SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 1996
Commission File No. 1-11126
DYERSBURG CORPORATION
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1363247
(State or other jurisdiction of (I.R.S employer
incorporation or organization identification no.)
1315 Phillips St., Dyersburg, Tennessee 38024
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901) 285-2323
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Title of each class Number of Shares Outstanding
as of August 2, 1996
Common Stock, $.01 par value 13,229,508
<PAGE>
INDEX TO FORM 10-Q
DYERSBURG CORPORATION
PART I--FINANCIAL INFORMATION
PAGE NUMBER
ITEM 1--FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Condensed Balance Sheets at
June 29, 1996, September 30, 1995 and
July 1, 1995............................. 3
Consolidated Condensed Statements of Income
for the Three Months Ended June 29, 1996
and July 1, 1995; Nine Months Ended
June 29, 1996 and July 1, 1995.......... 4
Consolidated Condensed Statements of Cash
Flows for the Nine Months Ended
June 29, 1996 and July 1,
1995...................................... 5
Notes to Consolidated Condensed Financial
Statements................................ 6
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................. 7
PART II--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K............... 10
SIGNATURES............................................. 11
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEET
DYERSBURG CORPORATION
(in thousands)
<CAPTION>
June 29 September 30 July 1,
1996 1995 1995
(Unaudited) (Note A) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash $ 805 $ 974 $ 654
Accounts receivable net 47,778 36,920 41,337
Inventories 30,340 22,238 28,623
Prepaid expenses and other 1,125 1,286 882
Total current assets 80,048 61,418 71,496
Intangibles 60,048 61,620 62,191
Property, plant and
equipment, net 69,098 65,834 67,542
$209,194 $188,872 $201,229
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 10,669 $10,515 $ 9,557
Accrued expenses 6,553 5,676 6,595
Income taxes 1,906 851
Total current liabilities 19,128 16,191 17,003
Deferred income taxes
and other 8,824 8,777 9,157
Long-term debt 93,339 77,646 89,890
Stockholders' Equity:
Common stock 137 142 142
Additional paid-in capital 44,279 46,821 46,821
Retained earnings 43,487 39,295 38,216
87,903 86,258 85,179
$209,194 $188,872 $201,229
<FN>
See notes to consolidated condensed financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
DYERSBURG CORPORATION
(in thousands except share data)
<CAPTION>
Three Months Ended Nine Months Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net sales $ 64,142 $ 57,022 $136,574 $146,071
Cost and expenses:
Cost of sales 49,504 44,640 108,290 117,088
Selling, general and
administrative 6,309 4,851 15,811 14,538
Interest and amortization
of debt costs 1,676 1,681 4,590 4,618
57,489 51,172 128,691 136,244
Income before income taxes 6,653 5,850 7,883 9,827
Income taxes 2,772 2,785 3,278 4,488
Net income $ 3,881 $ 3,065 $ 4,605 $ 5,339
Share data:
Weighted average common
and common equivalent
shares outstanding 13,660,755 14,196,228 13,904,896 14,196,228
Earnings per primary
and fully diluted
common share and
common equivalent share:
Net income $ 0.28 $ 0.22 $ 0.33 $ 0.38
Dividends per share $ 0.01 $ 0.01 $ 0.03 $ 0.03
<FN>
See notes to consolidated condensed financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
DYERSBURG CORPORATION
(in thousands)
<CAPTION>
Nine Months Ended
June 29, July 1,
1996 1995
<S>
Cash Flows from Operating Activities <C> <C>
Net Income $ 4,605 $ 5,339
Adjustments to reconcile to net cash
provided by operating activities:
Depreciation and amortization 8,773 8,860
Deferred income taxes 47 324
Accounts receivable -10,857 1,542
Inventories - 8,102 -7,986
Other-net 3,185 - 862
Net cash provided by
operating activities -2,349 7,217
Cash Flows from Investing Activities
Capital expenditures -10,777 -9,334
Other - net 225 23
Net cash used in investing activities -10,552 -9,311
Cash Flows from Financing Activities
Retirement of debt - 151 - 147
Net borrowing under revolving
credit agreement 15,843 2,761
Dividends paid - 413 - 426
Issuance of common stock 43
Retirement of common stock - 2,590
Net cash provided by financing
activities 12,732 2,188
Net decrease in cash - 169 94
Cash at beginning of period 974 560
Cash at end of period 805 654
<FN>
See notes to consolidated condensed financial statements.
</FN>
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
DYERSBURG CORPORATION
June 29, 1996
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed
financial statements include the accounts of Dyersburg Corporation
("Dyersburg") and its wholly-owned subsidiary. All significant
intercompany balances and transactions have been eliminated. The
accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. Financial information as of
September 30, 1995 has been derived from the audited financial
statements of the Corporation, but does not include all disclosures
required by generally accepted accounting principles. In the
opinion of management, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the
financial information for the periods indicated have been included.
The results for interim periods are not necessarily indicative of
results to be expected for the year. For further information,
refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for
the fiscal year ended September 30, 1995.
NOTE B--INVENTORIES
(In Thousands)
June 29, September 30, July 1,
1996 1995 1995
Raw Materials $ 7,482 $ 4,947 $ 6,749
Work in Process 7,643 7,621 9,460
Finished Goods 14,330 8,937 11,648
Supplies and other 885 733 766
$30,340 $22,238 $ 28,623
NOTE C--STOCK REPURCHASE
On October 4, 1995, the Company approved a plan to
repurchase up to 2,000,000 shares of Dyersburg Corporation common
stock. The repurchase is expected to occur over a period of
approximately 12-18 months and will be made at the discretion of
the Company as warranted based upon market pricing. As of June 29,
1996, a total of 539,775 shares had been purchased under the
<PAGE>
NOTE C--STOCK REPURCHASE - Continued
repurchase plan at an aggregate cost of $2,589,500, or $4.80 per
share, on average.
NOTE D--TAXES
The Company's effective tax rate for the nine months
ended June 29, 1996 was 41.6% as compared to 45.7% for the comparable
1995 fiscal period. The reduction in the effective rate is the result
of certain state tax savings.
<PAGE>
ITEM 2--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the quarter ended June 29, 1996 were $64.1
million versus $57.0 million for the quarter ended July 1, 1995.
The 12.5% increase resulted from improvement in consumer demand for
apparel products and from the effects of slightly improved product
pricing in 1996. Net sales for the nine month period declined 6.5%
from $146.1 million to $136.6 million, primarily due to weak
consumer demand in the first six months of 1996 and increased sales
in the fiscal 1995 period resulting from one-time off-season sales
incentives. The decrease was partially offset by slightly improved
pricing in the fiscal 1996 period.
Gross margins for the quarter increased to 22.8% from
last year's 21.7%. The increase was primarily due to an improved
mix of higher-margin products combined with slightly improved
pricing. Gross margins for the fiscal 1996 nine month period were
20.7% compared to 19.8% for the same period in 1995. Raw material
costs, which escalated significantly during fiscal 1995, have
largely stabilized or slightly declined following modest increases
early in fiscal 1996.
Selling, general and administrative expenses as a
percentage of sales were 9.8% for the third fiscal quarter of 1996
versus 8.5% for the same period in 1995. For the nine months ended
June 29, 1996, these expenses were 11.6% versus 10.0% for the prior
year. Selling, general and administrative expenses increased due to
expansion in the marketing organization and to nonrecurring costs
associated with the internal reorganization of the Company's
subsidiaries.
Interest expenses for the quarter and nine month period
in 1996 approximated those of the same periods in the prior year.
The Company's effective tax rate for the nine months ended
June 29, 1996 was 41.6% as compared to 45.7% for the comparable
1995 fiscal period. The reduction in the effective rate is the
result of certain state tax savings.
Net income for the third fiscal quarter of 1996
increased to $3.9 million, or $.28 per share, versus 1995's $3.1
million, or $.22 per share. For the fiscal 1996 nine month period,
net income was $4.6 million, or $.33 per share, versus $5.3
million, or $.38 per share, in the prior year.
Liquidity and Capital Resources
Working capital at June 29, 1996 was $60.9 million
versus $54.5 million at July 1, 1995 due primarily to an increase
<PAGE>
Liquidity and Capital Resources - Continued
in accounts receivable as a result of higher sales in the 1996 to
quarter. The Company's current ratio was 4.2 to 1 and total debt-
to-capital was 51.5% at June 29, 1996. Long-term debt increased
$93.3 million at June 29, 1996 from $77.6 million at September 30,
1995 as a result of seasonal working capital requirements and the
Company's stock repurchase program. Long-term debt at June 29,
1996 slightly exceeded the amount at July 1, 1995.
Receivables increased from $36.9 million at September
30, 1995 to $47.8 million at June 29, 1996 as a result of
seasonally higher sales activity. Inventories increased from $22.2
million at September 30, 1995 to $30.3 million at June 29, 1996.
Maximum inventory levels were reached early in the third quarter of
1996 with a continued decrease expected through year-end.
Capital expenditures continued as planned with spending
of $2.0 million in the third fiscal quarter of 1996 compared to
$3.2 million for the same period in 1995. The Company anticipates
that capital expenditures in fiscal 1996 will approximate those of
1995.
The Company repurchased 4,200 shares of its common stock
at a total cost of $22,200 during the quarter ended June 29, 1996.
A total of 539,775 shares were purchased during the first nine
months of fiscal 1996 at an aggregate cost of $2,589,500, or an
average of $4.80 per share.
Working capital requirements peaked during the third
quarter along with seasonal production volume. At June 29, 1996,
the Company had unused available bank lines of credit of $12.3
million. The Company believes that cash generated from operations
and available borrowing under the revolving credit facility will be
sufficient to meet operating needs and fund the capital spending
and stock repurchase programs.
<PAGE>
PART II--OTHER INFORMATION
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) See "Index to Exhibits" on page .
(b) There were no reports filed on Form 8-K
during the quarter ended June 29, 1996.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
Paul L. Hallock
Date Paul L. Hallock
Vice President - Finance
<PAGE>
INDEX
Exhibit No. Description Page No.
10.1 Second Amended and 13
Restated Reducing Revolving
Credit Agreement
10.2 First Amendment to Second 118
Amended and Restated Reducing
Revolving Credit Agreement
11 Computation of Earnings 127
Per Share
</PAGE>
<PAGE>
SECOND
AMENDED AND RESTATED
REDUCING REVOLVING CREDIT AGREEMENT
Dated as of April 10, 1996
By and Among
DYERSBURG CORPORATION,
DYERSBURG FABRICS INC., AND
DFIC, INC., as Guarantors,
DYERSBURG FABRICS LIMITED PARTNERSHIP, I, as Borrower
AND
SUNTRUST BANK, ATLANTA, individually and as Agent,
NATIONAL CITY BANK, KENTUCKY,
NBD BANK,
THE BANK OF TOKYO-MITSUBISHI, LTD., ATLANTA AGENCY, and
WACHOVIA BANK OF GEORGIA, N.A.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS 3
1.01 Definitions 3
1.02 Accounting Terms 13
ARTICLE II AMOUNT AND TERMS OF LOANS 13
2.01 Commitments and Revolving Credit Notes 13
2.02 Interest on Revolving Credit Notes 16
2.03 Method of Borrowing Under the Commitments 16
2.04 Revolving Credit Note Interest Payment Dates 17
2.05 Prepayment of Borrowings Under the Commitments 18
2.06 Revolving Credit Period; Termination Date 18
2.07 Optional Reduction of Commitments 18
2.08 Commitment Fee 19
2.09 Letter of Credit Fees 19
2.10 Continuation of Borrowings Pursuant to
Original Agreement; Use of Proceeds 19
ARTICLE III [INTENTIONALLY OMITTED] 19
ARTICLE IV GENERAL PAYMENT PROVISIONS 19
4.01 Making of Payments 19
4.02 Default Rate of Interest 20
4.03 Selection of Successive Interest Rates
and Interest Periods 20
4.04 Proration of Payments 20
4.05 Banks' Obligations Several 21
4.06 Calculation of Interest 21
4.07 Illegality 21
4.08 Increased Costs 21
4.09 Failure to Complete Borrowings 22
4.10 Capital Adequacy 22
4.11 Survival 23
4.12 Change of Lending Office 23
4.13 Replacement of Banks 23
ARTICLE V CONDITIONS TO BORROWINGS 24
5.01 Conditions Precedent to Initial Advances 24
5.02 Conditions Precedent to Each Advance 26
ARTICLE VI REPRESENTATIONS AND WARRANTIES 27
6.01 Existence 27
6.02 Power and Authority; Contravention 27
6.03 Enforceability 28
6.04 Governmental Consent 29
6.05 Subsidiaries 29
6.06 Insurance 29
6.07 Financial Statements 29
6.08 Taxes 30
6.09 Actions Pending 30
6.10 Title to Properties 30
6.11 Federal Reserve Regulations 30
6.12 ERISA 31
6.13 Outstanding Debt 31
6.14 Conflicting Agreements or Other Matters 31
6.15 Pollution and Environmental Control 32
6.16 Possession of Franchises, Licenses, Etc. 33
6.17 Disclosure 33
6.18 Solvency 33
6.19 Transaction 34
ARTICLE VII AFFIRMATIVE COVENANTS 34
7.01 Corporate or Partnership Existence;
Maintenance of Properties 34
7.02 Compliance with Laws, Etc. 34
7.03 Taxes and Claims 35
7.04 Compliance with Other Agreements 35
7.05 Inspection of Property 35
7.06 Insurance 35
7.07 Business 35
7.08 Keeping of Books 36
7.09 Reporting Covenants 36
7.10 Financial Covenants 39
ARTICLE VIII NEGATIVE COVENANTS 40
8.01 Liens, Etc. 40
8.02 Limitations on Restricted Payments 41
8.03 Debt 42
8.04 Restrictions on Loans, Advances,
Investments and Contingent Liabilities 42
8.05 Merger and Sale of Assets 44
8.06 Issuance of Stock or Partnership Interest
by Subsidiaries 44
8.07 Sale and Lease-Back 44
8.08 Sale or Discount of Receivables 45
8.09 Compliance with ERISA 45
8.10 Activities of Guarantors 45
8.11 Executive Offices 45
8.12 Prepayment of Debt 45
8.13 Amendment of Partnership Agreement 45
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES 46
9.01 Events of Default 46
9.02 Remedies on Default 49
ARTICLE X THE AGENT 50
10.01 Appointment and Authorization 50
10.02 Nature of Duties of the Agent 51
10.03 Lack of Reliance on the Agent 51
10.04 Certain Rights of the Agent 51
10.05 Liability of the Agent 52
10.06 Indemnification 53
10.07 Agent and Affiliates 54
10.08 Successor Agent 54
10.09 Agent's Fees 54
ARTICLE XI MISCELLANEOUS 55
11.01 No Waiver 55
11.02 Notices 55
11.03 Governing Law 56
11.04 Survival of Representations and Warranties 56
11.05 Descriptive Headings 56
11.06 Severability 56
11.07 Time is of the Essence 56
11.08 Counterparts 56
11.09 Payment of Costs 56
11.10 Successors and Assigns 57
11.11 Cumulative Remedies; No Waiver 57
11.12 Amendments; Consents 57
11.13 Set-Off 58
11.14 Indemnity 58
11.15 Usury 58
11.16 Jurisdiction and Venue 58
11.17 Construction 59
11.18 Entire Agreement 59
11.19 No Novation 59
Exhibit A - Form of Second Amended and Restated
Revolving Credit Note
Exhibit B - Form of Closing Certificate
Exhibit C - Opinion of Borrower's Counsel
Exhibit D - Subsidiaries
Exhibit E - Litigation
Exhibit F - Employee Benefit Plans
Exhibit G - Conflicting Agreements
Exhibit H - Trademarks
Exhibit I - Compliance Certificate
Exhibit J - Existing Liens
SECOND AMENDED AND RESTATED REDUCING
REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED REDUCING REVOLVING CREDIT
AGREEMENT, dated as of April 10, 1996 (the "Agreement"), by and
among DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a limited
partnership organized and existing under the laws of the State of
Tennessee (the "Borrower"), DYERSBURG CORPORATION, a corporation
organized and existing under the laws of the State of Tennessee
(the "Holding Company"), DYERSBURG FABRICS INC., a corporation
organized and existing under the laws of the State of Tennessee
("DFI"), DFIC, INC., a corporation organized and existing under the
laws of the State of Delaware ("Investment;" the Holding Company,
DFI and Investment sometimes individually referred to herein as a
"Guarantor" and collectively as the "Guarantors"), and SUNTRUST
BANK, ATLANTA (formerly known as Trust Company Bank), a Georgia
banking association, NATIONAL CITY BANK, KENTUCKY, a national
banking association, NBD BANK (formerly known as NBD Bank, N.A.),
a Michigan banking corporation, THE BANK OF TOKYO-MITSUBISHI, LTD.,
ATLANTA AGENCY formerly known as The Bank of Tokyo, Ltd., Atlanta
Agency), a Georgia agency of a Japanese banking corporation, and
WACHOVIA BANK OF GEORGIA, N.A., a national banking association
(together with any successors and assigns, collectively, the
"Banks" and individually, a "Bank"), and SUNTRUST BANK, ATLANTA, as
agent for the Banks (in such capacity, the "Agent"); the Guarantors
are entering into this Agreement for the sole purpose of making the
representations and warranties, and agreeing to be bound by, the
covenants and agreements set forth herein.
W I T N E S S E T H :
WHEREAS, DFI, as borrower and the Holding Company, as guarantor,
the Agent and the Banks are party to that certain Amended and
Restated Reducing Revolving Credit Agreement dated as of July 16,
1993 (as amended through the date hereof, the "Original
Agreement");
WHEREAS, DFI and the Holding Company have requested that the Agent
and the Banks consent to the reorganization of the companies as
follows (the "Transaction"):
(a) Investment, a wholly-owned subsidiary of DFI, will be
incorporated as a Delaware corporation and DFI will contribute
approximately one percent of its tangible assets (other than stock
of its Subsidiaries) to Investment in exchange for all stock of
Investment;
(b) the Borrower will be formed as a Tennessee limited partnership
with DFI contributing substantially all its tangible assets (other
than stock of its Subsidiaries) to the partnership in exchange for
a one percent (1%) general partnership interest and a ninety-eight
percent (98%) limited partnership interest in the Borrower and
Investment will contribute its assets to the Borrower in exchange
for a one percent (1%) limited partnership interest;
(c) DFI will contribute its 98% limited partnership interest to
Investment as a contribution to capital;
(d) UKIC, Inc., a wholly-owned subsidiary of United Knitting, Inc.
will be incorporated as a Delaware corporation and United
Knitting, Inc. will contribute approximately one percent of its
tangible assets (other than stock of its Subsidiaries) to UKIC,
Inc. in exchange for all its stock;
(e) United Knitting Limited Partnership, I will be formed as a
Tennessee limited partnership with United Knitting, Inc.
contributing substantially all its tangible assets (other than
stock of its Subsidiaries) to the partnership in exchange for a one
percent (1%) general partnership interest and a ninety-eight (98%)
limited partnership interest and UKIC, Inc. will contribute its
assets to the limited partnership in exchange for a one percent
(1%) limited partnership interest therein (United Knitting Limited
Partnership, I, United Knitting, Inc. and UKIC, Inc. collectively
referred to herein as the "Affiliate Guarantors");
(f) United Knitting, Inc. will contribute its 98% limited
partnership interest to UKIC, Inc. as a contribution to capital;
and
(g) In order to simplify the overall corporate structure, United
Knitting Acquisition Corp. will be liquidated and dissolved, with
its assets transferred to DFI;
WHEREAS, the Agent and the Lenders are willing to consent to the
Transaction upon the express conditions that (i) the Borrower
expressly assumes all of the obligations of DFI pursuant to the
Original Agreement and the documents executed in connection
therewith, (ii) each of the Guarantors executes a joint and several
guaranty of the obligations of the Borrower, and (iii) each of
United Knitting Investment Corporation, United Knitting Limited
Partnership, I and United Knitting, Inc. guarantee the obligations
of Borrower;
WHEREAS, the Agent, the Banks, the Borrower and the Guarantors wish
to amend and restate the Original Agreement to evidence the
consummation of the Transactions and the other modifications set
forth herein;
NOW THEREFORE, for and in consideration of the sum of $10.00 in
hand paid by the Banks to the Borrower, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
ARTICLE I DEFINITIONS SECTION I.1 Definitions. In
addition to the other terms defined herein, the following terms
used herein shall have the meanings herein specified (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Advance" shall mean advance by a Bank under the Commitments, which
may be either a Base Rate Advance, a Eurodollar Advance, or a Fixed
Rate Advance.
"Agent" shall mean SunTrust Bank, Atlanta, as agent for the Banks
hereunder and under the other Loan Documents, and each successor
agent.
