for itself and in respect of its respective property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
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of the parties to this Agreement hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such party, and agrees not to plead
or claim, in any legal action or proceeding with respect to this Agreement, the
Bridge Notes or the Guarantees brought in any of the aforesaid courts, that any
such court lacks jurisdiction over such party. Each of the parties to this
Agreement irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its respective address for notices pursuant
to Section 12.9, such service to become effective 30 days after such mailing To
the extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any Bridge Note or any Guarantee that service of
process was in any way invalid or ineffective. Nothing herein shall affect the
right of any party to this Agreement to serve process in any other manner
permitted by law or to commerce legal proceedings or otherwise proceed against
any party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement, the Bridge Notes or the Guarantees brought in the courts referred to
in clause 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. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the Bridge Notes or the Guarantees or the
transactions contemplated hereby or thereby.
12.18 Payments Pro Rata
A. The Agent agrees that promptly after its receipt of each payment of
any interest or premium on or principal of the Bridge Notes from or on behalf of
the Borrower or any Guarantor, it shall, except as otherwise provided in this
Agreement, distribute such payment to the Lenders (other than any Lender that
has consented in writing to waive its pro rata share of such payment) pro rata
based upon their respective pro rata shares, if any, of such payment.
B. Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of set-off or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Bridge Loan of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Company to
such Lenders in such amount as shall result in a proportional participation by
all of the Lenders in such amount; provided that, if all or any portion of such
excess amount is
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thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
12.19 Taxes
A. Each payment by the Borrower or a Guarantor under this Agreement or
under any of the other Loan Documents shall, except as required by law, be made
without withholding or deduction for or on account of any and all present or
future Taxes. If any Taxes are required to be withheld or deducted from any such
payment, the Borrower (or, if the payment is made by a Guarantor, such
Guarantor) shall pay such additional amounts as may be necessary to ensure that
the net amount actually received by each Lender and the Agent after such
withholding or deduction is equal to the amount that each Lender and the Agent
would have received had no such withholding or deduction been required,
provided, however, that no such additional amounts shall be payable in respect
of (i) in the case of each Lender and the Agent, any Taxes imposed on its net
income and franchise taxes imposed on it by the jurisdiction under the laws of
which such Person is organized (unless such Taxes are imposed solely because the
payment was made by a Guarantor and would not have been imposed had such payment
instead been made by the Borrower) or (ii) any Taxes imposed on a payee by
reason of such payee's failure to comply with the provisions of Section 12.2E of
this Agreement.
B. The Borrower shall pay all Taxes referred to in Section 12.19A
before penalties are payable or interest accrues thereon, but if any such
penalties are payable or interest accrues, the Borrower shall make payment
thereof when due to the appropriate governmental authority.
C. The Borrower shall pay any present or future stamp, transfer or
documentary taxes or any other excise or property taxes, charges or similar
levies, and any penalties, additions to tax or interest due with respect
thereto, that may be imposed by any jurisdiction (or any political subdivision
or taxing authority thereof or therein) which arise from any payment made by the
Borrower hereunder or under any of the other Loan Documents or in connection
with the execution, delivery or registration of this Agreement or any of the
other Loan Documents.
D. If any Lender or the Agent pays any Taxes or other amounts that the
Borrower or a Guarantor is required to pay pursuant to this Section 12.19, the
Borrower shall indemnify it on demand in full in the currency in which such
Taxes or other amounts are paid, whether or not such Taxes were correctly or
legally asserted, together with interest thereon from and including the date of
payment to but excluding the date of reimbursement at a rate per annum
determined in accordance with Section 2.2.
E. The Borrower shall furnish to the Agent and each of the Lenders the
original or a certified copy of a receipt evidencing any payment of Taxes made
by the Borrower as soon as such receipt becomes available.
F. The provisions of this Section 12.19 shall survive the termination
of the Agreement and repayment of all Obligations.