"Affiliate" shall mean, with respect to any Person, a Person
directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such Person, other than a
Subsidiary of such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise.
"Affiliate Guarantors" shall have the meaning set forth in the
recitals hereof.
"Affiliate Guaranty" shall mean that certain joint and several
guaranty of the Affiliate Guarantors, dated as of even date
herewith, either as originally executed or as hereafter amended,
modified or supplemented.
"Agreement" shall mean this Second Amended and Restated Reducing
Revolving Credit Agreement, as it may be from time to time
supplemented, amended, modified, renewed or extended.
"Applicable Margin" shall mean, with respect to any Borrowing under
the Commitments through June 30, 1996, one and one-eighth of one
percent (1.125%) per annum, and with respect to any Borrowing under
the Commitments after June 30, 1996, the percentage as determined
from the chart set forth below which shall be calculated on each
Reporting Date for the next succeeding fiscal quarter based on the
following chart and shall automatically be applicable as of the
first day of the succeeding fiscal quarter as to all Borrowings
outstanding hereunder:
INTEREST COVERAGE RATIO
LEVERAGE TEST 3.0:1.0 greater than 3.0:1.0 5.0:100 or
or less & less than 5.0:1.0 greater
45% or greater 1.125% 1.00% 0.875%
greater than 30%
& less than 45% 1.00% 0.875% 0.75%
30% or less 0.875% 0.75% 0.625%
"Asbestos Laws" means the common law in all federal,
state and local laws or regulations, codes, orders, decrees,
judgments or injunctions issued, promulgated, approved or entered
thereunder, now or hereafter in effect relating to or concerning
asbestos or asbestos-containing material, including without
limitation, exposure to asbestos or asbestos-containing material.
"Assumption Agreement" shall mean that certain Assignment and
Assumption Agreement, dated as of the Closing Date by and between
DFI and the Borrower whereby the Borrower assumed all of DFI's
obligations pursuant to the Prior Agreement and the other documents
described therein.
"Banks" shall have the meaning set forth in the preamble hereof.
"Base Rate" shall mean the higher of (i) the Prime Rate and (ii)
the Federal Funds Rate plus one-half of one percent (0.5%) per
annum.
"Base Rate Advance" shall mean any Advance hereunder that bears
interest based on the Base Rate.
"Base Rate Borrowing" shall mean any Borrowing hereunder that bears
interest based on the Base Rate.
"Bonds" shall mean those certain $7,900,000 The Industrial
Development Board of the City of Trenton, Tennessee Industrial
Development Revenue Bonds (Dyersburg Fabrics Inc. Project), Series
1990 issued on behalf of DFI, as assumed by the Borrower on the
Closing Date.
"Borrowing" shall mean borrowing under the Commitments consisting
of substantially simultaneous Advances by the Banks.
"Business Day" shall mean a day of the year on which
commercial banks are not required or authorized to close in the
city in the United States in which each Bank maintains its
principal place of business and, if the applicable Business Day
relates to any Eurodollar Borrowing, on which dealings are carried
on in the London interbank market.
"Cash Flow Coverage Ratio" shall mean, on a consolidated basis with
respect to the Consolidated Companies, the ratio of (i) Net Income
plus Depreciation plus amortization of Intangibles minus Cash
Dividends actually paid to (ii) Capital Expenditures plus mandatory
amortization of principal of Debt, all as determined on a
historical basis. For purposes of determining this ratio in
connection with a period during which a mandatory reduction of the
Commitments in accordance with Section 2.01(b) hereof occurs, the
amount of the mandatory amortization of principal for such fiscal
period shall be equal to the difference between (i) the greatest
amount outstanding under the Commitments at any time during the
preceding twelve months, and (ii) the amount of the reduced
Commitments following such Mandatory Reduction Date; provided
however, in the event that such difference is less than 0, it shall
be deemed to be 0.
"CERCLA" has the meaning set forth in Section 6.15(a) of this
Agreement.
"Closing Date" shall mean April __, 1996, or such later date as the
Borrower and the Guarantors shall have fulfilled all conditions
precedent to the initial advance under this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and the rulings
issued thereunder.
"Commitment" shall mean, with respect to each Bank, the amount set
forth opposite such Bank's name in Section 2.01 hereof.
"Common Stock" shall mean the common stock of the Holding Company,
par value $0.01 per share.
"Consolidated Companies" shall mean collectively, the Holding
Company and each of its Subsidiaries, including DFI, Investment,
Borrower and the Affiliate Guarantors.
"Debt" shall mean (i) indebtedness for borrowed money or for the
deferred purchase price of property or services (other than trade
accounts payable on customary terms in the ordinary course of
business), (ii) financial obligations evidenced by bonds,
debentures, notes or other similar instruments, (iii) financial
obligations as lessee under leases which shall have been or should
be, in accordance with generally accepted accounting principles,
recorded as capital leases, and (iv) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure
a creditor against loss in respect of, indebtedness or financial
obligations of others of the kinds referred to in clauses (i)
through (iii) above.
"Deed of Trust" shall mean that certain deed of trust, assignment
of rents and leases and security agreement, dated as of October 27,
1989, as amended through the date hereof and as hereafter amended,
modified or supplemented, with respect to Borrower's facility
located in Trenton, Tennessee.
"Default" shall mean any event that, with notice or lapse of time
or both, would constitute an Event of Default.
"Default Rate" shall have the meaning set forth in Section 4.02
hereof.
"Dollar" and the sign "$" shall mean lawful money of the United
States of America.
"Environmental Laws" means all federal, state, local and foreign
laws or regulations, codes, orders, decrees, judgments or
injunctions issued, promulgated, approved or entered thereunder,
now or hereafter in effect (including all Asbestos Laws), relating
to pollution or protection of the environment and relating to
public health, including without limitation, laws relating to (i)
emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial toxic or
hazardous constituents, substances or wastes, including without
limitation, any hazardous substance, petroleum, including crude oil
or any fraction thereof, or any petroleum product or other wastes,
chemicals, or substances regulated by any Environmental Law, into
the environment (including without limitation, ambient, air,
surface water, groundwater, land surface or subsurface strata), or
(ii) the manufacture, processing, distribution, use, generation,
treatment, storage, disposal, transport or handling of hazardous
substance, and (iii) underground storage tanks and related piping
and emissions, discharges and releases or threatened releases
therefrom.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated
and rulings issued thereunder.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with the Borrower, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code.
"Eurodollar Advance" shall mean any Advance hereunder which
bears interest based on LIBOR.
"Eurodollar Borrowing" shall mean any Borrowing hereunder which
bears interest based on LIBOR.
"Event of Default" shall have the meaning set forth in Article IX.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to
the weighted average of the rates on overnight Federal funds
transactions with member banks of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of Atlanta, or, if such rate is
not so published for any day which is a Business Day, the average
of the quotations for such day on such transactions received by the
Agent from three Federal funds brokers of recognized standing
selected by it.
"First Fiscal Day" shall mean, with respect to the Holding Company
or Borrower, for any fiscal year, the first day of such fiscal
year.
"Fiscal Year End" shall mean, with respect to the Holding Company,
for any fiscal year, the Saturday closest to September 30 of such
year.
"Fixed Rate" shall mean, with respect to each portion of the
Commitments, if any, as the parties may have agreed from time to
time to bear interest at a fixed rate of interest pursuant to
Section 2.02, the fixed rate of interest quoted by the Banks and
accepted by the Borrower for such portion of the Commitments
pursuant to Sections 2.02 and 2.03 of this Agreement.
"Fixed Rate Advance" shall mean, any Advance hereunder which bears
interest based on the Fixed Rate.
"Fixed Rate Borrowing" shall mean any Borrowing under the
Commitments made subject to any Fixed Rate as provided in Section
2.02 from time to time.
"Funded Debt" shall mean all Debt which by its terms has a final
maturity of more than one year from the date of any calculation
thereof (or which is renewable or extendable at the option of the
obligor for a period or periods of more than one year from the date
of calculation), including all payments in respect thereof that are
required to be made within one year from the date of any
calculation of Funded Debt, whether or not included in current
liabilities. The calculation of Funded Debt with respect to any
Person shall include all Funded Debt of another Person, other than
a Subsidiary, which has been guaranteed by such Person.
"Guarantors" shall have the meaning set forth in the preamble of
this Agreement.
"Guaranty" shall mean that certain joint and several guaranty
agreement dated as of even date herewith executed by each of the
Guarantors guaranteeing all obligations of the Borrower under this
Agreement and the other Loan Documents, either as originally
executed or as hereinafter amended, modified or supplemented.
"Hazardous Substances" has the meaning assigned to that term in
CERCLA.
"Indenture" shall mean that certain Indenture of Trust dated as of
July 1, 1990, by and between The Industrial Development Board of
the City of Trenton, Tennessee and SunTrust Bank, Atlanta, as
Trustee, relating to the Bonds.
"Intercompany Note" shall have the meaning set forth in Section
8.03(h) hereof.
"Interest Coverage Ratio" shall mean, with respect to the
Consolidated Companies, the ratio, calculated on a consolidated,
rolling four quarter basis, of (i) Earnings Before Interest and
Taxes, to (ii) Interest Expense.
"Interest Expense" shall mean, on a consolidated basis, interest
expense as such term is defined under generally accepted accounting
principles.
"Interest Period" shall mean, (a) with respect to any Eurodollar
Borrowing, a period of 1, 2, 3 or 6 months, as the Borrower may
elect as provided in this Agreement, or (b) with respect to any
Fixed Rate Borrowing, a period of one month to five years as
elected by the Borrower and approved by the Banks in their sole
discretion as provided in this Agreement; provided, that (i) the
first day of an Interest Period must be a Business Day, (ii) any
Interest Period that would otherwise end on a day that is not a
Business Day shall be extended to the next succeeding Business Day,
unless such Business Day falls in the next calendar month, in which
case the Interest Period shall end on the next preceding Business
Day, and (iii) the Borrower may not elect an Interest Period which
would extend beyond the Termination Date or a Mandatory Reduction
Date, as those terms are defined herein except, in the case of a
Mandatory Reduction Date, as provided in Section 2.02.
"Letter of Credit" shall mean that certain letter of credit issued
by SunTrust Bank, Atlanta in the amount of $8,056,903 for the
account of DFI pursuant to the Letter of Credit Agreement, as
amended.
"Letter of Credit Agreement" shall mean that certain Second Amended
and Restated Letter of Credit Agreement dated as of even date
herewith by and among the Borrower, the Guarantors and SunTrust
Bank, Atlanta, as hereafter amended, modified or supplemented.
"Leverage Test" shall mean, with respect to the Consolidated
Companies, the ratio, calculated on a consolidated basis and
expressed as a percentage, of Funded Debt of the Consolidated
Companies to Total Capital.
"LIBOR" shall mean with respect to any Interest Period for any
Eurodollar Borrowing, the rate per annum equal to the quotient of
(i) the offered rate for deposits in Dollars of amounts equal or
comparable to the principal amount of such Eurodollar Borrowing
offered for a term comparable to such Interest Period, which rates
appear on the Reuters Screen LIBO Page as of 11:00 a.m. London
time, two (2) Business Days prior to the first day of such Interest
Period, provided that (x) if more than one such offered rate
appears on the Reuters Screen LIBO Page, the rate used to determine
LIBOR will be the arithmetic average (rounded upward, if necessary,
to the next higher 1/16th of 1%) of such offered rates, or (y) if
no such offered rates appear on such page, the rate used for such
Interest Period will be the arithmetic average (rounded upward, if
necessary, to the next higher 1/16th of 1% of rates quoted by not
less than two major banks in New York, New York, selected by the
Agent, at approximately 10:00 a.m., New York time, two (2) Business
Days prior to the first day of such Interest Period, for deposits
in Dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the
principal amount of such Eurodollar Borrowing, divided by (ii) a
number equal to 1.00 minus the Reserve Percentage, the rate so
determined to be rounded upwards to the nearest multiple of 1/100th
of 1%.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any written
agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof,
and the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction.)
"Loan Documents" shall mean and include, as the context requires,
this Agreement, the Letter of Credit, the Letter of Credit
Agreement, the Notes, the Working Capital Agreement, the Working
Capital Note, the Deed of Trust, the Pledge Agreement, the
Guaranty, the Security Agreement, the Affiliates Guaranty, the
Assumption Agreement and any and all other instruments,
agreements, documents and writings executed in connection herewith.
"Mandatory Reduction Date" shall have the meaning set forth in
Section 2.01(b).
"Multiemployer Plan" shall mean a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, on a consolidated basis, the net income
before extraordinary items (but after giving effect to the credit
resulting from tax loss carry-forwards) of the Consolidated
Companies.
"Net Worth" shall mean, the net worth of the Holding Company
calculated in accordance with generally accepted accounting
principles.
"Notes" shall mean the Revolving Credit Notes.
"Note Purchase Agreement" shall mean that certain Note Purchase
Agreement, dated as of September 29, 1993, by and between DFI and
the Holding Company and the noteholders named therein relating to
those certain 6.78% Senior Notes Due 2005 in the aggregate
principal amount of $25,000,000, as assumed by the Borrower.
"Original Agreement" shall have the meaning set forth in the
preamble hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Person" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" shall mean any "employee benefit plan" maintained by or on
behalf of the Borrower or any ERISA Affiliate as defined in Section
3(3) of ERISA, including, but not limited to, any defined benefit
pension plan, profit sharing plan, money purchase pension plan,
savings or thrift plan, stock bonus plan, employee stock ownership
plan, Multiemployer Plan, or any plan, fund, program, arrangement
or practice providing for medical (including post-retirement
medical), hospitalization, accident, sickness, disability, or life
insurance benefits.
"Pledge Agreement" shall mean that certain Amended and Restated
Pledge and Security Agreement dated as of July 1, 1990, from
Borrower and DFI in favor of SunTrust Bank, Atlanta, as hereafter
amended, modified or supplemented.
"Prepayment Charge" shall mean, in connection with any
acceleration or prepayment of a Fixed Rate Borrowing, the excess,
if any, of (a) the aggregate present value as of the date of such
acceleration or prepayment of (i) the amount of principal of such
Fixed Rate Borrowing being prepaid and (ii) the amount of interest
(exclusive of interest accrued to the date of prepayment) that
would have been payable in respect of such principal amount if such
prepayment had not been made, determined by discounting such
amounts at the Base Reinvestment Rate from the respective dates on
which they would have been due and payable, over (b) 100% of the
amount of principal being prepaid. If the Base Reinvestment Rate
is equal to or higher than the Fixed Rate applicable to such Fixed
Rate Borrowing, the Prepayment Charge shall be zero, but in no
event shall any amounts be owing by the Banks to the Borrower. For
purposes of this definition, Base Reinvestment Rate means the sum
of (i) the arithmetic mean of the yields under the respective
headings "This Week" and "Last Week" published in the Statistical
Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) most closely corresponding
to the remaining term of the Interest Period of the Fixed Rate
Borrowing being prepaid, and (ii) one half of one percent (0.50%).
For the purposes of calculating the Base Reinvestment Rate, the
most recent Statistical Release published prior to the date of
determination of the Prepayment Charge shall be used. For purposes
of this definition, Statistical Release shall mean the current
statistical release designated "H.15(5l9)" or any successor
publication which is published weekly by the Federal Reserve System
and which establishes yields on actively traded United States
Government Securities adjusted to constant maturities or, if such
statistical release is not published at the time of any
determination hereunder, then any other reasonably comparable
index.
"Prime Rate" shall mean the per annum rate of interest designated
from time to time by the Agent to be its prime rate, with any
change in the rate of interest resulting from a change in the Prime
Rate to be effective as of the opening of business of the Agent on
the day of such change. On the date of this Agreement, the Prime
Rate is _______ percent (___%) per annum.
"Project Bond Financing" shall mean that certain lease financing
for the construction of Borrower's knitting facility in Dyersburg,
Tennessee in the amount of approximately $7,600,000.
"Reporting Date" shall mean (i) the date specified in Section
7.09(b) when the Holding Company's quarterly consolidated financial
statements are due for the first three quarters of the Holding
Company's fiscal year, and (ii) the later of the date when the
Holding Company's consolidated financial statements required by
Section 7.09(a) are delivered or the forty-fifth (45) day following
the end of the Holding Company's fiscal year.
"Required Banks" shall mean, at any time prior to the termination
of the Commitments, the Banks holding at least 67% of the sum of
the aggregate amount of committed funds under the Commitments and
the Working Capital Agreement, whether or not advanced, and, at any
time following the termination of the Commitments, the Banks
holding at least 67% of the sum of all Borrowings outstanding
hereunder and under the Working Capital Agreement, plus, the Letter
of Credit.
"Reserve Percentage" shall mean, for any day, the stated maximum
rate (expressed as a decimal) of all reserves required to be
maintained with respect to liabilities or assets consisting of or
including "Eurocurrency liabilities," as prescribed by Regulation
D of the Board of Governors of the Federal Reserve System (or by
any other governmental body having jurisdiction with respect
thereto), including, without limitation, any basic, marginal,
emergency, supplemental, special, transitional or other reserves,
the rate so determined to be rounded upward to the nearest whole
multiple of 1/100 of 1%.
"Revolving Credit Note" shall mean a promissory note of the
Borrower payable to the order of any Bank, in substantially the
form of Exhibit A hereto, evidencing the maximum aggregate
principal indebtedness of the Borrower to such Bank under such
Bank's Commitment, either as originally executed or as it may be
from time to time supplemented, modified, amended, renewed or
extended.
"Security Agreement" shall mean that certain Security Agreement
dated as of October 10, 1989 from DFI to SunTrust Bank, Atlanta, as
amended and restated on the Closing Date to reflect the transfer of
the assets of DFI to the Borrower, as hereafter amended, modified
or supplemented.
"Short Term Debt" shall mean all Debt which is not Funded Debt.
"Stated Amount" shall have the meaning set forth in the Letter of
Credit.
"Subordinated Debt" shall mean all indebtedness for money borrowed
wherein the principal, premium, if any, and interest is
subordinated and junior in right of payment to the prior payment in
full of all other indebtedness of the Borrower for money borrowed
from the Banks on terms and conditions satisfactory to the Banks.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities or other ownership
interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such Person.
"Termination Date" shall mean the Termination Date of the
Commitments as defined in Section 2.06.
"Total Capital" shall mean, on a consolidated basis, the sum of all
Funded Debt of the Consolidated Companies plus Net Worth.
"Transaction" shall have the meaning set forth in the recitals
hereof.
"Working Capital" shall mean, on a consolidated basis, Current
Assets minus Current Liabilities.
"Working Capital Agreement" shall mean that certain loan agreement,
dated as of even date herewith, by and among the Guarantors, the
Borrower and SunTrust Bank, Atlanta providing for working capital
loans to Borrower in an aggregate principal amount not to exceed
$1,000,000, as hereafter amended, supplemented or modified.
"Working Capital Note" shall mean that certain promissory note,
dated as of even date herewith, from the Borrower to SunTrust Bank,
Atlanta in an original principal amount of $1,000,000, either as
originally executed or as the same may from time to time be
supplemented, modified, amended, renewed or extended.
SECTION I.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed as having the
respective meanings customary under generally accepted accounting
principles consistently applied from and after the date of the
initial Advances, subject to the following paragraph. All
financial statements delivered pursuant to Section 7.09 hereof
shall conform to generally accepted accounting principles applied
on a basis consistent with the financial statements referred to in
Section 6.07 hereof. In the event that the Financial Accounting
Standards Board or a successor organization mandates a change in
generally accepted accounting principles and such change results in
a change in the method of calculation or the interpretation of any
of the financial covenants, standards or terms found in any
provision of this Agreement, the Guarantors and the Borrower agree
to join with the Banks in amending any such affected terms and
provisions with the result that the criteria for evaluating the
Consolidated Companies' financial condition shall be the same after
implementing such changes; provided, however, that until the Agent
has received prior notice of such changes affecting this Agreement
as described above and either (a) all affected provisions of this
Agreement have been amended, or (b) Agent notifies the Guarantors
and the Borrower in writing that no such amendments are necessary,
compliance with all financial covenants shall be determined and all
financial reports prepared in compliance without regard to such
changes except for the financial statements of the Guarantors and
the Borrower delivered pursuant to subsections 7.09(a) and (b)
hereof to the extent that the Guarantors' and the Borrower's
accountants will not or would not certify such financial statements
without qualification if not prepared in accordance with the most
current formulation of generally accepted accounting principles.
All references to "consolidated basis" contained herein shall be
deemed to apply to the Consolidated Companies, unless the context
requires otherwise.
ARTICLE II AMOUNT AND TERMS OF LOANS SECTION II.1
Commitments and Revolving Credit Notes. (a) Commitment. Subject
to and upon the terms and conditions set forth in this Agreement,
each of the Banks severally establishes, subject to reduction as
set forth below, until July 16, 1998 a reducing revolving credit in
favor of the Borrower in aggregate principal amount at any one time
outstanding equal to the sum set forth opposite such Bank's name
below (individually, a "Commitment" and collectively, the
"Commitments"):
SunTrust Bank, Atlanta $26,400,000.00 33.0%
NBD Bank 18,000,000.00 22.5%
National City Bank,
Kentucky 15,200,000.00 19.0%
The Bank of Tokyo-
Mitsubishi, Ltd.,
Atlanta Agency 15,200,000.00 19.0%
Wachovia Bank of
Georgia, N.A. 5,200,000.00 6.5%
TOTAL: $80,000,000.00 100.0%
Within the limits of the Commitments as reduced by (i) optional
reductions of the Commitments pursuant to Section 2.07 hereof; (ii)
mandatory reductions of the Commitments as set forth below; and
(iii) the Stated Amount of the Letter of Credit, the Borrower may
borrow, repay and reborrow under the terms of this Agreement;
provided, however, that the Borrower may neither borrow nor
reborrow should there exist a Default or an Event of Default.
Borrowings under the Commitments shall be made through simultaneous
Advances by the Banks and the amount of each Borrowing under the
Commitments shall be prorated among such Banks based on the
percentages set forth above. All Advances by each Bank shall be
evidenced by a single Revolving Credit Note payable to such Bank in
the form of Exhibit A attached hereto with appropriate insertions.
Each Revolving Credit Note shall be dated the date hereof, shall be
payable to the order of the respective Bank in a principal amount
equal to the amount set forth opposite such Bank's name above,
shall bear interest as hereinafter provided and shall mature on
July 16, 1998 or sooner should the principal and accrued interest
thereon be declared immediately due and payable as provided for
hereinafter. The aggregate principal amount of each Borrowing
under the Commitments shall be not less than $250,000 and shall be
in integral multiples of $50,000. No Bank shall have any
obligation to advance funds in excess of the amount of its
Commitment as set forth above.
(b) Mandatory Reduction of Commitments. In addition to the
reductions of the Commitments by optional reductions pursuant to
Section 2.07 hereof and by the Stated Amount of the Letter of
Credit as provided in subsection (c) hereof, the Commitments shall
be reduced, pro rata as to each Bank based on the percentages set
forth in subsection (a) above, to the following amounts on the
following date (the "Mandatory Reduction Date"); provided, that if
the Commitments have previously been reduced to such amount prior
to any Mandatory Reduction Date, no further reduction shall be
required:
Mandatory Reduction Reduced Amount
Date of Commitments
April 1, 1997 $70,000,000
Any Borrowings outstanding under the Commitments in excess of the
reduced amount of the Commitments shall be repaid on the Mandatory
Reduction Date.
(c) Letter of Credit. (i) In addition, upon the terms and subject
to the conditions of the Letter of Credit Agreement, the terms of
which are expressly incorporated herein by this reference, the
Agent has issued the Letter of Credit, which for purposes of this
Agreement shall be deemed to have been issued hereunder pursuant to
the Commitments, and the Commitments shall be reduced by the Stated
Amount thereof. Each Bank hereby irrevocably purchases a
participation interest in such Letter of Credit and in any advance
made pursuant to such Letter of Credit in an amount equal to such
Bank's pro rata share of the Stated Amount of the Letter of Credit
and each such advance thereunder, which pro rata share is equal to
the percentage set forth opposite such Bank's name in subsection
(a) above.
(ii) The payment of drafts under any Letter of Credit shall be
made in accordance with the terms of such Letter of Credit and
Letter of Credit Agreement and, in that connection, the Agent shall
be entitled to honor any drafts and accept any documents presented
to it by the beneficiary of such Letter of Credit in accordance
with the terms of such Letter of Credit and Letter of Credit
Agreement.
(iii) If the Agent shall make payment on any draft presented under
a Letter of Credit, the Agent shall give notice of such payment to
the Banks as provided below and each Bank hereby authorizes and
requests the Agent to advance for its account pursuant to the terms
hereof its share of such payment based upon its pro rata share of
the Commitments as set out in Section 2.01(a) and agrees, upon
notice of such advance, to promptly reimburse the Agent in
immediately available funds for the amount so advanced on its
behalf. Such amounts shall be deemed to be Advances for all
purposes hereunder, including the accrual of interest, but shall
not be subject to the minimum borrowing amounts or conditions
precedent set forth in Section 5.02 hereof. If the Borrower's
reimbursement obligations for such draft arise under Section 2A(i)
of the Letter of Credit Agreement, the Agent shall give immediate
notice to each of the Banks of such payment by the Agent. If the
Borrower's reimbursement obligations for such draft arise under
Section 2A(ii) or 2A(iii) of the Letter of Credit Agreement, the
Agent shall give notice to each of the Banks of such payment by the
Agent on the next succeeding Business Day unless such reimbursement
obligation is sooner fulfilled by the Borrower. If, following such
notice from the Agent, such reimbursement is not made by any Bank
in immediately available funds on the same day on which the Agent
shall have given notice, such Bank shall pay interest thereon to
the Agent at a rate per annum equal to the following: (i) if the
amount is reimbursed by the Bank to the Agent on or prior to the
Business Day next succeeding the date of the notice, interest on
such amount at the rate equal to the Federal Funds Rate; or (ii) if
the amount is reimbursed by the Bank to the Agent after the
Business Day next succeeding the day of the notice, interest on
such amount at the Base Rate plus two percent (2%) per annum. The
amount of interest payable as a result of any Bank's failure to
make any amount available under this section shall be calculated on
the basis of a year of 360 days and paid for the actual number of
days such failure has continued (including the date of payment).
(iv) The Agent shall distribute to each of the Banks, pro rata
based on the percentages set out in Section 2.01(a), (i)
reimbursement payments under Section 2A of the Letter of Credit
Agreement, together with interest paid thereon, and (ii) any other
payments received under the Letter of Credit Agreement or any of
the other Loan Documents securing the reimbursement obligations of
the Borrower pursuant to the Letter of Credit Agreement. The Banks
shall not be entitled to share on any other fees payable to the
Agent pursuant to the terms of the Letter of Credit Agreement
except as provided in Section 2.09.
SECTION II.2 Interest on Revolving Credit Notes. Interest shall
accrue on the unpaid principal amount of each Borrowing under the
Commitments at the following per annum rates, which may be
selected by the Borrower subject to and in accordance with the
terms of this Agreement: (i) the Base Rate; (ii) LIBOR for
Interest Periods of 1, 2, 3 or 6 months, plus the Applicable
Margin; or (iii) the Fixed Rate as agreed to by the Banks in
their sole discretion for an Interest Period of one month to five
years as selected by the Borrower and agreed to by the Banks in
their sole discretion;
provided that, (i) each Bank's pro rata portion of a Borrowing
shall bear interest at the same rate as the other Banks' pro rata
portions of such Borrowing; (ii) the Borrower may not select a rate
based on LIBOR or the Fixed Rate if the Interest Period with
respect thereto would extend beyond the Termination Date; (iii) the
Borrower may not select an interest rate based on LIBOR or the
Fixed Rate for an Interest Period which extends beyond a Mandatory
Reduction Date, unless the aggregate amount of the unutilized
Commitments, Base Rate Borrowings under the Commitments, and
Eurodollar Borrowings or Fixed Rate Borrowings under the
Commitments for Interest Periods expiring prior to such Mandatory
Reduction Date, is equal to or in excess of the amount of the
reduction of the Commitments to be made on such Mandatory Reduction
Date; and (iv) the Borrower may not select a rate based on LIBOR if
such selection would result in more than three (3) Eurodollar
Borrowings outstanding under the Commitments.
SECTION II.3 Method of Borrowing Under the Commitments. The
Borrower shall give the Agent written or telephonic notice
(promptly confirmed in writing, including telecopy) of any
requested Borrowing under the Commitments (a "Notice of Borrowing")
specifying (i) the amount of the Borrowing, (ii) the date the
proposed Borrowing is to be made (which shall be a Business Day),
(iii) whether the Borrowing will be a Base Rate Borrowing or a
Eurodollar Borrowing, and (iv) in the case of a Eurodollar
Borrowing, the duration of the initial Interest Period applicable
thereto. Each Notice of Borrowing shall be given to the Agent (i)
with respect to any Eurodollar Borrowing, not later than 10:00 a.m.
(Atlanta, Georgia time) on the third Business Day preceding the day
of such requested Borrowing, and (ii) with respect to any Base Rate
Borrowing, not later than 10:00 a.m. (Atlanta, Georgia time) on the
day of such requested Borrowing. The Agent shall be entitled to
rely on any telephonic Notice of Borrowing which it believes in
good faith to have been given by a duly authorized officer or
employee of the Borrower and any Advances made by the Banks based
on such telephonic notice shall, when transmitted to the Borrower,
be Advances for all purposes hereunder. The Agent shall promptly
notify each Bank by telephone, which notice shall be promptly
confirmed in writing (including telecopy) by the Agent to such
Bank, of the Notice of Borrowing received from the Borrower, of
such Bank's pro rata portion of the requested Borrowing, whether
the Advance will be a Base Rate Advance or a Eurodollar Advance,
the initial Interest Period selected by the Borrower with respect
thereto (if applicable), and the initial per annum rate of interest
accruing on such Advance. Not later than 1:00 p.m. (Atlanta,
Georgia time) on the date specified for the Borrowing in the Notice
of Borrowing and in the notice to such Bank provided by the Agent,
each Bank shall promptly make its portion of the Borrowing
available to the Agent in immediately available funds and upon
receipt, the Agent shall promptly make the amount of such Borrowing
available to the Borrower. In the event any Bank shall fail to
make any Advance available to the Agent in immediately available
funds by 1:00 p.m. (Atlanta, Georgia time) on the date specified
and provided no Default or Event of Default shall have occurred and
be continuing, the Agent may, in its sole discretion advance such
Bank's portion of the Borrowing on behalf of such Bank and such
Bank shall promptly reimburse the Agent for the amount thereof plus
interest thereon at a rate per annum equal to the following: (i)
if the amount of such Bank's Advance is reimbursed to the Agent on
or prior to the calendar day next succeeding the date of the
Borrowing, interest on such amount at the rate equal to the Federal
Funds Rate; or (ii) if the amount of such Bank's Advance is
reimbursed to the Agent after the calendar day next succeeding the
day of the Borrowing, interest on such amount at the Base Rate plus
two percent (2%) per annum. The amount of interest payable as a
result of any Bank's failure to make any Advance available shall be
calculated on the basis of a year of 360 days and paid for the
actual number of days such failure has continued (including the
date of payment). If the Borrower desires to request a Fixed Rate
Borrowing under the Commitments, the Borrower shall give the Agent
at least five (5) Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of such request
specifying the amount of the Fixed Rate Borrowing and the requested
Interest Period with respect thereto and the Banks, in their sole
discretion, shall within two Business Days of receipt of such
notice, provide to the Borrower a quote of the Fixed Rate to be
applicable to such Borrowing for the amount and the Interest Period
requested by the Borrower. Within one (1) Business Day of receipt
of such quote, the Borrower shall notify the Agent whether or not
it has elected to accept the offered Fixed Rate.
SECTION II.4 Revolving Credit Note Interest Payment Dates.
Interest on the Revolving Credit Notes shall be payable (i) on the
last day of the relevant Interest Period for Eurodollar Borrowings;
provided, that in the event such Interest Period exceeds three
months, on the last day of each three month interval during such
Interest Period, (ii) on the last day of each quarter, in arrears,
commencing June 30, 1996, for Base Rate Borrowings, (iii) on the
last day of the relevant Interest Period for Fixed Rate Borrowings;
provided, that in the event such Interest Period exceeds three
months, on the last day of each three month interval during such
Interest Period, and (iv) on the Termination Date, whether due to
acceleration or otherwise.
SECTION II.5 Prepayment of Borrowings Under the Commitments. The
Borrower shall have the right to prepay Borrowings under the
Commitments, in whole at any time or in part from time to time, pro
rata as to each Bank based on the percentages set forth in Section
2.01(a), without premium or penalty, together with all interest
accrued on the principal amount prepaid to the date of such
prepayment, provided that (i) the Borrower gives the Agent at least
two Business Days' prior written notice of such prepayment,
specifying the date such prepayment will occur and the Borrowing to
be prepaid, (ii) each partial prepayment shall be in an amount of
at least $250,000 and shall be in integral multiples of $50,000,
(iii) a Eurodollar Borrowing may only be prepaid on the last day of
the then current Interest Period with respect thereto, and (iv) any
prepayment of a Fixed Rate Borrowing other than on the last day of
the Interest Period relating thereto shall be accompanied by the
Prepayment Charge. Notwithstanding the foregoing, the Borrower may
prepay any Base Rate Borrowing upon notice to the Agent by 10:00
a.m. (Atlanta, Georgia time) on the date of such prepayment
containing the information specified above. The Agent shall notify
the Banks promptly by telephone of any notice of prepayment
received by the Agent from the Borrower pursuant to this Section
2.05.
SECTION II.6 Revolving Credit Period; Termination Date. The
unpaid principal balance and all accrued and unpaid interest on the
Revolving Credit Notes and all other amounts owing by the Borrower
to the Banks hereunder will be due and payable upon the first of
the following dates or events to occur (the "Termination Date"):
(i) acceleration of the maturity of a Revolving Credit Note in
accordance with the remedies contained in Section 9.02 of this
Agreement; or (ii) upon the expiration of the Commitments on July
16, 1998.
SECTION II.7 Optional Reduction of Commitments. The Borrower
shall have the right to permanently reduce the amount of the
unutilized Commitments from time to time, pro rata as to each Bank
based on the percentages set forth in Section 2.01, without premium
or penalty, provided that (i) the Borrower gives the Agent at least
five (5) Business Days' prior written notice of such reduction,
specifying the date that such reduction will be effective, and (ii)
each reduction shall be in an amount of at least $1,000,000 and
shall be in integral multiples of $100,000. The Agent shall notify
the Banks promptly by telephone of any notice of reduction received
by the Agent from Borrower pursuant to this Section 2.07 to be
promptly confirmed in writing.
SECTION II.8 Commitment Fee. From and after the date hereof up
to and including the Termination Date, the Borrower shall pay to
the Banks, pro rata based upon the percentage set out beside each
Bank's name in Section 2.01 above, a commitment fee at the rate of
one quarter of one percent (0.25%) per annum (calculated on the
basis of a year of 360 days and payable for the actual number of
days elapsed) on the average daily balance of the unused portion of
the Commitments (the "Commitment Fee"). The Commitment Fee shall
be payable by the Borrower quarterly in arrears, commencing on June
30, 1996 and continuing thereafter on the last day of each
succeeding March, June, September and December and on the
Termination Date. As stated in Section 2.01, the Letter of Credit
shall be deemed to be a utilization of the Commitments.
SECTION II.9 Letter of Credit Fees. In lieu of the fee to be
paid to the Agent pursuant to Section 1B of the Letter of Credit
Agreement, the Borrower shall pay to the Agent, for the account of
the Banks, a letter of credit fee at a percentage which is equal to
the Applicable Margin (calculated on the basis of a year of 360
days and payable for the actual number of days lapsed) of the
average Stated Amount of the Letter of Credit (the "Letter of
Credit Fee"). The Letter of Credit Fee shall be payable by the
Borrower quarterly, in advance, based upon the Applicable Margin
for the preceding quarter, commencing on June 30, 1996 and
continuing thereafter on the last day of each succeeding March,
June, September and December, and on the Termination Date. On the
date of receipt of the Letter of Credit Fee, the Agent shall retain
an amount equal to one eighth of one percent (0.125%) of the Stated
Amount for the Agent's own account and shall distribute the
remaining portion of the Letter of Credit Fee to the Banks, pro
rata based upon the percentage set out beside each Bank's name in
Section 2.01(a) above.
SECTION II.10 Continuation of Borrowings pursuant to Original
Agreement; Use of Proceeds. As of the Closing Date, the total
principal amount outstanding pursuant to the Original Agreement
shall be assumed by the Borrower pursuant to the Assumption
Agreement and shall be deemed to be outstanding pursuant to the
Commitments hereunder. Thereafter, the Borrower shall use the
proceeds of each Advance hereunder to finance the general working
capital and partnership needs of the Borrower.
ARTICLE III [INTENTIONALLY OMITTED] ARTICLE IV
GENERAL PAYMENT PROVISIONS SECTION IV.1 Making of
Payments. The Commitment Fee, Letter of Credit Fee, Prepayment
Charges and all payments of principal of, or interest on, the Notes
shall be made in immediately available funds to the Agent at its
principal office in Atlanta, Georgia, for the accounts of the
Banks. All payments due on a date which is not a Business Day
shall be deemed to be due on the next following Business Day. All
such payments shall be made not later than 1:00 p.m. (Atlanta,
Georgia time) and funds received after that hour shall be deemed to
have been received by the Agent on the next following Business Day.
Payments to the Agent shall, as to the Borrower, constitute payment
to the applicable Banks hereunder. On the Business Day that a
payment is received or deemed to have been received hereunder,
subject to the provisions of Section 2.11 hereof, the Agent shall
remit in immediately available funds to each Bank its share (based
on the percentages set forth in Section 2.01(a) hereof) of all
payments received by the Agent on the Notes and the applicable
percentage of any other amounts received hereunder.
SECTION IV.2 Default Rate of Interest. If the Borrower shall
fail to pay on the due date therefor, whether by acceleration or
otherwise, any principal or other amount owing under any of the
Notes or this Agreement, then interest shall accrue on such unpaid
principal, and to the extent allowed by law, other amount due, from
the due date until and including the date on which such principal
or other amount is paid in full at the higher of (i) the then
applicable interest rate plus an additional two percent (2%) per
annum or (ii) a rate of interest equal to the Base Rate plus an
additional two percent (2.0%) per annum (the "Default Rate").
SECTION IV.3 Selection of Successive Interest Rates and Interest
Periods. The Borrower may, on the last day of the Interest Period
relating thereto, convert any Eurodollar Borrowing into a Base Rate
Borrowing or subject to the terms hereof, a Fixed Rate Borrowing,
or continue a Eurodollar Borrowing in the same aggregate principal
amount. The Borrower may at any time convert a Base Rate Borrowing
into a Eurodollar Borrowing or subject to the terms hereof, a Fixed
Rate Borrowing. The Borrower may, on the last day of the Interest
Period relating thereto, convert any Fixed Rate Borrowing into a
Base Rate Borrowing or a Eurodollar Borrowing, or subject to the
terms hereof, continue a Fixed Rate Borrowing in the same principal
amount. The Borrower shall give the Agent telephonic notice
(promptly confirmed in writing, including telecopy) at least three
(3) Business Days prior to a conversion or continuation of any
Borrowing (other than a continuation of a Base Rate Borrowing),
such notice to specify whether the Borrowing is to be continued as
or converted to a Eurodollar Borrowing or converted to a Base Rate
Borrowing and, if applicable, the Interest Period selected by the
Borrower for such Borrowing; provided that in the event the
Borrower wishes to convert or continue any Borrowing as a Fixed
Rate Borrowing, Borrower shall follow the procedure set forth in
Section 2.03. If the Agent does not receive timely notice of any
succeeding interest rate and/or Interest Period selected by the
Borrower as provided for herein or if the Borrower selects an
interest rate for an Interest Period which is not available under
Section 2.02 or Section 4.07, any outstanding Borrowing for which
the Borrower failed to select an interest rate and/or Interest
Period or selected an interest rate for an Interest Period which is
not available under Section 2.02 or 4.07, shall be converted to a
Base Rate Borrowing and the Agent shall promptly notify the
Borrower by telephone, which notice shall be promptly confirmed in
writing (including telecopy) to the Borrower, of such conversion.
The Agent shall notify the Banks and the Borrower promptly by
telephone of each change in the Base Rate and of each change in the
rate of interest accruing on any Borrowing.
SECTION IV.4 Proration of Payments. Subject to the terms of the
certain letter agreement among the Banks dated as of even date
herewith and Section 4.13 below, if any Bank shall obtain any
payment or other recovery (whether voluntary, involuntary, through
exercise of any right of set-off or otherwise) on account of the
principal of or interest on any Note or any fees in respect of this
Agreement in excess of its pro rata share of payments and other
recoveries obtained by all the Banks on account of the principal of
and interest on Notes then held by them or any fees due to them in
respect of this Agreement, such Bank shall forthwith purchase from
the other Banks such participation in the Notes held by them or in
such fees owed to them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank, the purchase from each Bank
shall be rescinded and the purchase price restored by each such
Bank to the extent of such recovery, but without interest.
Disproportionate payments of interest shall be shared by the
purchase of separate participations in unpaid interest obligations,
disproportionate payments of fees shall be shared by the purchase
of separate participations in unpaid fee obligations, and
disproportionate payments of principal shall be shared by the
purchase of separate participations in unpaid principal
obligations. The Borrower agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 4.04 may,
to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of
the Borrower in the amount of such participation. Each Bank shall
give the Agent notice within five days of any payments or other
recoveries described above which it obtains.