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12.20 Waiver of Stay, Extension or Usury Laws
The Borrower covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Borrower from paying all or any
portion of the principal of or interest on the Bridge Loan as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Borrower hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Agent, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
12.21 Requirements of Law
(a) In the event that any change in law occurring after the date that
any lender becomes a Lender party to this Agreement with respect to such Lender
shall, in the opinion of such Lender, require that any Bridge Loan Commitment of
such Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by such Lender or
any corporation controlling such Lender, and such change in law shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital, as the case may be, as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation, as the
case may be, could have achieved but for such change in law (taking into account
such Lender's or such corporation's policies, as the case may be, with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time following notice by such Lender to the Borrower of such change
in law as provided in paragraph (b) of this Section 12.21, within 15 days after
demand by such Lender, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such corporation, as the
case may be, for such reduction.
(b) The Borrower shall not be required to make any payments to any
Lender for any additional amounts pursuant to this Section 12.21 unless such
Lender has given written notice to the Borrower, through the Agent, of its
intent to request such payments prior to or within 60 days after the date on
which such Lender became entitled to claim such amounts. If any Lender requests
compensation from the Borrower under this Section 12.21, the Borrower may, by
notice to such Lender (with a copy to the Agent), suspend the obligation of such
Lender thereafter to make or continue Bridge Loan, until the requirement of law
giving rise to such request ceases to be in effect; provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.
12.22 Confidentiality
Each Lender shall hold all non-public information obtained pursuant to
the requirements of or in connection with this Agreement which has been
identified as confidential by the Borrower in accordance with such Lender's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being
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understood and agreed by the Borrower that (i) in any event a Lender may make
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Bridge Loan or any participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process; provided that unless specifically prohibited by applicable law or
court order, each Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information and (ii) a Lender may share with any of
its affiliates, and such affiliates may share with any Lender, any information
related to the Borrower or any of its Affiliates (including information relating
to creditworthiness), the Acquisition or the financing therefor; and provided,
further, that in no event shall any Lender be obligated or required to return
any materials furnished by the Company or any of its Subsidiaries. In connection
with any sales, assignments or transfers referred to in Section 12.2A, a Lender
shall obtain agreements from the purchasers, assignees or transferees, as the
case may be, reasonably satisfactory to the Borrower, that such parties will
comply with this Section 12.22.
12.23 Compensation
The Borrower shall compensate each Lender, upon its written request
(which request shall set forth the basis for requesting such compensation), for
all reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund its
Bridge Loan but excluding loss of anticipated profit with respect to any Bridge
Loan) which such Lender may sustain: (i) if for any reason (other than a default
by such Lender or the Agent) a borrowing of the Bridge Loan does not occur on a
date specified therefor in a Notice of Borrowing (whether or not withdrawn by
the Borrower); (ii) if any repayment of the Bridge Loan occurs on a date which
is not the last day of an Interest Period applicable hereto; (iii) if any
prepayment of any Bridge Loan is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of any other default
by the Borrower to repay its Bridge Loan when required by the terms of this
Agreement. Calculation of all amounts payable to a Lender under this Section
12.23 shall be made as though that Lender had actually funded the Bridge Loan
utilizing the Applicable LIBOR Rate, through the purchase of a LIBOR rate
deposit bearing interest at the Applicable LIBOR Rate in an amount equal to the
amount of that Loan, having a maturity comparable to the relevant Interest
Period.
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WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
GALEY & LORD INDUSTRIES, INC.
By: /s/ Michael R. Harmon
---------------------------------
Name: Michael R. Harmon
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
GUARANTORS:
GALEY & LORD, INC.
By: /s/ Michael R. Harmon
---------------------------------
Name: Michael R. Harmon
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
<PAGE>
G&L SERVICE COMPANY, NORTH
AMERICA, INC.
By: /s/ Michael R. Harmon
-----------------------------------
Name: Michael R. Harmon
Title: President, Treasurer and Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
<PAGE>
AGENT:
FIRST UNION CORPORATION
as agent
By: /s/ Braxton B. Comer
----------------------------------
Name: Braxton B. Comer
Title: Senior Vice President
Notice Address:
301 South College Street
Charlotte, NC 28288
Attention: Kevin Smith
Telephone: (704) 374-4702
Telecopy: (704) 383-9527
LENDERS:
Commitment: $250,000,000 FIRST UNION CORPORATION
By: /s/ Braxton B. Comer
-----------------------------------
Name: Braxton B. Comer
Title: Senior Vice President
Notice Address:
301 South College Street
Charlotte, NC 28288
Attention: Kevin Smith
Telephone: (704) 374-4702
Telecopy: (704) 383-9527
<PAGE>