SECTION IV.5 Banks' Obligations Several. The obligation of each
Bank to make any Advance is several, and not joint or joint and
several, and is not conditioned upon the performance by all the
other Banks of their obligations to make Advances. SECTION IV.6
Calculation of Interest. Interest payable on the Notes shall be
calculated on the basis of a year of 360 days and paid for the
actual number of days elapsed.
SECTION IV.7 Illegality. Notwithstanding any other provisions of
this Agreement, if any change in any applicable law, regulation or
directive, or in the interpretation or application thereof shall
make it unlawful or impractical for any Bank to make or maintain
its portion of any Eurodollar Borrowings or to maintain Eurodollar
deposits in the London interbank market, the obligation of the
Banks hereunder to advance or maintain Eurodollar Borrowings
shall forthwith be canceled and the Borrower shall, if any
Eurodollar Borrowings are then outstanding, promptly upon request
from the Agent, either, at the option of the Borrower, pay all such
Eurodollar Borrowings or convert such Eurodollar Borrowings to Base
Rate Borrowings. If any such payment or conversion of Eurodollar
Borrowings is made on a day that is not the last day of the then
current Interest Period applicable to such Eurodollar Borrowings,
the Borrower shall promptly pay, upon demand of such Bank (with a
copy of such demand to the Agent) such amount or amounts as may be
necessary to compensate such Bank for any loss or expense sustained
or incurred by such Bank as a result of such payment or conversion.
Each Bank shall certify the amount of such loss or expense to the
Borrower, and such certification shall be conclusive absent
manifest error.
SECTION IV.8 Increased Costs. In the event that any change
(other than any change by way of imposition or increase of reserve
requirements included in the Reserve Percentage) in any applicable
law, treaty or governmental regulation, or in the interpretation or
application thereof, or compliance by any Bank with any guideline,
request or directive (whether or not having the force of law) from
any central bank or other U.S. or foreign financial, monetary or
other governmental authority, shall: (a) subject any Bank to any
tax of any kind whatsoever with respect to this Agreement or any
Borrowing or change the basis of taxation of payments to any Bank
of principal, interest, fees or any other amount payable hereunder
(except for changes in the rate of tax on the overall net income of
any Bank); (b) impose, modify, or hold applicable any reserve,
special deposit, assessment or similar requirement against assets
held by, or deposits in or for the account of, advances or loans
by, or other credit extended by or committed to be extended by any
office of any Bank, including, without limitation, pursuant to
Regulation D of the Board of Governors of the Federal Reserve
System; or (c) impose on any Bank or on the London interbank market
any other condition with respect to this Agreement, the Notes, or
any Eurodollar Borrowing or Fixed Rate Borrowing; and the result of
any of the foregoing is to increase the cost to any Bank of making
or committing to make, renewing or maintaining any Eurodollar
Borrowing or Fixed Rate Borrowing or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of
any Eurodollar Borrowing or Fixed Rate Borrowing, THEN, IN ANY
CASE, upon demand by such Bank and delivery to the Borrower (with
a copy to the Agent) of a certificate explaining such change in
law, treaty, regulation, guideline, request, directive or
interpretation thereof, its impact on such Bank and the basis for
determining such increased costs, the Borrower shall immediately
pay to such Bank, from time to time as specified by such Bank, such
amounts as shall be sufficient to compensate such Bank for such
increased costs reasonably attributable to the Eurodollar
Borrowings or Fixed Rate Borrowing. The Bank's determination of
costs incurred under this Section 4.08, and the allocation, if any,
of such costs, if done in good faith and made on an equitable basis
and in accordance with the officer's certificate of such Bank,
shall be conclusive absent manifest error.
SECTION IV.9 Failure to Complete Borrowings. The Borrower hereby
agrees to indemnify each Bank and hold each Bank harmless from any
loss, cost or expense it may sustain or incur as a consequence of
the failure by the Borrower to complete any Eurodollar Borrowing or
Fixed Rate Borrowing after notice thereof has been given to the
Agent, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such Bank to fund its portion of such
Borrowing when such Bank's Advance, as a result of such failure, is
not made on such date. Each Bank shall certify the amount of its
loss or expense to the Borrower, and such certification shall be
conclusive absent manifest error.
SECTION IV.10 Capital Adequacy. If, after the date of this
Agreement, any Bank shall have determined that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank
or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank with any request
or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, relating generically to loans of the category applicable to
the Borrowings or Letter of Credit, has or would have the effect of
reducing the rate of return on such Bank's capital as a consequence
of its obligations hereunder to a level below that which such Bank
could have achieved but for such adoption, change or compliance
(taking into consideration such Bank's policies with respect to
capital adequacy) by an amount reasonably deemed by such Bank to be
material, then such Bank shall notify the Borrower of such
adoption, change or compliance. To the extent such amount is not
generally compensated through an increase in the Base Rate or is
not included in the Reserve Requirement as the case may be, then,
the Borrower and such Bank shall thereafter attempt to negotiate in
good faith an adjustment to the compensation payable hereunder
which will adequately compensate such Bank in light of these
circumstances for the portion of such cost increases reasonably
attributable to the Borrowings or Letter of Credit effected
hereunder. If the Borrower and such Bank are unable to agree to
such adjustment within thirty days of the day on which the Borrower
receives such notice, then commencing on the date of such notice
(but not earlier than the effective date of any such adoption,
change or compliance), Borrower shall pay to Agent, for the account
of such Bank, such additional amount or amounts as will compensate
such Bank for such increased costs or reduction. A certificate of
any Bank claiming compensation under this Section 4.10 and setting
forth in reasonable detail the additional amount or amounts to be
paid to it hereunder and the method by which such amounts claimed
have been allocated to the Borrowings shall be conclusive in the
absence of manifest error.
SECTION IV.11 Survival. The obligations of the Borrower under
Sections 4.07, 4.08, 4.09 and 4.10 shall survive termination of
this Agreement and payment of the Notes. SECTION IV.12 Change
of Lending Office. Each Bank agrees that it will use reasonable
efforts to designate an alternate lending office with respect to
any of its Eurodollar Advances affected by the matters or
circumstances described in Sections 4.07 and 4.08 to reduce the
liability of Borrower or avoid the results provided thereunder, so
long as such designation is not disadvantageous to such Bank as
determined by such Bank in its sole discretion.
SECTION IV.13 Replacement of Banks. In the event that any Bank is
affected by the matters or circumstances described in Section 4.07,
4.08 or 4.10 above in a manner which results in liability to the
Borrower hereunder, (an "Affected Bank"), the Borrower shall have
the right, at its own expense, upon notice to the Affected Bank and
the Agent, (a) to terminate all (but not part of) the Commitment
and the pro rata participation in the advances pursuant to the
Letter of Credit of such Affected Bank, or (b) to require such
Affected Bank, and each Bank hereby agrees, to use reasonable
efforts to transfer and assign, without recourse, all the
interests, rights and obligations of such Affected Bank to another
financial institution reasonably acceptable to the other Banks, the
Guarantors and the Borrower; provided that (i) no such termination
or assignment shall conflict with any law, rule or regulation or
order of any governmental authority, and (ii) the Borrower or such
successor lender, as the case may be, shall pay to such Affected
Bank in same day funds on the date of such termination or
assignment, the principal of and interest accrued to the date of
payment and all other amounts owed to such Affected Bank hereunder.
Upon such termination or assignment, such Affected Bank shall cease
to be a party hereto but shall continue to be entitled to the
benefits of Sections 4.11 and 11.14 hereof.
ARTICLE V CONDITIONS TO BORROWINGS The obligation of
each Bank to make an Advance to the Borrower hereunder (or to deem
the Advances outstanding pursuant to the Prior Agreement) is
subject to the satisfaction of the following conditions: SECTION
V.1 Conditions Precedent to Initial Advances. At the time of the
making by each Bank of its initial Advances hereunder (or deemed
Advances), all obligations of the Borrower to the Agent or any Bank
incurred prior to the initial Advances (including, without
limitation, the Borrower's obligation to reimburse the fees and
disbursements of counsel to the Agent and to each Bank and any fees
payable to the Agent on or prior to such date) shall have been
paid in full, and (a) the Agent shall have received the following,
each dated as of the date of the initial Advances, in form and
substance satisfactory to the Banks and (except for the Notes) in
sufficient copies for each Bank:
(i) A duly completed Revolving Credit Note payable to the order of
each Bank in the principal amount of such Bank's Commitment.
(ii) A duly executed duplicate original of this Agreement executed
on the Borrower's behalf by its duly authorized officers.
(iii) A duly executed Assumption Agreement in form satisfactory
to the Banks. (iv) Copy of the Certificate of Limited Partnership
of the Borrower, certified as true and correct by the Secretary of
State of Tennessee, and certificates from the Secretaries of State
of the State of Tennessee and of those States in which the Borrower
is legally required to qualify to transact business as a foreign
partnership, certifying the Borrower's good standing as a limited
partnership in such States.
(v) Certified copies of the Agreement of Limited Partnership of
the Borrower, of the requisite corporate action on the part of the
general partner of the Borrower approving this Agreement and the
Notes and the Borrowings hereunder, the Assumption Agreement, and
the Transaction and of all documents evidencing other necessary
partnership action and governmental approvals, if any, with respect
to this Agreement and the Notes and the Transaction. (vi) A
certificate of the Secretary or Assistant Secretary of the general
partner of Borrower certifying the names and true signatures of the
officers of general partner of the Borrower authorized to execute
this Agreement and the Notes and the other documents to be
delivered hereunder on behalf of the Borrower. (vii) Copies of
the organizational papers of each of the Guarantors and the
Affiliate Guarantors, certified as true and correct by the
Secretaries of State of the States of each such Guarantor's and
Affiliate Guarantor's incorporation, and certificates from the
Secretaries of State of the States of each such Guarantor's and
Affiliate Guarantor's incorporation and of those States in which
each Guarantor and Affiliate Guarantor is legally required to
qualify to transact business as a foreign corporation, certifying
each Guarantor's and Affiliate Guarantor's good standing as a
corporation in such States.
(viii) Certified copies of the by-laws of each of the Guarantors
and the Affiliate Guarantors, of resolutions of the Board of
Directors of the Guarantors and the Affiliate Guarantors approving
this Agreement, the Guaranty, the Affiliate Guaranty and the
Transaction, and of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect
to this Agreement, the Guaranty, the Affiliate Guaranty and the
Transaction.
(ix) A certificate of the Secretary or Assistant Secretary of each
of the Guarantors and the Affiliate Guarantors certifying the names
and true signatures of the officers of the Guarantors and the
Affiliate Guarantors authorized to execute this Agreement, the
Guaranty and the Affiliate Guaranty.
(x) True copies of all consents and required governmental
approvals, if any, necessary to the execution, delivery and
performance of this Agreement, the Notes, any other Loan Documents
and the transactions contemplated hereby and thereby.
(xi) Certificate of insurance, together with copies of all polices
evidenced thereby showing that all property of the Borrower and its
Subsidiaries has been insured for the benefit of the Borrower or a
Subsidiary in amounts deemed adequate by the Borrower's management
against risks customarily insured against by Persons operating
businesses similar to those of the Borrower or its Subsidiaries in
the localities where such properties are located. (xii) A
favorable written opinion of Bass, Berry & Sims, counsel for the
Borrower, the Guarantors and the Affiliate Guarantors,
substantially in the form of Exhibit C hereto, and covering such
additional matters relating to the transactions contemplated hereby
as the Required Banks may reasonably request, addressed to the
Agent and the Banks.
(xiii) A duly executed Guaranty in form and substance
satisfactory to the Banks, executed and delivered by the duly
authorized officers of the Guarantors.
(xiv) A duly executed Affiliate Guaranty in form and substance
satisfactory to the Banks, executed and delivered by the duly
authorized officers of the Affiliate Guarantors. (xv) A duly
executed certificate of duly authorized officers of the Borrower,
dated the Closing Date, substantially in the form of Exhibit B
hereto, certifying that there is no Default or Event of Default in
existence as of the Closing Date after giving effect to the
Agreement and the Transaction.
(xvi) Duly executed counterparts of the amended and restated
Working Capital Agreement, Working Capital Note, Letter of Credit
Agreement, Security Agreement, Pledge Agreement and each of the
other Loan Documents, reflecting the consummation of the
Transaction and the Assumption Agreement. (xvii) A duly executed
letter from Borrower's accountants stating that the Transaction has
been consummated in accordance with applicable Tennessee tax law
and regulations and that the Borrower will not be taxed as an
association pursuant to federal income tax law.
(xviii) A duly executed amendment to the Note Purchase Agreement,
in form and substance satisfactory to the Agent and the Required
Lenders. (b) In addition, the Agent and the Required Banks shall
have received evidence satisfactory to them in their sole
discretion, that each of the following is true and correct as of
the Closing Date: (i) The Transaction shall have been
consummated in accordance with all applicable law and shall not
violate any existing agreements of the Consolidated Companies.
(ii) All corporate, partnership and other proceedings taken or to
be taken in connection with the transactions contemplated hereby
and all Loan Documents and other documents incident thereto or
delivered in connection therewith shall be satisfactory in form and
substance to each Bank. SECTION V.2 Conditions Precedent to
Each Advance. At the time of the making by each Bank of each
Advance hereunder (including the initial Advance), the following
statements shall be true (and each of the giving by the Borrower of
a Notice of Borrowing in accordance with Section 2.03 hereof and
the acceptance by the Borrower of the proceeds of such Borrowing
shall constitute a representation and warranty by the Guarantors
and the Borrower that on the date of such Borrowing, before and
after giving effect thereto and to the application of the proceeds
therefrom, such statements are true):
(i) The representations and warranties contained in Article VI
hereof are true and correct on and as of the date of such Borrowing
as though made on and as of such date (the representations and
warranties set forth in Sections 6.07 and 6.10 shall be deemed to
apply to the most recent financial statements furnished by the
Holding Company and the Borrower to the Banks prior to such
Borrowing in accordance with Section 7.09 hereof), and
(ii) No Default or Event of Default exists or would result from
such Borrowing or from the application of the proceeds therefrom.
ARTICLE VI REPRESENTATIONS AND WARRANTIES Each of
the Guarantors and the Borrower represents and warrants (after
giving effect to the Transaction) as follows: SECTION VI.1
Existence. Each of the Borrower and the Guarantors is a
corporation or a limited partnership duly organized, validly
existing and in good standing under the laws of the State of its
incorporation or organization and each of their respective
Subsidiaries is duly organized, validly existing and in good
standing under the law of the jurisdiction in which it is
incorporated or organized. Each of the Guarantors, the Borrower
and each of their respective Subsidiaries is duly qualified and in
good standing as a foreign corporation or foreign partnership
authorized to do business in each jurisdiction (other than the
jurisdiction of its incorporation or organization) in which the
nature of its activities or the character of the properties it owns
or leases makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on
the business, properties or financial condition of the Consolidated
Companies.
SECTION VI.2 Power and Authority; Contravention. (a) The
execution, delivery and performance by the Borrower of this
Agreement and the Notes and the consummation of the Transaction are
within the Borrower's partnership powers, have been duly authorized
by all necessary corporate action (including any necessary
shareholder action) on the part of its general partner and by all
necessary partnership action, and do not and will not (i) violate
any provision of any law, rule or regulation, any judgment, order
or ruling of any court or governmental agency, the organizational
papers or partnership agreement of the Borrower, or any indenture,
agreement or other instrument to which the Borrower is a party or
by which the Borrower or any of any of its properties is bound, or
(ii) be in conflict with, result in a breach of, or constitute with
notice or lapse of time or both a default under any such indenture,
agreement or other instrument.
(b) The execution, delivery and performance by the Guarantors of
this Agreement and the Guaranty and the consummation of the
Transaction are within each of the Guarantors' corporate powers,
have been duly authorized by all necessary corporate action
(including any necessary shareholder action), and do not and will
not (i) violate any provision of any law, rule or regulation, any
judgment, order or ruling of any court or governmental agency, the
organizational papers or by-laws of the Guarantors, or any
indenture, agreement or other instrument to which any of the
Guarantors is a party or by which any of the Guarantors or any of
their properties is bound, or (ii) be in conflict with, result in
a breach of, or constitute with notice or lapse of time or both a
default under any such indenture, agreement or other instrument.
(c) The execution, delivery and performance by the Affiliate
Guarantors of the Affiliate Guaranty and the consummation of the
Transaction are within each of the Affiliate Guarantor's corporate
powers, have been duly authorized by all necessary corporate action
(including any necessary shareholder action), and do not and will
not (i) violate any provision of any law, rule or regulation, any
judgment, order or ruling of any court or governmental agency, the
organizational papers or by-laws of the Guarantors, or any
indenture, agreement or other instrument to which any of the
Affiliate Guarantors is a party or by which any of the Affiliate
Guarantors or any of their properties is bound, or (ii) be in
conflict with, result in a breach of, or constitute with notice or
lapse of time or both a default under any such indenture, agreement
or other instrument.
SECTION VI.3 Enforceability. (a) This Agreement, the Notes, and
all other Loan Documents to which Borrower is a party are the
legal, valid and binding agreements of the Borrower, enforceable
against the Borrower in accordance with their respective terms,
except as the enforceability of any of them may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights and remedies generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
(b) This Agreement, the Guaranty, and all other Loan Documents to
which any Guarantor is a party are the legal, valid and binding
agreements of such Guarantor, enforceable against such Guarantor in
accordance with their respective terms, except as the
enforceability of any of them may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting
creditors' rights and remedies generally and by general principles
of equity, whether considered in a proceeding at law or in equity.
(c) The Affiliate Guaranty, and all other Loan Documents to which
any Affiliate Guarantor is a party are the legal, valid and binding
agreements of such Affiliate Guarantor, enforceable against such
Affiliate Guarantor in accordance with their respective terms,
except as the enforceability of any of them may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights and remedies generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
SECTION VI.4 Governmental Consent. Neither the nature of the
Guarantors, the Borrower or any of their respective Subsidiaries
nor any of their respective businesses or properties, nor any
relationship between the Guarantors, the Borrower or any Subsidiary
and any other Person, nor any circumstance in connection with the
execution and delivery of the Loan Documents and the consummation
of the transactions contemplated thereby is such as to require any
authorization, consent, approval, order, license, exemption or
other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings,
if any, after the date of closing with the Securities and Exchange
Commission and/or state Blue Sky authorities) in connection with
the execution and delivery of this Agreement, the Notes, and the
other Loan Documents or fulfillment of or compliance with the terms
and provisions hereof or thereof.
SECTION VI.5 Subsidiaries. Exhibit D attached hereto correctly
sets forth the name of each Subsidiary of the Guarantors and the
Borrower and the jurisdiction of its incorporation or organization.
All the outstanding shares of the capital stock or partnership
interests of each such Subsidiary have been validly issued and are
fully paid and nonassessable and all such outstanding shares or
partnership interests, as the case may be, except as noted on such
Exhibit, are owned of record and beneficially by one of the
Guarantors or the Borrower, as shown, or by a wholly-owned
Subsidiary of one of the Guarantors or the Borrower, free of any
Lien or claim.
SECTION VI.6 Insurance. Each property owned by the Guarantors,
the Borrower or any of their respective Subsidiaries is insured for
the benefit of the Guarantors, the Borrower or such Subsidiary in
amounts deemed adequate by the management of Guarantors and the
Borrower against risks customarily insured against by Persons
operating businesses similar to those of the Guarantors, the
Borrower or their respective Subsidiaries in the localities where
such properties are located.
SECTION VI.7 Financial Statements. The Guarantors and the
Borrower have furnished the Banks with the following financial
statements, identified by the chief financial officer of the
Holding Company or the Borrower: (i) balance sheets of DFI as at
October 1, 1994, and September 30, 1995 and statements of income,
retained earnings and cash flows of the Borrower for such years,
all certified by Ernst & Young LLP; (ii) unaudited balance sheets
of DFI as at December 30, 1995 and unaudited statements of income,
retained earnings and cash flow for the three month period ended on
such date, prepared by DFI in condensed form and without footnotes;
and (iii) consolidated balance sheets of the Holding Company as at
October 1, 1994 and September 30, 1995 and consolidated statements
of income, retained earnings and cash flow of the Holding Company
for such years, all certified by Ernst & Young LLP. All such
financial statements (including any related schedules and/or notes)
are true and correct in all material respects (subject, as to
interim statements, to changes resulting from audits and normal
year end adjustments), have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved and show all liabilities, direct
and contingent, of the Consolidated Companies required to be shown
in accordance with such principles. The balance sheets fairly
present the condition of the Consolidated Companies as at the dates
thereof, and the statements of income and statements of retained
earnings and cash flows position fairly present the results of the
operations of the Consolidated Companies for the periods indicated.
There has been no material adverse change in the business,
condition or operations (financial or otherwise), or prospects of
the Consolidated Companies taken as a whole since Fiscal Year End
1995.
SECTION VI.8 Taxes. The Guarantors, the Borrower and each of
their respective Subsidiaries have filed all federal, state and
other income tax returns which are required to be filed, and each
has paid all taxes as shown on such returns and on all assessments
received by it to the extent that such taxes have become due or
except such as are being contested in good faith by appropriate
proceedings and for which adequate reserves have been established
in accordance with generally accepted accounting principles.
Federal, state and other income tax returns of the Guarantors, the
Borrower and their respective Subsidiaries have been examined and
reported on by the taxing authorities or closed by applicable
statutes and satisfied for all fiscal years prior to and including
the fiscal year ended on Fiscal Year End 1987.
SECTION VI.9 Actions Pending. Except as specified in Exhibit E
attached hereto, there is no action, suit, investigation, or
proceeding pending or, to the best knowledge of the Guarantors and
the Borrower, threatened against the Guarantors, the Borrower or
any of their respective Subsidiaries or any properties or rights of
the Guarantors, the Borrower or any of their respective
Subsidiaries, by or before any court, arbitrator or administrative
or governmental body, which might result in any material adverse
change in the business, condition or operations (financial or
otherwise), or prospects of the Consolidated Companies taken as a
whole or which in any manner draws into question the validity of
this Agreement, any of the Notes, the Guaranty, the Affiliate
Guaranty, the Transaction or any other Loan Document.
SECTION VI.10 Title to Properties. Each of the Guarantors and the
Borrower and each of their respective Subsidiaries have good and
marketable title to its respective real properties (other than real
properties that it leases) and good title to all of its other
respective properties and assets, including the properties and
assets reflected in the balance sheet as at Fiscal Year End 1995
hereinabove described (other than properties and assets disposed of
in the ordinary course of business), subject to no Lien of any kind
except Liens permitted by Section 8.01. The Borrower and each of
its Subsidiaries enjoys peaceful and undisturbed possession under
all leases necessary in any material respect for the operation of
its respective properties and assets, none of which contains any
unusual or burdensome provisions which are likely to materially and
adversely affect or impair the operations of such properties and
assets. All such leases are valid and subsisting and in full force
and effect.
SECTION VI.11 Federal Reserve Regulations. Neither the Borrower
nor any Subsidiary is in the business of extending credit for the
purpose of purchasing or carrying any "margin stock" as defined in
Regulation U (12 C.F.R. Part 221) of the Board of Governors of the
Federal Reserve System (hereinafter called "margin stock"). Each
Borrowing will be used solely for the purposes specified in this
Agreement and none of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin stock
or for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of Regulation U. Neither the
Borrower nor any agent of the Borrower acting on its behalf has
taken or will take any action which might cause this Agreement or
any of the Notes to violate Regulations G, T, U, or X or (to the
best knowledge of the Borrower) any other regulation of the Board
of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, as amended, in each case as now in
effect or as the same may hereafter be in effect.
SECTION VI.12 ERISA. Except as disclosed on Exhibit F:
(a) Identification of Plans. None of the Guarantors, the Borrower
nor any ERISA Affiliate maintains or contributes to, or has
maintained or contributed to, any defined benefit pension plan or
Multiemployer Plan;
(b) Compliance. Each Plan has at all times been maintained, by
its terms and in operation, in accordance in all material respects
with all applicable laws; (c) Liabilities. Except for
liabilities and expenses which become payable and are timely paid
pursuant to the terms and usual operations of the Plans, none of
the Guarantors, the Borrower nor any Subsidiary is currently or
will become subject to any material liability (including withdrawal
liability), tax or penalty whatsoever to any person whomsoever with
respect to any Plan including, but not limited to, any material
tax, penalty or liability arising under Title I or Title IV of
ERISA or Chapter 43 of the Code; and
(d) Funding. The Guarantors, the Borrower and each ERISA
Affiliate have made full and timely payment of all amounts (i)
required to be contributed under the terms of each Plan and
applicable law and (ii) required to be paid as expenses of each
Plan. No Plan or Plans have an "amount of unfunded benefit
liabilities" (as defined in Section 4001(a)(18) of ERISA) which, in
the aggregate, would exceed $500,000 if such Plan were terminated
as of the date of this representation and warranty.
SECTION VI.13 Outstanding Debt. Neither the Guarantors, the
Borrower nor any of their respective Subsidiaries has outstanding
any Debt, on a consolidated basis, except as permitted by Section
8.03. There exists no default under the provisions of any
instrument evidencing or securing such Debt or of any agreement
otherwise relating thereto.
SECTION VI.14 Conflicting Agreements or Other Matters. None of
the Guarantors, the Borrower nor any of their respective
Subsidiaries is a party to any contract or agreement or subject to
any charter or other corporate or partnership restriction which
materially and adversely affects its business, property or assets,
or financial condition or prospects. Neither the execution or
delivery of this Agreement or the other Loan Documents, nor
fulfillment of or compliance with the terms and provisions hereof
and thereof, will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under,
or result in any violation of , or result in the creation of any
Lien upon any of the properties or assets of the Guarantors, the
Borrower or any of their respective Subsidiaries pursuant to, the
charter, by-laws partnership agreement or other organizing
documents of the Guarantors, the Borrower or any Subsidiary, any
award of any arbitrator or any agreement (including any agreement
with stockholders), instrument, order, judgment, decree, statute,
law, rule or regulation to which the Guarantors, the Borrower or
any of their respective Subsidiaries is subject. Neither the
Guarantors, the Borrower nor any of their respective Subsidiaries
is a party to, or otherwise subject to any provision contained in,
any instrument evidencing indebtedness of the Guarantors, the
Borrower or any of their respective Subsidiaries, any agreement
relating thereto or any other contract or agreement (including its
charter or partnership agreement) which limits the amount of, or
otherwise imposes restrictions on the incurring of, Debt of the
Guarantors or Borrower of the type to be evidenced by the Notes and
the Guaranty, respectively, except as set forth in the agreements
listed on Exhibit G attached hereto.
SECTION VI.15 Pollution and Environmental Control. (a) Each of
the Guarantors, the Borrower and each of their respective
Subsidiaries has complied in all material respects with all
applicable Environmental Laws, including without limitation,
compliance with permits, licenses, standards, schedules and
timetables, and is not in violation of, and does not presently have
outstanding any liability under, has not been notified that it is
or may be liable under and does not have knowledge of any liability
or potential liability under any applicable Environmental Law,
including without limitation, the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"), the Federal Water Pollution Control Act, as amended
("FWPCA"), the Federal Clean Air Act, as amended ("FCAA"), and the
Toxic Substance Control Act ("TSCA"), which violation, liability or
potential liability could reasonably be expected to have a
materially adverse effect on the condition (financial or
otherwise), business or operations of the Consolidated Companies
taken as a whole.
(b) None of the Guarantors, the Borrower nor any of their
respective Subsidiaries has received a written request for
information under CERCLA or any comparable state law or written
notice that any such entity has been identified as a potential
responsible party under CERCLA or any comparable state law, nor has
any such entity received any written notification that any
Hazardous Substance that it or any of its respective predecessors
in interest has generated, stored, treated, handled, transported,
or disposed of, has been released or is threatened to be released
at any site at which any Person intends to conduct or is conducting
a remedial investigation or other action pursuant to any applicable
Environmental Law.
(c) Each of the Guarantors, the Borrower and each of their
respective Subsidiaries has obtained all permits, licenses or other
authorizations required for the conduct of their respective
operations under all applicable Environmental and Asbestos Laws and
each such authorization is in full force and effect. SECTION
VI.16 Possession of Franchises, Licenses, Etc. Exhibit H
attached hereto sets forth a complete listing of all material
patents, trademarks, service marks, trade names, copyrights and
licenses owned by the Guarantors, the Borrower and their respective
Subsidiaries. The Guarantors, the Borrower and each of their
respective Subsidiaries possess all franchises, certificates,
licenses, permits and other authorizations from governmental
political subdivisions or regulatory authorities, and all patents,
trademarks, service marks, trade names, copyrights, licenses and
other rights, free from burdensome restrictions, that are necessary
for the ownership, maintenance and operation of any of their
respective properties and assets, and neither the Guarantors, the
Borrower nor any of their respective Subsidiaries is in violation
of any thereof, except where the failure to possess or the
violation of such patents, trademarks, service marks, trade names,
copyrights or licenses would not have a materially adverse effect
on the prospects, business, properties or financial condition of
the Consolidated Companies.
SECTION VI.17 Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to the Banks or the
Agent by or on behalf of the Guarantors or the Borrower in
connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading. There
is no fact peculiar to the Guarantors, the Borrower or any of their
respective Subsidiaries which materially adversely affects or in
the future may (so far as the Guarantors or the Borrower can now
foresee) materially adversely affect the business, property or
assets, or financial condition of the Guarantors, the Borrower or
any of their respective Subsidiaries which has not been set forth
in this Agreement or in the other documents, certificates and
statements furnished to the Banks or the Agent by or on behalf of
the Guarantors or the Borrower prior to the date hereof in
connection with the transactions contemplated hereby.
SECTION VI.18 Solvency. After giving effect to the Transaction,
and after giving effect to each Borrowing under this Agreement, (a)
the fair value and present fair saleable value of each of the
Guarantors' assets, the Affiliate Guarantors' assets and the
Borrower's assets are each in excess of their respective
liabilities, including known contingent liabilities; (b) none of
the Guarantors, the Affiliate Guarantors nor the Borrower will have
incurred debts beyond its respective ability to repay such debts as
they mature; and (c) none of the Guarantors, the Affiliate
Guarantors nor the Borrower has unreasonably small capital to carry
on its respective business as theretofore operated and all
businesses in which either is about to engage. As used in this
Section 6.18, "debt" means any liability on a claim, and "claim"
means (i) the right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured, or (ii) the right to an equitable remedy for breach
of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured.
SECTION VI.19 Transaction. The Transaction has been consummated
in accordance with all applicable law. As a result of the
Transaction, the Borrower has title to all of the tangible assets
formerly owned by DFI (other than the stock of DFI's Subsidiaries)
and has succeeded to the rights and obligations of DFI pursuant to
all material contracts of DFI. The Borrower will be taxable as
partnership and not as an association pursuant to applicable
federal tax law.
ARTICLE VII AFFIRMATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
commitment to advance funds hereunder, each of the Guarantors and
the Borrower will, unless the Required Banks shall otherwise
consent in writing:
SECTION VII.1 Corporate or Partnership Existence; Maintenance of
Properties. (i) Do or cause to be done all things necessary to
preserve and maintain, and cause each of its Subsidiaries to
preserve and maintain, its respective corporate or partnership
existence, rights and franchises, except as otherwise permitted
pursuant to Section 8.05 hereof, (ii) cause its properties and the
properties of its Subsidiaries used or useful in the conduct of
their respective businesses to be maintained and kept in good
condition, repair and working order (subject to ordinary wear and
tear) and supplied with all necessary equipment and cause to be
made all necessary repairs, renewals, replacements, betterments and
improvements thereto, all as in the judgment of the Guarantors and
the Borrower may be necessary so that the businesses carried on in
connection therewith may be properly and advantageously conducted
at all times, except as otherwise permitted pursuant to Section
7.05 hereof, and (iii) will and will cause each of its Subsidiaries
to qualify and remain qualified to conduct business in each
jurisdiction where the nature of the business or ownership of
property by the Guarantors, the Borrower, or such Subsidiary, as
the case may be, may legally require such qualification, except,
with respect to (ii) and (iii) above, where the failure to maintain
properties or failure to qualify would not have a materially
adverse effect on the prospects, business, properties or financial
condition of the Consolidated Companies.
SECTION VII.2 Compliance with Laws, Etc. Comply, and cause each
of its Subsidiaries to comply, with all applicable federal, state,
and local laws, rules, regulations and orders, including, without
limitation, all federal, state and local laws, rules, regulations
and orders relating to pollution, reclamation, or protection of the
environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into air, water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes,
except where the failure to comply would not have a materially
adverse effect on the prospects, business, properties or financial
condition of the Consolidated Companies.
SECTION VII.3 Taxes and Claims. Pay, and cause each of its
Subsidiaries to pay and discharge, or cause to be paid and
discharged, (i) before the same shall become delinquent, all taxes,
assessments and other governmental charges levied or imposed upon
it or upon its income, profits or properties and (ii) all claims
(including, without limitation, claims for labor, materials,
supplies or services) which might, if unpaid, become a Lien upon
and of its property, provided that, in each case, neither the
Guarantors, the Borrower nor any of their respective Subsidiaries
shall be required to pay or cause to be paid or discharged any such
tax, assessment, charge or claim whose amount or validity is being
contested in good faith by appropriate proceedings and with respect
to which adequate reserves are being maintained and, provided,
further, that each of Guarantors and the Borrower shall, and shall
cause each Subsidiary to, pay all such taxes, assessments, charges
and claims forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor.
SECTION VII.4 Compliance with Other Agreements. Conduct, and
cause each Subsidiary to conduct, its business operations and
obtain all necessary permits and licenses in compliance with all
agreements, indentures and mortgages to which it is a party or by
which it or any of its properties is bound, except where the
failure to comply would not have a materially adverse effect on
the prospects, business, properties or financial condition of the
Consolidated Companies.
SECTION VII.5 Inspection of Property. Permit any Person
designated in writing by the Agent or any Bank, at the Agent's or
such Bank's expense, to visit and inspect any of the properties of
any of the Guarantors, the Borrower and any of their respective
Subsidiaries, to examine the corporate or partnership books and
financial records of any of the Guarantors, the Borrower and their
respective Subsidiaries and make copies thereof and take extracts
therefrom, and to discuss the affairs, finances and accounts of any
of such Persons with the principal officers of Guarantors and the
Borrower and, with the permission of the Guarantors and the
Borrower, its independent public accountants, all during regular
business hours and as often as the Agent or any Bank may reasonably
request.
SECTION VII.6 Insurance. Maintain, and cause each Subsidiary to
maintain, with financially sound and reputable carriers insurance
in such amounts and against such liabilities and hazards as
customarily is maintained by other companies operating similar
businesses. SECTION VII.7 Business. Remain, and cause each
Subsidiary to remain, substantially in the respective business in
which the Guarantors, the Borrower and each of their respective
Subsidiaries is engaged as of the date of this Agreement (with the
express understanding that the establishment of a Subsidiary to
conduct a cut-and-sew business is permitted pursuant hereto).
SECTION VII.8 Keeping of Books. Keep, and cause each of its
Subsidiaries to keep, proper books of record and account,
containing complete and accurate entries of all financial and
business transactions of the Guarantors, the Borrower and each of
their respective Subsidiaries; provided, that any breach of the
covenant contained in this Section 7.08 not involving willful
concealment or fraud on the part of the Guarantors or the Borrower
which is cured within thirty (30) days of the discovery thereof
shall not constitute an Event of Default hereunder.
SECTION VII.9 Reporting Covenants. Deliver to each of the Banks:
(a) as soon as available and in any event within 90 days after
each Fiscal Year End of the Holding Company, a consolidated balance
sheet of the Holding Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income,
retained earnings and cash flows for such fiscal year, setting
forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by a report
thereon of Ernst & Young LLP or other independent public
accountants reasonably acceptable to the Required Banks, which
report will be unqualified as to scope of audit and shall state
that such consolidated financial statements present fairly the
consolidated financial condition of the Holding Company and its
Subsidiaries as at the end of such fiscal year, and the
consolidated results of operations and cash flow of the Holding
Company and its Subsidiaries for such fiscal year in accordance
with generally accepted accounting principles consistently applied
and that the audit by such accountants in connection with such
consolidated financial statements was made in accordance with
generally accepted auditing standards, to be accompanied by a
consolidating balance sheet of the Holding Company and its
Subsidiaries as of the end of such fiscal year and the related
consolidating statements of income, retained earnings and cash
flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, all in
reasonable detail and accompanied by a certificate of the chief
financial officer of the Holding Company;
(b) as soon as available and in any event within 45 days after the
end of each fiscal quarter of the Holding Company and the Borrower,
a consolidated balance sheet of the Holding Company and its
Subsidiaries and a consolidated balance sheet of the Borrower and
its Subsidiaries as of the end of such quarter and the related
consolidated statements of income, retained earnings and changes in
financial position for such quarter and for the portion of the
Holding Company's and the Borrower's fiscal year ended at the end
of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion
of the Holding Company's and the Borrower's previous fiscal year,
all certified (subject to normal year end adjustments) as to
fairness of presentation, preparation in accordance with generally
accepted accounting principles and consistency of accounting
methods by the chief financial officer of the Holding Company or
the Borrower, as the case may be, in condensed form and without
footnotes;
(c) as soon as available and in any event within 30 days (except
in the case of the third, sixth, ninth and twelfth months, within
45 days) after the end of each fiscal month of the Holding Company,
copies of consolidated balance sheets of the Holding Company and
its Subsidiaries as of the end of such month, and statements of
income and retained earnings and cash flow of the Holding Company
and its Subsidiaries for such month and for the portion of the
fiscal year ending with such month, in each case setting forth in
comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail, in condensed form
and without footnotes, and certified (subject to normal year end
adjustments) as to fairness of presentation, preparation in
accordance with generally accepted accounting principles and
consistency of accounting methods by the chief financial officer
of the Holding Company;
(d) as soon as available and in any event by the earlier of (i)
the fifth day following the Board of Directors meeting approving
such budget, or (ii) the 60th day following the beginning of the
Holding Company's fiscal year, a projected annual budget for
Holding Company and its Subsidiaries for the Holding Company's
current fiscal year;
(e) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate
of the chief financial officer of the Holding Company or the
Borrower substantially in the form of Exhibit I attached hereto (i)
setting forth in reasonable detail the calculations required to
establish whether the Holding Company was in compliance with the
requirements of Section 7.10 on the date of such financial
statements and (ii) stating whether there exists on the date of
such certificate any Default or Event of Default and, if any
Default or Event of Default then exists, setting forth the details
thereof and the action which the Holding Company is taking or
proposes to take with respect thereto;
(f) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm
of independent public accountants which reported on such statements
(i) stating whether anything has come to its attention to cause it
to believe that there existed on the date of such statements any
Default or Event of Default and (ii) confirming the calculations
set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (e) above;
(g) forthwith, and in any event no later than two (2) days
following the occurrence of any Default or Event of Default, a
certificate of the chief financial officer of the Borrower setting
forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto;
(h) promptly upon the mailing or filing thereof, copies of all
reports and proxy statements which any of the Guarantors or the
Borrower sends to its security holders, and copies of all reports
and registration statements which any of the Guarantors or the
Borrower or any Subsidiary files with the Securities and Exchange
Commission or any national securities exchange;
(i) promptly after (i) any of the Guarantors or the Borrower
obtains knowledge thereof, notice of the institution by any Person
of any action, suit or proceeding or any governmental investigation
or any arbitration, before any court or arbitrator or any
governmental or administrative body, agency, or official, against
the Guarantors, the Borrower, any Subsidiary, or any material
property of any of them, in each case, in an aggregate amount in
excess of $500,000 or which might have a materially adverse effect
on the prospects, business, properties or financial condition of
any Guarantor, the Borrower or any Subsidiary, or (ii) the receipt
of actual knowledge thereof, notice of the threat of any such
action, suit, proceeding, investigation or arbitration, each such
notice under this subsection to specify, if known, the amount of
damages being claimed or other relief being sought, the nature of
the claim, the Person instituting the action, suit, proceeding,
investigation or arbitration, and any other significant features of
the claim.
(j) promptly after the occurrence thereof with respect to any
Plan, or any trust established thereunder, notice of (A) a
"reportable event" described in Section 4043 of ERISA and the
regulations issued from time to time thereunder (other than a
"reportable event" not subject to the provisions for 30-day notice
to the PBGC under such regulations), or (B) any other event which
could subject the Borrower or any ERISA Affiliate to any material
taxes, penalties or liabilities under Title I or Title IV of ERISA
or Chapter 43 of the Code;
(k) at the same time and in the same manner as such notice must be
provided to the PBGC, or to a Plan participant, beneficiary or
alternative payee, any notice required under Section 101(d),
302(f)(4), 303, 307, 4041(b)(1)(a) or 4041(c)(1)(a) of ERISA or
under Section 401(a)(29) or 412 of the Code with respect to any
Plan;
(l) upon the request of Agent, (A) true and complete copies of any
and all documents, government reports and determination or opinion
letters for any Plan, or (B) a current statement of withdrawal
liability for each Multiemployer Plan; (m) promptly upon receipt,
forward to Agent copies of all orders, notices, permits,
applications or other material communications and reports received
by any of the Guarantors or the Borrower or any Subsidiary in
connection with any discharge or the presence of any hazardous
substance or any other matters relating to the Environmental Laws
or any similar laws or regulations; and
(n) such other information respecting the condition or operations,
financial or otherwise, of the Guarantors, the Borrower or any of
their respective Subsidiaries, as any Bank through the Agent may
from time to time reasonably request. SECTION VII.10 Financial
Covenants. The Holding Company shall, on a consolidated basis:
(a) Interest Coverage Ratio. Maintain an Interest Coverage Ratio,
calculated as of the last day of each fiscal quarter for the
immediately preceding four quarters, of no less than 3.0:1.0;
provided that, with respect to the fiscal quarters of the Guarantor
ending on December 30, 1995 and March 31, 1996, such Interest
Coverage Ratio, calculated as set forth above, shall not be less
than 2.50:1.0.
(b) Cash Flow Coverage Ratio. Maintain a Cash Flow Coverage
Ratio, calculated as of the last day of each fiscal quarter for the
immediately preceding four fiscal quarters, of no less than
1.1:1.0; provided that, with respect to the fiscal quarters of the
Guarantor ending on or about December 30, 1995 and March 31, 1996,
such Cash Flow Coverage Ratio, calculated as set forth above, shall
not be less than 0.95:1.0. (c) Stockholders' Equity. Maintain
Stockholder's Equity, calculated on a quarterly basis, of no less
than $63,395,538.00, with such amount to be permanently increased
at the end of each fiscal quarter commencing with the fiscal
quarter ending on or about March 31, 1996, by an amount equal to
50% of the Consolidated Companies' Net Income, calculated on a
consolidated basis, for such fiscal quarter; provided, however, in
the event that the Holding Company suffers a Net Loss for any
fiscal quarter, Net Income shall be deemed to be $0, so that in no
event shall the required Stockholder's Equity at the end of any
fiscal quarter be less than that required at the end of any
preceding fiscal quarter.
(d) Leverage Test. Maintain a Leverage Test, calculated on the
last day of each fiscal quarter of the Holding Company, of not more
than the percentage set forth below for the indicated period:
Period Maximum Percentage
December 30, 1995
through September 28, 1996 55%
December 28, 1996 and
thereafter 50%.
(e) Working Capital. Maintain minimum Working Capital, calculated
annually on each Fiscal Year End based on the audited financial
statements delivered pursuant to Section 7.09(a) hereof, of at
least $15,000,000. ARTICLE VIII NEGATIVE COVENANTS So
long as any Note shall remain unpaid or any Bank shall have any
commitment to advance funds hereunder, the Guarantors and the
Borrower will not, without the written consent of the Required
Banks:
SECTION VIII.1 Liens, Etc. Create, assume or suffer to exist, or
permit any of their respective Subsidiaries to create, assume or
suffer to exist, any Lien upon any of its property or assets
whether now owned or hereafter acquired, except: (a) Liens
existing on the date hereof as set forth on Exhibit J attached
hereto and Liens created by the Loan Documents; (b) purchase
money Liens upon any property acquired or held by the Guarantors,
the Borrower or any of their respective Subsidiaries in the
ordinary course of business to secure the purchase price of such
property or to secure Debt incurred within three (3) months of such
acquisition solely for the purpose of financing the acquisition of
such property, provided that such Lien does not extend to any other
property and does not exceed the lesser of the purchase price or
fair market value of such property;
(c) Liens existing on any property held by the Guarantors, the
Borrower or any of their respective Subsidiaries in the ordinary
course of business at the time of its acquisition (other than any
such Lien created in contemplation of such acquisition), provided
that such Lien does not exceed the lesser of the purchase price or
the fair market value of such property; (d) Liens existing on
property of any Person acquired by the Guarantors, the Borrower or
any of their respective Subsidiaries at the time of acquisition of
such Person (other than any such Lien created in contemplation of
such acquisition), provided that such Lien does not exceed the
lesser of the purchase price or the fair market value of such
property;
(e) Liens for taxes or assessments or other governmental charges
or levies not yet due or which are being actively contested in good
faith by appropriate proceedings if adequate reserves with respect
thereto are maintained on the books of the Guarantors, the Borrower
or their respective Subsidiaries, as the case may be, in accordance
with generally accepted accounting principles;
(f) statutory or common law Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and other Liens
imposed by law created in the ordinary course of business for
amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
are being maintained;
(g) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workmen's compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (other than obligations for the payment of borrowed
money);
(h) easements, rights-of-way, restrictions and other similar
charges or encumbrances not materially interfering with the
ordinary conduct of the business of the Guarantors, the Borrower or
any of their respective Subsidiaries or any of their respective
properties; (i) Liens for judgments which are being actively
appealed in good faith by appropriate proceedings in an aggregate
amount not to exceed $500,000; (j) other Liens incurred in the
ordinary course of business other than in connection with Debt
which do not in the aggregate materially detract from the value of
the assets of Guarantors, the Borrower or their respective
Subsidiaries or materially interfere with business operations;
(k) Liens relating to and securing the Project Bond Financing; and
(l) extensions, renewals or replacements of any Lien referred to
in clauses (a) through (k) of this Section 8.01, provided that the
principal amount of the Debt or obligation secured thereby is not
increased and that any such extension, renewal or replacement is
limited to the property originally encumbered by the Lien.
SECTION VIII.2 Limitations on Restricted Payments. Pay or declare
any dividend or make any other distribution on or on account of any
class of its stock, partnership interests or other equity or make
cash distributions of equity, partnership interests or make
interest payments on equity, or redeem, purchase, or otherwise
acquire, directly or indirectly, any shares of its stock or other
equity, or redeem, purchase, prepay or otherwise acquire, directly
or indirectly, any Subordinated Debt (all of the foregoing being
herein called "Restricted Payments") unless, following such
Restricted Payment, the Holding Company would be in compliance with
the covenants contained in Section 7.10 of this Agreement and no
Default or Event of Default would exist hereunder.
SECTION VIII.3 Debt. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any Debt, other than: (a) Debt evidenced by the Loan
Documents; (b) purchase money Debt to the extent Liens with
respect thereto are permitted by Section 8.01(b); (c) unsecured
current liabilities (not resulting from any borrowing) incurred in
the ordinary course of business for current purposes and not
represented by a promissory note or other evidence of indebtedness;
(d) Debt incurred in connection with transactions permitted under
Sections 8.02 and 8.04; (e) other Debt created, incurred or
assumed after the date of this Agreement by the Borrower and its
Subsidiaries, provided that the aggregate outstanding principal
amount of such Debt of the Borrower and its Subsidiaries, on a
consolidated basis, shall not exceed $2,500,000 at any one time
outstanding;
(f) Debt incurred under the Loan Agreement (as defined in the
Letter of Credit Agreement); (g) Debt incurred pursuant to the
Note Purchase Agreement in an aggregate principal amount not to
exceed $25,000,000; provided that, such Debt shall have a maturity
and an average life equal to or greater than seven years and the
documents evidencing such Debt shall contain covenants,
representations and warranties and events of default no more
onerous to the Borrower than the comparable provisions of this
Agreement, as determined by the Required Banks;
(h) Subordinated Debt from DFI to the Holding Company in an
aggregate principal amount not to exceed $22,000,000, such Debt to
be evidenced by an intercompany note clearly legended as
subordinated to the indebtedness outstanding pursuant to the Loan
Documents pursuant to the terms of the Guaranty (the "Intercompany
Note"); and
(i) Debt incurred in connection with the Project Bond Financing.
SECTION VIII.4 Restrictions on Loans, Advances, Investments and
Contingent Liabilities. Make or permit to remain outstanding any
loan or advance to, or extend credit (other than credit extended in
the normal course of business to any Person which is not an
Affiliate of the Guarantors or the Borrower) to, or guarantee,
endorse or otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends
of, or own, purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital
contribution to, any Person, except that the Guarantors or the
Borrower or any of their respective Subsidiaries may:
(a) (i) permit to remain outstanding loans to or investments in
any Subsidiary existing on the date of this Agreement, including,
the Intercompany Note, and (ii) any loans to or investments in or
from any Affiliate Guarantor or Guarantor in connection with an
integrated cash management system among the Consolidated Companies;
(b) acquire and own stock, obligations or securities received in
settlement of debts (created in the ordinary course of business)
owing to the Guarantors, the Borrower or any of their respective
Subsidiaries; (c) acquire and own (i) direct obligations of the
United States of America or any agency thereof, or obligations
fully guaranteed as to principal and interest by the United States
of America or any agency thereof, in each case maturing within one
year from the date of creation of such obligation, (ii)
certificates of deposit due within one year issued by commercial
banks domiciled in the United States having minimum capital funds
of $100,000,000 and whose long term certificates of deposit are
rated A+ or better by Standard & Poor's Corporation or A-1 or
better by Moody's Investors Services, (iii) commercial paper
maturing no more than 270 days from the date of issuance and rated
A-1 or better by Standard & Poor's Corporation or P-1 or better by
Moody's Investors Services, and (iv) mutual funds or other similar
investment programs investing solely in the instruments described
in (i) through (iii) above;
(d) endorse negotiable instruments for collection in the ordinary
course of business;
(e) make or permit to remain outstanding travel and other like
advances to officers and employees in the ordinary course of
business; (f) make Restricted Payments as allowed in Section 8.02
hereof; (g) make additional loans or advances to, or guarantee,
endorse or otherwise be or become contingently liable in connection
with the obligations, stock, or dividends of, or own, purchase or
acquire stock, obligations or securities of, any other Person
engaged in the textile or related business which either is a
Subsidiary or following such transactions would be a Subsidiary,
provided that such additional loans and advances, plus the
aggregate amount of such additional contingent liabilities plus the
aggregate amount of the additional investment (at original cost) in
such stock, obligations and securities do not cause a violation of
any covenants contained in Section 7.10 of this Agreement and no
Default or Event of Default would exist hereunder;
(h) make or permit to remain outstanding any other loan or
advance, investments or contingent liabilities in an aggregate
amount not to exceed $100,000 at any time outstanding; (i) permit
to remain outstanding certain promissory notes of the original
management shareholders of the Holding Company in an aggregate
amount not to exceed $800,000; and (j) permit to remain
outstanding loans, investments and extensions of credit by and
between the Borrower and the Guarantors incurred in connection with
the Project Bond Financing.
SECTION VIII.5 Merger and Sale of Assets. Enter into or permit any
Subsidiary to enter into any transaction of merger, consolidation,
pooling of interest, joint venture, syndicate or other combination
with any other Person or sell, lease, transfer or otherwise dispose
(except for any involuntary transfer through the operation of
eminent domain) or permit any Subsidiary to sell, lease, transfer
or otherwise dispose (except for any involuntary transfer through
the operation of eminent domain) of all or a substantial part of
its assets (whether now owned or hereafter acquired) in any single
transaction or series of related transactions, to any Person,
except that:
(a) the Borrower may merge with any other United States company,
provided that the Borrower shall be the continuing or surviving
Person;
(b) any Subsidiary (other than the Borrower) may merge with the
Borrower, provided that the Borrower shall be the continuing or
surviving entity, or with any one or more other Subsidiaries;
(c) any Subsidiary (other than the Borrower) may sell, lease or
otherwise dispose of any of its assets to the Borrower or another
Subsidiary; and (d) Borrower or any Subsidiary may sell or
dispose of any obsolete or worn-out asset in an aggregate fair
market value not to exceed $500,000 in any fiscal year.
SECTION VIII.6 Issuance of Stock or Partnership Interest by
Subsidiaries. Permit any Subsidiary (either directly or indirectly
by the issuance of rights or options for, or securities convertible
into such shares) to issue, sell or dispose of any shares of its
stock of any class (other than directors' qualifying shares, if
any) or partnership interest except to the Guarantors, the Borrower
or another Subsidiary.
SECTION VIII.7 Sale and Lease-Back. Except for the Project Bond
Financing, enter into or permit any Subsidiary to enter into any
arrangement, with any lender or investor or under which such lender
or investor is a party, providing for the leasing by the
Guarantors, the Borrower or any of their respective Subsidiaries of
real or personal property, used by the Guarantors, the Borrower or
any of their respective Subsidiaries in the operations of the
Guarantors, the Borrower or any Subsidiary, which has been or is
sold or transferred by the Guarantors, the Borrower or any
Subsidiary to such lender or investor or to any Person to whom
funds have been or are to be advanced by such lender or investor on
the security of such rental obligations of the Guarantors, the
Borrower or such Subsidiary.
SECTION VIII.8 Sale or Discount of Receivables. Sell or permit any
Subsidiary to sell with recourse or discount or otherwise sell for
less than the face value thereof, any of its notes or account
receivables other than the sale, in the ordinary course of
business, of defaulted receivables for purposes of collection, and
in connection with non-recourse factoring arrangements.
SECTION VIII.9 Compliance with ERISA. Take or fail to take, nor
permit any ERISA Affiliate to take or fail to take, any action with
respect to a Plan including, but not limited to (i) establishing
any Plan, (ii) amending any Plan, (iii) terminating or withdrawing
from any Plan, or (iv) incurring an amount of unfunded benefit
liabilities, as defined in Section 4001(a)(18) of ERISA, or any
withdrawal liability under Title IV of ERISA, where such action or
failure could have a material adverse effect on the financial
condition, properties, business, results of operations or prospects
of the Guarantors, the Borrower or any Subsidiary, result in a lien
on the property of the Guarantors, the Borrower or any Subsidiary,
or require the Guarantors, the Borrower or any Subsidiary to
provide any security.
SECTION VIII.10 Activities of Guarantors. With respect to the
Guarantors, engage in any business activity or own any material
asset or incur any Debt other than (i) those business activities
engaged in and assets owned and Debt existing on the date of this
Agreement, including the Debt incurred in connection with the
Project Bond Financing, and (ii) except as contemplated by this
Agreement.
SECTION VIII.11 Executive Offices. Without thirty (30) days
prior notice to the Agent, transfer executive offices, change
corporate name or location of records. SECTION VIII.12
Prepayment of Debt. Prepay any Debt incurred pursuant to Section
8.03(g) hereof or enter into any amendment thereto which would
cause the provisions thereof to be materially more onerous to the
Borrower Guarantors or any of them as determined by the Required
Banks.
SECTION VIII.13 Amendment of Partnership Agreement. Enter into
any amendment of the Agreement of Limited Partnership of Borrower.
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES SECTION IX.1
Events of Default. Any one or more of the following shall
constitute an Event of Default hereunder:
(a) The Borrower fails to pay when due (i) any payment of
principal, or (ii) interest due on any of the Notes or any other
sum payable hereunder within five (5) Business Days after the due
date hereof; or (b) Any representation or warranty contained
herein or deemed to have been made hereunder or made by or
furnished on behalf of the Guarantors or the Borrower in connection
herewith or in connection with any other Loan Document shall be
false or misleading in any material respect as of the date made or
deemed to have been made; or
(c) Any of the Guarantors or the Borrower fails to perform or
observe any covenant, term or condition contained in Article VII or
Article VIII of this Agreement; provided, however, with respect to
Sections 7.01(ii) and (iii), 7.02, 7.03, 7.04, 7.06, 7.07, 7.09(j),
(k), (l), (m), 8.01, 8.03 and 8.09, such failure shall not
constitute an Event of Default hereunder if remedied within 30 days
after the occurrence thereof; or
(d) Any of the Guarantors or the Borrower fails to perform or
observe any other covenant or agreement of this Agreement not
specifically referred to elsewhere in this Section 9.01 and such
failure shall continue for more than 30 calendar days or fails to
perform or observe any covenant or agreement contained in any other
Loan Document (subject to any applicable grace period allowed
therein); or
(e) Any of the Guarantors, the Borrower or any of their respective
Subsidiaries (i) defaults in any payment of principal or interest
on any other obligation for money borrowed (or any obligation under
a capital lease, any obligation under a conditional sale or other
title retention agreement, any obligation issued or assumed as full
or partial payment for property whether or not secured by a
purchase money mortgage, or any obligation under notes payable or
drafts accepted representing extensions of credit) in an aggregate
amount in excess of $500,000, beyond any period of grace provided
with respect thereto, or (ii) fails to perform or observe any other
agreement, term or condition contained in any agreement under which
any obligation described in clause (i) is created (or if any other
event shall occur and be continuing thereunder) and the effect of
such failure or other event under this subparagraph (ii) is to
cause such obligation to become due prior to any stated maturity;
or
(f) Any of the Guarantors, the Borrower or any Subsidiary fails to
pay its debts generally as they become due or shall admit in
writing its inability to pay its debts generally; or (g) Any of
the Guarantors, the Borrower or any Subsidiary shall make or take
any action to make an assignment for the benefit of creditors,
petition or take any action to petition any tribunal for the
appointment of a custodian, receiver or any trustee for it or a
substantial part of its assets, or shall commence or take any
action to commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation or debtor relief law or statute of any jurisdiction,
whether now or hereafter in effect including, without limitation,
the Bankruptcy Code; or, if there shall have been filed any such
petition or application, or any such proceeding shall have been
commenced against it, in which an order for relief is entered which
remains unstayed and in effect for more than 30 days; or any of the
Guarantors, the Borrower or any Subsidiary by any act or omission
shall indicate its consent to, approval of or acquiescence in any
such petition, application or proceeding or order for relief or the
appointment of a custodian, receiver or any trustee for it or any
substantial part of any of its properties, or shall suffer to exist
any such custodianship, receivership or trusteeship; or any
corporate action is taken by any of the Guarantors, the Borrower or
any Subsidiary for the purpose of effecting any of the foregoing;
or
(h) Any of the Guarantors, the Borrower or any Subsidiary shall
have concealed, removed, or permitted to be concealed or removed,
any part of its property, with intent to hinder, delay or defraud
its creditors or any of them, or made or suffered a transfer of any
of its property with such intention which may be fraudulent under
any bankruptcy, fraudulent conveyance or similar law; or
(i) Any order, judgment or decree is entered in any proceedings
against any of the Guarantors or the Borrower decreeing the
dissolution of any of the Guarantors or the Borrower and such
order, judgment or decree remains unstayed and in effect for more
than 60 days; or (j) Any order, judgment or decree is entered
in any proceedings against any of the Guarantors, the Borrower or
any of their respective Subsidiaries decreeing a split-up of the
Guarantors, the Borrower or such Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets represent a
substantial part, of the consolidated assets of the Holding Company
and its Subsidiaries (determined in accordance with generally
accepted accounting principles) or which requires the divestiture
of assets or stock of a Subsidiary, and such order, judgment or
decree remains unstayed and in effect for more than 30 days; or
(k) A judgment or order for the payment of money in an amount in
excess of $1,000,000 or otherwise materially adverse to the
business, financial condition, results of operations or prospects
of any of the Guarantors, the Borrower and its Subsidiaries taken
as a whole is rendered against any of the Guarantors, the Borrower
or any Subsidiary and either (i) enforcement proceedings shall not
have been dismissed by any creditor upon such judgment or order by
the tenth day prior to the sale of any asset pursuant thereto, or
(ii) there shall be any period of 30 consecutive days during which
a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(l) An "Event of Default" occurs under any other Loan Document,
including without limitation, the Letter of Credit Agreement, the
Deed of Trust, the Security Agreement and the Pledge Agreement; or
(m) Any Guarantor or Affiliate Guarantor shall breach any
representation, warranty or covenant contained in, or withdraws,
terminates, or disclaims liability under, the Guaranty or the
Affiliate Guaranty, as the case may be; or (n) The Holding
Company shall cease to own and control, directly or indirectly, at
least 51% (on a fully diluted basis) of the issued and outstanding
common stock of DFI entitled to vote for the election of members of
the board of directors of DFI or the Holding Company shall cease to
own and control directly or indirectly all of the partnership
interests of the Borrower; or
(o) (i) Any person or group (within the meaning of Rule 13d-5 of
the Securities and Exchange Commission as in effect on the date
hereof) shall become the owner, beneficially or of record, of
shares representing more than 50% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of
the Holding Company; or (ii) Any person or group (within the
meaning of Rule 13d-5 of the Securities and Exchange Commission as
in effect on the date hereof) shall, pursuant to one or more
transactions for which the prior approval of the board of directors
of the Holding Company has been obtained, become the owner,
beneficially or of record, of shares representing more than 30% of
the aggregate ordinary voting power represented by the issued and
outstanding capital stock of the Holding Company; or
(iii) Any person or group (within the meaning of Rule 13d-5 of the
Securities and Exchange Commission as in effect on the date hereof)
shall (a) other than pursuant to one or more transactions for which
the prior approval of the board of directors of the Holding Company
has been obtained, become the owner, beneficially or of record, of
shares representing more than 30% of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of
the Holding Company (the date on which the Holding Company becomes
aware that such person or group owns shares representing more than
30% of such aggregate voting power, the "Trigger Date") and (b)
continue to be the owner, beneficially or of record, of shares
representing more than 30% of such aggregate voting power on the
earlier of (x) the date, if any, on which the board of directors of
the Holding Company approves the transaction or transactions
pursuant to which such person or group became the owner,
beneficially or of record, of shares representing more than 30% of
such aggregate voting power and (y) the date that is 30 days
following the Trigger Date; or
(iv) There shall occur during any period a change in the board of
directors of the Holding Company pursuant to which the individuals
who constituted the board of directors of the Holding Company at
the beginning of such period (together with any other director
whose election by the board of directors of the Holding Company (or
whose nomination for election by the stockholders of the Holding
Company) was approved by a vote of at least two-thirds of the
directors then in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the directors of the Holding Company in office at the
end of such period; or
(p) DFI shall cease to be the general partner of the Borrower; or
(q) the Transaction shall be set aside or penalties shall be
imposed on the Borrower or any Guarantor as a result thereof, which
in either case, have a material adverse effect on the business,
properties or financial condition of the Consolidated Companies.
SECTION IX.2 Remedies on Default. (a) Upon the occurrence
and during the continuation of an Event of Default (other than an
Event of Default described in Section 9.01(g)), the Agent shall, at
the option and upon the request of the Required Banks, or may, with
the consent of the Required Banks (i) terminate all obligations of
the Banks to the Borrower, including, without limitation, all
obligations to make Advances under this Agreement, (ii) declare the
Notes, including, without limitation, principal, accrued interest
and costs of collection (including, without limitation, reasonable
attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceedings) immediately
due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are expressly waived.
(b) Upon the occurrence of an Event of Default under Section
9.01(g), (i) all obligations of the Banks to the Borrower,
including, without limitation, all obligations to make Advances
under this Agreement, shall terminate automatically and (ii) the
Notes, including, without limitation, principal, accrued interest
and costs of collection (including, without limitation, reasonable
attorneys' fees if collected by or through an attorney at law or in
bankruptcy, receivership or other judicial proceedings) shall be
immediately due and payable, without presentment, demand, protest,
or any other notice of any kind, all of which are expressly waived.
(c) Upon the occurrence of an Event of Default and acceleration of
the Notes as provided in (a) or (b) above, the Banks and the Agent,
or any of them, may pursue any remedy available under this
Agreement, under the Notes, or under any other Loan Document, or
available at law or in equity, all of which shall be cumulative.
The order and manner in which the rights and remedies of the Banks
under the Loan Documents and otherwise may be exercised shall be
determined by the Required Banks.
(d) All payments with respect to this Agreement received by the
Agent and the Banks, or any of them, after the occurrence of an
Event of Default and acceleration of the Notes, shall be applied
first to the costs and expenses (including attorneys' fees and
disbursements) incurred by the Agent, acting as Agent, and the
Banks as a result of the Default, and thereafter paid pro rata to
the Banks in the same proportion that the aggregate of the unpaid
principal amount owing on the Notes to each Bank, plus accrued and
unpaid interest thereon, bears to the aggregate of the unpaid
principal amount owing on all the Notes to all of the Banks, plus
accrued and unpaid interest thereon. Regardless of how each Bank
may treat the payments for the purpose of its own accounting, for
the purpose of computing the Borrower's obligations hereunder and
under the Notes, payments shall be applied first, to the costs and
expenses incurred by the Agent, acting as Agent, and the Banks as
a result of the Default, as set forth above, second, to the payment
of accrued and unpaid fees of the Agent and the Banks, third, to
the payment of accrued and unpaid interest on the Notes, to and
including the date of such application (ratably according to the
accrued and unpaid interest on the Borrowings), fourth, to the
ratable payment of the unpaid principal of the Notes, fifth, to the
payment of all other amounts then owing to the Agent or the Banks
under the Loan Documents, and sixth, to the Borrower. No
application of the payments will cure any Event of Default or
prevent acceleration, or continued acceleration, of amounts payable
under the Loan Documents or prevent the exercise, or continued
exercise, of rights or remedies of the Banks hereunder or under
applicable law.
ARTICLE X THE AGENT SECTION X.1 Appointment and
Authorization. Each Bank hereby designates Trust Company Bank as
Agent to act as herein specified. Each Bank hereby irrevocably
authorizes, and each holder of any Note by the acceptance of a Note
shall be deemed irrevocably to authorize, the Agent to take such
action on its behalf under the provisions of this Agreement and the
Notes and any other instruments and agreements referred to herein
and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the
Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto. The Agent may perform any of its
duties hereunder by or through its agents or employees.
SECTION X.2 Nature of Duties of the Agent. The Agent shall have
no duties or responsibilities except those expressly set forth in
this Agreement. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable for any action taken
or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful
misconduct. The Agent shall not have by reason of this Agreement
a fiduciary relationship in respect of any Bank; and nothing in
this Agreement, expressed or implied, is intended to or shall be so
construed as to impose upon the Agent any obligations in respect of
this Agreement except as expressly set forth herein. The Agent
agrees to give each Bank prompt notice of the Agent's receipt from
the Borrower of any notice under this Agreement.
SECTION X.3 Lack of Reliance on the Agent. (a) Each Bank
agrees that, independently and without reliance upon the Agent, any
other Bank, or the directors, officers, agents or employees of the
Agent or of any other Bank, each Bank, to the extent it deems
appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs
of the Borrower and its Subsidiaries in connection with the taking
or not taking of any action in connection with this Agreement and
the other Loan Documents, including the decision to enter into this
Agreement, and (ii) its own appraisal of the creditworthiness of
the Borrower and its Subsidiaries, and, except as expressly
provided in this Agreement, the Agent shall have no duty or
responsibility, either initially or on a continuing basis, to
provide any Bank with any credit or other information with respect
thereto, whether coming into its possession before the making of
any Advance or at any time or times thereafter.
(b) The Agent shall not be responsible to any Bank for any
recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered
in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Agreement or the Notes or the financial
condition of the Borrower or its Subsidiaries or be required to
make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or the
Notes, or the financial condition of the Borrower or its
Subsidiaries, or the existence or possible existence of any Default
or Event of Default.
SECTION X.4 Certain Rights of the Agent. (a) If the Agent
shall request instructions from the Required Banks with respect to
any act or action (including the failure to act) in connection with
this Agreement, the Agent shall be entitled to refrain from such
act or taking such action unless and until the Agent shall have
received instructions from the Required Banks and the Agent shall
not incur liability to any Person by reason of so refraining
provided that nothing contained in this sentence shall affect any
express rights of the Borrower set forth herein. Without limiting
the foregoing, no Bank shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining
from acting hereunder in accordance with the instructions of the
Required Banks; provided, however, that the Agent shall not be
required to act or not act in accordance with any instructions of
the Required Banks if to do so would expose the Agent to liability
in its capacity as Agent, or would be contrary to any Loan Document
or to applicable law.
(b) The Agent may assume that no Event of Default has occurred and
is continuing, unless the Agent has received notice from the
Borrower stating the nature of the Event of Default, or has
received notice from a Bank stating the nature of the Event of
Default and that such Bank considers the Event of Default to have
occurred and to be continuing.
(c) If the Agent may not, pursuant to Section 10.04(b), assume
that no Event of Default has occurred and is continuing, the Agent
shall give notice thereof to the Banks and shall act or not act
upon the instructions of the Required Banks, provided that the
Agent shall not be required to act or not act if to do so would
expose the Agent to personal liability or would be contrary to any
Loan Document or to applicable law, and provided further, that if
the Required Banks fail, for five days after the receipt of notice
from the Agent, to instruct the Agent, then the Agent, in its
discretion, may act or not act as it deems advisable for the
protection of the interests of the Banks and shall be fully
protected in so acting.
SECTION X.5 Liability of the Agent. Neither the Agent nor any
of its respective directors, officers, agents, or employees shall
be liable to the Banks for any action taken or not taken by them
under or in connection with the Loan Documents, except for their
own gross negligence or willful misconduct. Without limitation on
the foregoing, the Agent and its respective directors, officers,
agents, and employees:
(a) may treat the payee of any Note as the holder thereof until
the Agent receives notice of the assignment or transfer thereof in
form satisfactory to the Agent, signed by the payee and may treat
each Bank as the owner of that Bank's interest in the obligations
due to the Bank for all purposes of this Agreement until the Agent
receives notice of the assignment or transfer thereof, in form
satisfactory to the Agent, signed by that Bank;
(b) may consult with legal counsel, in-house legal counsel,
independent public accountants, in-house accountants and other
professionals, or other experts selected by it with reasonable
care, or with legal counsel, independent public accountants, or
other experts for the Borrower, and shall not be liable for any
action taken or not taken by it or them in good faith in accordance
with the advice of such legal counsel, independent public
accountants, or experts;
(c) will not be responsible to any Bank for any statement,
warranty, or representation made in any of the Loan Documents or in
any notice, certificate, report, request, or other statement
(written or oral) in connection with any of the Loan Documents
except where the Agent has made a certification in its capacity as
Agent as required under the terms of this Agreement, not as a
conduit of information provided by the Borrower, any Guarantor or
any party on their behalf, and such certification is grossly
negligent or the product of willful misconduct; provided, however,
each of the Banks acknowledges and agrees that it has made its own
independent credit analysis in deciding whether or not to enter
into this Agreement and is not relying on any certification of the
Agent;
(d) except to the extent expressly set forth in the Loan
Documents, will have no duty to ascertain or inquire as to the
performance or observance by the Borrower or any other Person of
any of the terms, conditions, or covenants of any of the Loan
Documents or to inspect the property, books, or records of the
Borrower or any Subsidiary or other Person;
(e) will not be responsible to any Bank for the due execution,
legality, validity, enforceability, genuineness, effectiveness,
sufficiency, or value of any Loan Document, any other instrument or
writing furnished pursuant thereto or in connection therewith by or
on behalf of the Borrower, the Guarantors or any other Bank;
(f) will not incur any liability by acting or not acting in
reliance upon any Loan Document, notice, consent, certificate,
document, statement, telex, telecopier message or other instrument
or writing believed by it or them to be genuine and to have been
signed, sent or made by the proper Person except to the extent that
such reliance is grossly negligent or the product of willful
misconduct; and
(g) will not incur any liability for any arithmetical error in
computing any amount payable to or receivable from any Bank
hereunder, including, without limitation, payment of principal and
interest on the Notes, Advances, and other amounts; provided that
promptly upon discovery of such an error in computation, the Agent,
the Bank, and (to the extent applicable) the Borrower shall make
such adjustments as are necessary to correct such error and to
restore the parties to the position that they would have occupied
had the error not occurred.
SECTION X.6 Indemnification. Each Bank shall, ratably in
accordance with the respective outstanding principal amount of its
Advances, indemnify and hold the Agent and its directors, officers,
agents, and employees harmless against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements of any kind or nature whatsoever
(including, without limitation, attorneys' fees and disbursements
other than fees of in-house counsel to the Banks) that may be
imposed on, incurred by, or asserted against it or them in any way
relating to or arising out of the Loan Documents (other than losses
incurred by reason of the failure by the Borrower to pay the
obligations due to the Banks hereunder or under the Notes) or any
action taken or not taken by it as Agent thereunder, except for the
Agent's gross negligence or willful misconduct. Without limitation
of the foregoing, each Bank shall reimburse the Agent upon demand
for that Bank's ratable share of any cost or expense incurred by
the Agent in connection with the negotiation, preparation,
execution, delivery, administration, amendment, waiver,
refinancing, restructuring, reorganization (including a bankruptcy
reorganization), or enforcement of the Loan Documents, to the
extent that the Borrower is required to pay that cost or expense
but fails to do so upon demand.
SECTION X.7 Agent and Affiliates. SunTrust Bank, Atlanta (and
each successor Agent) has the same rights and powers under the Loan
Documents as any other Bank and may exercise the same as though it
were not the Agent; and the term "the Banks" or "Bank" includes
SunTrust Bank, Atlanta in its individual capacity. SunTrust Bank,
Atlanta (and each successor Agent) and its Affiliates and
Subsidiaries may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the
Borrower and any Affiliate of the Borrower, as if it were not the
Agent and without any duty to account therefor to the Banks.
SunTrust Bank, Atlanta (and each successor Agent) need not account
to any other Bank for any monies received by it for reimbursement
of its costs, expenses and fees as the Agent hereunder, or for any
monies received by it in its capacity as a Bank hereunder, except
as otherwise provided herein. This Agreement shall not be deemed
to constitute a joint venture or partnership among the Banks.
SECTION X.8 Successor Agent. The Agent may resign as such at
any time by written notice to the Borrower and the Banks, to be
effective upon a successor's acceptance of appointment as Agent.
In such event, the Required Banks shall appoint a successor Agent
or Agents, who must be from among the Banks and acceptable to the
Borrower; provided, that the Agent shall be entitled to appoint a
successor Agent acceptable to the Borrower from among the Banks,
subject to acceptance of appointment by that successor Agent, if
the Required Banks have not appointed a successor Agent within
thirty (30) calendar days after the date the Agent gave notice of
resignation or was removed. Upon a successor's acceptance of
appointment as Agent, the successor will thereupon succeed to and
become vested with all the rights, powers, privileges, and duties
of the Agent under the Loan Documents, and the resigning Agent will
thereupon be discharged from its duties and obligations thereafter
arising under the Loan Documents.
SECTION X.9 Agent's Fees. The Borrower shall pay the Agent for
its own account fees in the amounts and at the times previously
agreed upon in writing between the Borrower and the Agent.
ARTICLE XI MISCELLANEOUS SECTION XI.1 No Waiver. No
delay or failure on the part of the Agent or any Bank or any holder
of any of the Notes in the exercise of any right, power or
privilege granted under this Agreement, under any other Loan
Document, or available at law or in equity, shall impair any such
right, power or privilege or be construed as a waiver of any Event
of Default or any acquiescence therein. No single or partial
exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege. No waiver
shall be valid against the Banks unless made in writing and signed
by the Agent, and then only to the extent expressly specified
therein.
SECTION XI.2 Notices. Unless otherwise provided herein, all
notices, requests and other communications provided for hereunder
shall be in writing (including bank wire, telecopy or similar
teletransmission or writing) and shall be given at the following
addresses:
(1) If to the Banks, at the address specified opposite each
Bank's signature below
(2) If to the Agent, SunTrust Bank, Atlanta
25 Park Place
Atlanta, Georgia 30303
Attention: Raymond King
Telephone: 404/230-5162
Telecopy: 404/588-8505
(3) If to Borrower, Dyersburg Fabrics Limited
Partnership, I
c/o Dyersburg Fabrics Inc.
1315 East Phillips Street
Dyersburg, Tennessee 38024
Attention: Mr. Jerome Wiggins
Telephone: 901/285-2323
Telecopy: 901/285-2323 ext. 284
(4) If to any Guarantor, Dyersburg Corporation
1315 East Phillips Street
Dyersburg, Tennessee 38024
Attention: Mr. Jerome Wiggins
Telephone: 901/285-2323
Telecopy: 901/285-2323 ext. 284
Any such notice, request or other communication shall be effective
(i) if given by mail, upon the earlier of receipt or the fifth
Business Day after such communication is deposited in the United
States mails, registered or certified, with first class postage
prepaid, addressed as aforesaid or (ii) if given by any other means
(including, without limitation, by air courier), when delivered at
the address specified herein. The Borrower, the Guarantors, the
Agent, or any Bank may change its address for notice purposes by
notice to the other parties in the manner provided herein.
SECTION XI.3 Governing Law. This Agreement and all other Loan
Documents shall be governed by and interpreted in accordance with
the laws of the State of Georgia. SECTION XI.4 Survival of
Representations and Warranties. All representations and warranties
contained herein or made by or furnished on behalf of the
Guarantors and the Borrower in connection herewith shall survive
the execution and delivery of this Agreement and all other Loan
Documents. SECTION XI.5 Descriptive Headings. The descriptive
headings of the several sections of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
SECTION XI.6 Severability. If any part of any provision
contained in this Agreement or in any other Loan Document shall be
invalid or unenforceable under applicable law, said part shall be
ineffective to the extent of such invalidity only, without in any
way affecting the remaining parts of said provision or the
remaining provisions. SECTION XI.7 Time is of the Essence.
Time is of the essence in interpreting and performing this
Agreement and all other Loan Documents.
SECTION XI.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall constitute one and
the same instrument. SECTION XI.9 Payment of Costs. The Borrower
shall pay all costs, expenses, taxes and fees (i) incurred by the
Agent in connection with the preparation, execution and delivery of
this Agreement and all other Loan Documents including, without
limitation, the costs and professional fees of counsel for the
Agent, King & Spalding, whether or not the transaction contemplated
hereby shall be consummated, and any and all stamp, intangible or
other taxes that may be payable or determined in the future to be
payable in connection therewith; (ii) incurred by the Agent in
connection with administration of the Borrowings and the Loan
Documents in accordance with the provisions thereof and the
preparation, execution and delivery of any waiver, amendment or
consent by the Banks or the Agent relating to the Loan Documents,
(other than a waiver or amendment requested by any Bank) including,
without limitation, the costs and professional fees of counsel for
the Agent; and (iii) incurred by the Agent and any of the Banks in
enforcing the Loan Documents, including, without limitation,
reasonable attorneys' fees of counsel for the Agent and the Banks.
SECTION XI.10 Successors and Assigns. This Agreement shall bind
and inure to the benefit of the Guarantors, the Borrower and the
Banks, and their respective successors and assigns (with the
exception of the participations described below, however, the Banks
shall have no right to assign their interests herein without the
prior consent of the Borrower); provided, however, none of the
Guarantors or the Borrower shall have no right to assign its rights
or obligations hereunder to any Person. Notwithstanding anything
in this Agreement to the contrary, the Banks shall have the right,
but shall not be obligated, to sell participations in the loans
made pursuant hereto to affiliates of the Banks, other banks,
financial institutions and investors; provided, however, that any
transferee shall have no rights hereunder.
SECTION XI.11 Cumulative Remedies; No Waiver. The rights, powers,
and remedies of the Agent or any Bank provided herein or in any
other Loan Document are cumulative and not exclusive of any right,
power, or remedy provided by law or equity.
SECTION XI.12 Amendments; Consents. No amendment, modification,
supplement, termination, or waiver of any provision of this
Agreement or any other Loan Document (other than an extension of
the Working Capital Agreement in accordance with its terms or a
termination thereof), and no consent to any departure by the
Guarantors, the Borrower or any Subsidiary therefrom, may in any
event be effective unless in writing signed by the Agent (which the
Agent agrees with the Banks not to sign without the approval of the
Required Banks), and then only in the specific instance and for the
specific purpose given; and without the approval in writing of each
Bank with respect to its Advances, no amendment, modification,
supplement, termination, waiver, or consent may be effective:
(a) to amend or modify the principal of, or the amount of
principal, principal prepayments, or the rate of interest payable
on, any Borrowing or the amount of any Commitment, or the Letter of
Credit; (b) to postpone any date fixed for any payment of
principal of, prepayment of principal of, or any installment of
interest on, any Borrowing or to extend the term of any Commitment
or the Letter of Credit; or (c) to amend or modify the
definitions of "Commitment" or "Required Banks," or the provisions
of Section 11.14 or of this Section 11.12.
Any amendment, modification, supplement, termination, waiver or
consent effected in accordance with this Section 11.12 shall apply
equally to, and shall be binding upon, all Banks and the Agent.
SECTION XI.13 Set-Off. Upon the occurrence and during the
continuation of an Event of Default, each of the Guarantors and the
Borrower authorizes each Bank, without notice or demand, to apply
any indebtedness due or to become due to the Guarantors or the
Borrower from such Bank in satisfaction of any of the indebtedness,
liabilities or obligations of the Guarantors or Borrower under this
Agreement or under any other Loan Document, including, without
limitation, the right to set-off against any deposits or other cash
collateral of the Guarantors or the Borrower held by such Bank.
Such set-off shall be applied as provided in Section 4.04 hereof.
SECTION XI.14 Indemnity. Each of the Guarantors and the Borrower,
jointly and severally agrees to protect, indemnify and save
harmless the Agent and each Bank, and all directors, officers,
employees and agents of the Agent and each Bank, from and against
any and all (i) claims, demands and causes of action of any nature
whatsoever brought by any Person not a party to this Agreement and
arising from or related or incident to this Agreement or any other
Loan Document, (ii) costs and expenses incident to the defense of
such claims, demands and causes of action, including, without
limitation, reasonable attorneys' fees, and (iii) liabilities,
judgments, settlements, penalties and assessments arising from such
claims, demands and causes of action, provided such claims, costs
and liabilities are not proximately caused by such Agent's or
Bank's gross negligence or willful misconduct or breach of this
Agreement. The indemnity contained in this section shall survive
the termination of this Agreement.
SECTION XI.15 Usury. It is the intent of the parties hereto not
to violate any federal or state law, rule or regulation pertaining
either to usury or to the contracting for or charging or collecting
of interest, and the Borrower and the Banks agree that, should any
provision of this Agreement or of the Notes, or any act performed
hereunder or thereunder, violate any such law, rule or regulation,
then the excess of interest contracted for or charged or collected
over the maximum lawful rate of interest shall be applied to the
outstanding principal indebtedness due to the Banks by the Borrower
under this Agreement.
SECTION XI.16 Jurisdiction and Venue. Each of the Guarantors and
the Borrower agrees, without power of revocation, that any civil
suit or action brought against it as a result of any of its
obligations under this Agreement or under any other Loan Document
may be brought against it either in the Superior Court of Fulton
County, Georgia, or in the United States District Court for the
Northern District of Georgia, and each of the Guarantors and the
Borrower hereby irrevocably submits to the jurisdiction of such
courts and irrevocably waives, to the fullest extent permitted by
law, any objections that it may now or hereafter have to the laying
of the venue of such civil suit or action and any claim that such
civil suit or action has been brought in an inconvenient forum, and
each of the Guarantors and the Borrower agrees that final judgment
in any such civil suit or action shall be conclusive and binding
upon it and shall be enforceable against it by suit upon such
judgment in any court of competent jurisdiction.
SECTION XI.17 Construction. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree
that the court interpreting or construing the same shall not apply
a presumption that the terms hereof shall be more strictly
construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party
that itself or through its agents prepared the same, it being
agreed that the Borrower, the Agent, the Banks and their respective
agents have participated in the preparation hereof.
SECTION XI.18 Entire Agreement. This Agreement and the other Loan
Documents executed and delivered contemporaneously herewith,
together with the exhibits and schedules attached hereto and
thereto, constitute the entire understanding of the parties with
respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect
thereto including, without limitation, any loan commitment from the
Agent to the Guarantors or the Borrower, are expressly superseded
hereby. The execution of this Agreement and the other Loan
Documents by the Guarantors and the Borrower was not based upon any
facts or materials provided by the Agent or any Bank, nor were the
Guarantors and the Borrower induced to execute this Agreement or
any other Loan Document by any representation, statement or
analysis made by the Agent or any Bank.
SECTION XI.19 No Novation. This Agreement constitutes a
consolidation, amendment and restatement of the Original Agreement
effective from and after the Closing Date. The execution and
delivery of this Agreement shall not constitute a novation of any
indebtedness or other obligations owing to the Banks or the Agent
based on any facts or events occurring or existing prior to the
execution and delivery of this Agreement.
WITNESS the hand and seal of the parties hereto through their duly
authorized officers, as of the date first above written.
DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a Tennessee limited
partnership
By: DYERSBURG FABRICS INC., its
sole General Partner
By:_______________________________
Paul Hallock
Vice President
Attest:___________________________
Jerome M. Wiggins
Secretary
[CORPORATE SEAL]
DFIC, INC.
By:_______________________________
Paul Hallock
Vice President
Attest:___________________________
Barbara Steen
Secretary
DYERSBURG FABRICS INC.
By:_______________________________
Paul Hallock
Vice President-Finance
Attest:___________________________
Jerome M. Wiggins
Secretary
[CORPORATE SEAL]
DYERSBURG CORPORATION
By:_______________________________
Paul Hallock
Vice President-Finance
Attest:___________________________
Jerome M. Wiggins
Secretary
[CORPORATE SEAL]
SUNTRUST BANK, ATLANTA, individually
and as Agent
Address:
25 Park Place
By:_______________________________
Atlanta, Georgia 30303 Raymond King
Attention: Raymond King Vice President
By:_______________________________
Title:_________________________
Address: NATIONAL CITY BANK, KENTUCKY
101 South Fifth Street
P. O. Box 36000
Louisville, Kentucky 40233
Attention: Cheryl Mennen
By:_______________________________
Title:_______________________
By:_______________________________
Title:_______________________
Address: NBD BANK
NBD Bank
611 Woodward Avenue By:_______________________________
Detroit, Michigan 48226
Title:_______________________
Attention: Kimberly Zazula
By:_______________________________
Title:_______________________
Address: THE BANK OF TOKYO-MITSUBISHI, LTD.,
ATLANTA AGENCY
The Bank of Tokyo-Mitsubishi,
Ltd., Atlanta Agency
Georgia Pacific Center,
Suite 4970
133 Peachtree Street
Atlanta, Georgia 30303
By:_______________________________
Attention: Richard Davis
Title:_________________________
Address: WACHOVIA BANK OF GEORGIA, N.A.
Wachovia Bank of Georgia,
N.A.
191 Peachtree Street, N.E.
29th Floor
Atlanta, Georgia 30303
By:_______________________________
Attention: Dee O'Dell
Title:_________________________
EXHIBIT A
SECOND
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
April __, 1996 $_______________
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, DYERSBURG FABRICS LIMITED
PARTNERSHIP, I, a Tennessee limited partnership (the "Borrower"),
promises to pay to the order of ____________________, a
____________ banking corporation (the "Bank") at the principal
office of SunTrust Bank, Atlanta (the "Agent") at One Park Place,
Atlanta, Georgia 30303, or at such other place as the holder hereof
may designate by notice in writing to Borrower, in immediately
available funds in lawful money of the United States of America, on
the maturity date of this Second Amended and Restated Revolving
Credit Note (the "Termination Date") as set forth in that certain
Second Amended and Restated Reducing Revolving Credit Agreement
dated as of even date herewith (as hereafter amended, supplemented
or modified, the "Agreement") by and among the Borrower, Dyersburg
Corporation, a Tennessee corporation, Dyersburg Fabrics Inc., a
Tennessee corporation, DFIC, Inc., a Delaware corporation
("Guarantors"), SunTrust Bank, Atlanta, individually and as Agent,
Bank and various other lenders, the lesser of (i) the principal sum
of ______________ AND NO/100 DOLLARS ($__________), or (ii) so much
thereof as shall have been from time to time disbursed hereunder in
accordance with the Agreement and not theretofore repaid, as shown
on the grid schedule attached hereto (the "Grid Schedule").
In addition to principal, Borrower agrees to pay interest on the
principal amounts disbursed hereunder from time to time from the
date of each disbursement until paid at such rates of interest per
annum and upon such dates as provided for in the Agreement.
Interest shall accrue on the outstanding principal balance from the
date hereof up to and through the date on which all principal and
interest hereunder is paid in full, and shall be computed on the
basis of the actual number of days elapsed in a 360-day year. Such
interest is to be paid to Agent at its main office in Atlanta,
Georgia.
This Second Amended and Restated Revolving Credit Note ("Note")
evidences a revolving credit loan incurred pursuant to the terms
and conditions of the Agreement to which reference is hereby made
for a full and complete description of such terms and conditions.
All capitalized terms used in this Note shall have the same
meanings as set forth in the Agreement. Upon the occurrence of an
Event of Default, the Bank may terminate its Commitment and the
entire unpaid principal balance advanced hereunder and all accrued
interest may be declared to be or may automatically become
immediately due and payable in the manner and with the effect
provided in the Agreement, and the Bank may thereafter exercise any
of the remedies referred to in the Agreement, any other Loan
Document, or existing under applicable law.
Bank shall at all times have a right of set-off against any deposit
balances of Borrower in the possession of the Bank and the Bank may
apply the same against payment of this Note or any other
indebtedness of Borrower to the Bank. The payment of any
indebtedness evidenced by this Note prior to the Termination Date
shall not affect the enforceability of this Note as to any future,
different or other indebtedness incurred hereunder by the Borrower.
In the event the indebtedness evidenced by this Note is collected
by legal action or through an attorney-at-law, the Bank shall be
entitled to recover from Borrower all costs of collection,
including, without limitation, reasonable attorneys' fees if
collected by or through an attorney-at-law.
Borrower acknowledges that the actual crediting of the amount of
any disbursement under the Agreement to an account of Borrower (as
shown on the Bank's or the Agent's records) or recording such
amount in the Grid Schedule shall, in the absence of manifest
error, constitute presumptive evidence of such disbursement, the
type of Advance comprising such disbursement, and that such Advance
was made and borrowed under the Agreement and, in the case of a
Eurodollar Advance and Fixed Rate Advance, the Interest Period and
rate applicable thereto. Such account records or Grid Schedule
shall constitute, in the absence of manifest error, presumptive
evidence of principal amounts outstanding of Eurodollar Advances,
Base Rate Advances and Fixed Rate Advances and the payments made
under the Agreement at any time and from time to time, provided
that the failure of Bank to record on the Grid Schedule or in such
records the type or amount of any Advance shall not affect the
obligation of the undersigned to repay such amount together with
interest thereon in accordance with this Note and the Agreement.
[This Note is an amendment and restatement and increase of that
certain Amended and Restated Revolving Credit Note dated July 16,
1993 made by Dyersburg Fabrics Inc. in favor of the Bank, which
note has been assumed by the Borrower, and is not being given by
the Borrower or accepted by the Bank in satisfaction of said
indebtedness or as a novation with respect thereto.]
Failure or forbearance of Bank to exercise any right hereunder, or
otherwise granted by the Agreement or by law, shall not affect or
release the liability of Borrower hereunder, and shall not
constitute a waiver of such right unless so stated by Bank in
writing. This Note shall be deemed to be made under, and shall be
construed in accordance with and governed by, the laws of the State
of Georgia. Time is of the essence of this Note.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST
ARE HEREBY WAIVED.
Executed under hand and seal of the Borrower as of the day and year
first above written.
DYERSBURG FABRICS LIMITED
PARTNERSHIP, I, a Tennessee limited
partnership
By: DYERSBURG FABRICS INC., its
sole General Partner
By: _______________________________
Paul Hallock
Vice President-Finance
Attest: ___________________________
Jerome M. Wiggins
Secretary
[CORPORATE SEAL]
GRID SCHEDULE
ADVANCES BEARING INTEREST
AT THE BASE RATE
Unpaid Principal
Bearing Interest
Amount of Amount of at the Above-
Notation
Date Advance Advance Repaid Reference Rate Made
By
$________ $________ $__________
GRID SCHEDULE
ADVANCES BEARING INTEREST AT LIBOR
Unpaid Principal
Bearing Interest
Amount of Amount of at the Above-
Notation
Date Advance Advance Repaid Reference Rate Made
By
$________ $________ $__________
GRID SCHEDULE
ADVANCES BEARING INTEREST AT FIXED RATE
Amount of Unpaid Principal
Advance and Bearing Interest
Interest Amount of at the Above-
Notation
Date Period Advance Repaid Reference Rate
Made By
$________ $________ $__________
EXHIBIT B
FORM OF CLOSING CERTIFICATE
Pursuant to Section 5.01 of the Second Amended and Restated
Reducing Revolving Credit Agreement dated as of April 10, 1996 (the
"Loan Agreement") among DYERSBURG FABRICS LIMITED PARTNERSHIP, I,
a Tennessee limited partnership (the "Borrower"), DYERSBURG
FABRICS INC., a Tennessee corporation, DYERSBURG CORPORATION, a
Tennessee corporation and DFIC, INC., a Delaware corporation
(collectively, the "Guarantors"), SUNTRUST BANK, ATLANTA, formerly
known as Trust Company Bank, individually and as Agent, NBD BANK,
NATIONAL CITY BANK, KENTUCKY, f/k/a, THE FIRST NATIONAL BANK OF
LOUISVILLE, THE BANK OF TOKYO-MITSUBISHI, LTD., ATLANTA AGENCY and
WACHOVIA BANK OF GEORGIA, N.A. (collectively, the "Banks"), the
undersigned officer of the Borrower and the Guarantors hereby
certifies to the Banks as follows (capitalized terms used herein
having the same meanings as assigned to such terms in the Loan
Agreement):
1. All representations and warranties made by the Borrower and
the Guarantors and contained in the Loan Agreement are true and
correct on and as of the date hereof with the same effect as if
made on the date hereof.
2. After giving effect to the initial Advances to be made to the
Borrower pursuant to the Loan Agreement, no Default or Event of
Default will have occurred and be continuing.
3. The conditions precedent set forth in Section 5.01 of the Loan
Agreement have been or will be satisfied prior to or concurrently
with the making of the initial Advances pursuant to the Loan
Agreement.
5. The Transaction has been consummated in accordance with the
terms described in the Loan Agreement and in compliance with all
applicable law. All tangible assets of Dyersburg Fabrics Inc. have
been legally transferred to the Borrower.
This Certificate executed and delivered this ___ day of April,
1996.
____________________________________
Paul Hallock, Vice President-Finance
EXHIBIT C
OPINION OF BORROWER'S COUNSEL
Form of Opinion of Bass, Berry & Sims attached.
EXHIBIT D
SUBSIDIARIES
1. Dyersburg Fabrics Inc., a Tennessee corporation. All capital
stock owned by the Holding Company.
2. United Knitting Acquisition Inc., a Tennessee corporation
("UKAI"). All capital stock owned by DFI.
3. United Knitting Inc., a Tennessee corporation. All capital
stock owned by UKAI.
4. DFIC, Inc., a Delaware corporation. All capital stock owned
by DFI.
5. UKIC, Inc., a Delaware corporation. All capital stock owned
by United Knitting Inc.
6. Dyersburg Fabrics Limited Partnership, Inc., a Tennessee
limited partnership. DFI is the sole general partner and DFIC,
Inc., is the sole limited partner.
7. United Knitting Limited Partnership, Inc., a Tennessee limited
partnership. United Knitting Inc. is the sole general partner and
UKIC, Inc. is the sole limited partner.
EXHIBIT E
LITIGATION
None.
EXHIBIT F
EMPLOYEE BENEFIT PLANS
None.
EXHIBIT G
CONFLICTING AGREEMENTS
None.
EXHIBIT H
TRADEMARKS
Mark Reg. No. Date Status
REDRAH 397,475* 9/8/42 Renewed
(9/8/82 to 9/8/02)
DYERSBURG & DESIGN 762,404** 12/31/63 Renewed
12/31/83 to
12/31/03)
VERS-A-NET 1,327,049*** 3/26/85 Expires
3/26/05
FLEECE-FORCE ****
TUFF-PUFF ****
BAN-PILL ****
DYERSPORT ****
* Trademark held by Trenton Mills, Inc. Certificate of Merger
filed with U.S. Patents & Trademark Office.
** Change of corporate name from Dyersburg Cotton Products, Inc.
to Dyersburg Fabrics Inc. recorded as of December 2, 1969,
Trademark Reel 185, Frames 196-197.
*** Application filed by Enterprise, Incorporated. Registration
issued in the name of Dyersburg Fabrics Inc. Assignment recorded
as of July 13, 1984, Trademark Reel 0471, Frame 606.
**** Application filed. Registration not yet issued.
EXHIBIT I
COMPLIANCE CERTIFICATE
SunTrust Bank, Atlanta as Agent
25 Park Place
Atlanta, Georgia 30303
Attention: Raymond King
Re: Second Amended and Restated Reducing Revolving Credit Loan
Agreement, dated as of April 10, 1996, by and among Dyersburg
Fabrics Limited Partnership, I, Dyersburg Fabrics Inc., Dyersburg
Corporation, DFIC, Inc., SunTrust Bank, Atlanta individually and as
Agent, National City Bank, Kentucky, f/k/a The First National Bank
of Louisville, NBD BANK, and The Bank of Tokyo-Mitsubishi, Ltd.,
Atlanta Agency (the "Loan Agreement")
Gentlemen:
Pursuant to the requirements of Section 7.09 of the
above-referenced Loan Agreement, each of Dyersburg Fabrics Limited
Partnership, I, Dyersburg Corporation, DFIC, Inc. and Dyersburg
Fabrics Inc. hereby certifies that the computations set forth in
Attachment No. 1 hereto are true and accurate computations of the
ratios and other calculations required by the financial covenants
and certain other provisions of the Loan Agreement.
Each of Dyersburg Fabrics Limited Partnership, I, Dyersburg
Corporation, DFIC, Inc. and Dyersburg Fabrics Inc. further
certifies that it is in compliance with such financial covenants
and that no Default or Event of Default (as defined in the Loan
Agreement) has occurred or is continuing.
Very truly yours,
DYERSBURG FABRICS LIMITED
PARTNERSHIP, I, a Tennessee
limited partnership, through its sole general partner
DYERSBURG FABRICS INC.
By:______________________
Title:_____________________
DYERSBURG CORPORATION
By:______________________
Title:_____________________
DYERSBURG FABRICS INC.
By:______________________
Title:_____________________
DFIC, INC.
By:______________________
Title:_____________________
Attachment No. 1 to Compliance Certificate
The Certificate attached hereto is as of _____________ and pertains
to the period from ____________ to ______________. All
calculations are based upon the consolidated financial statements
of Dyersburg Corporation.
$
A) Interest Coverage - Calculated Quarterly
==========
a) Net Income, most recent 12 months __________
b) Income Taxes, most recent 12 months __________
c) Interest Expense, most recent 12 months __________
d) (a+b+c)/c) __________
e) Minimum required __________
f) Default Indicated?
Yes/No
B) Cash Flow Coverage Ratio - Calculated Quarterly
a) Net Income, most recent 12 months __________
b) Depreciation, most recent 12 month __________
c) amortization of Intangibles, most
recent 12 months __________
d) Cash Dividends paid,
most recent 12 months __________
e) Capital Expenditures,
most recent 12 months __________
f) Mandatory amortization of Debt, most
recent 12 months __________
g) (a+b+c+d)/(e+f) __________
h) Minimum required __________
i) Default Indicated:
Yes/No
C) Stockholder's Equity - Calculated Quarterly
a) Required Stockholder's Equity at last
Statement Date __________
b) Net Income since
last Statement Date
(Show Net Loss as -0-) __________
c) 50% of b __________
d) Minimum Stockholder's Equity Required
on Statement Date (a+c) __________
e) Stockholder's Equity at Statement Date __________
f) Default Indicated?
Yes/No
D) Funded Debt to Total Capital -
Calculated Quarterly
a) Total Funded Debt __________
b) Net Worth __________
c) a/(a+b) __________
d) Maximum Allowed __________
e) Default Indicated?
Yes/No
F) Minimum Working Capital - Calculated Annually
a) Current Assets __________
b) Current Liabilities __________
c) (a-b) __________
d) Minimum required $15,000,000
e) Default Indicated? Yes/No
EXHIBIT J
Existing Liens as of Date of Agreement
DATE PLACE FILE NO. SECURED PARTY COLLATERAL
09/22/88 Tennessee 696862 Unisys Finance Computer
Corporation Equipment
09/22/88 Tennessee 697017 Unisys Finance Computer
Corporation Equipment
11/02/89 Dyer County 70376 Unisys Finance Computer
Corporation Equipment
01/02/91 Tennessee 840395 Unisys Finance Computer
Corporation Equipment
11/01/89 Tennessee 709548 Trust Company Bank Gibson County
Facility
01/02/91 Tennessee 840528 Pitney Bowes Credit Manufacturing
Corporation Equipment
11/02/90 Tennessee 824162 Pitney Bowes Credit Manufacturing
Corporation Equipment
08/23/91 Tennessee 910590 Republic Factors Accounts and
Corp. Contract Rights
12/04/91 Tennessee 938855 Lift Truck Sales 2 Forklift
Service Trucks
12/22/92 Tennessee 148763 General Electric Manufacturing
Credit Corporation Equipment
12/22/92 Tennessee 148762 General Electric Manufacturing
Credit Corporation Equipment
01/05/93 Tennessee 152162 General Electric Manufacturing
Credit Corporation Equipment
01/05/93 Tennessee 152161 General Electric Manufacturing
Credit Corporation Equipment
04/23/93 Tennessee 187557 American Business Office
Credit Corporation Equipment
06/09/93 Tennessee 202673 Dyersburg DFI New
Corporation Knitting Facility
02/11/94 Tennessee 279208 BNY Financial Assignment of
Corporation 262657
(Assignee) Accounts and
Contract Rights
11/18/94 Tennessee 372066 American Business Office
Credit Corporation Equipment
12/15/95 Tennessee 501029 Master Lease Div. Office
of Tokai Equipment
12/29/95 Tennessee 504324 First American Manufacturing
National Bank Equipment
02/13/96 Tennessee 518916 First American Manufacturing
National Bank Equipment
<PAGE>
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED
REDUCING REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED REDUCING
REVOLVING CREDIT AGREEMENT (this "Amendment") dated as of June 25,
1996, by and among DYERSBURG FABRICS LIMITED PARTNERSHIP, I, a
Tennessee limited partnership (the "Borrower"), DYERSBURG
CORPORATION, a Tennessee corporation ("Holding Company"), DYERSBURG
FABRICS INC., a Tennessee corporation ("DFI"), DFIC, INC., a
Delaware corporation ("Investment"; Holding Company, DFI and
Investment collectively referred to herein as "Guarantors"),
SUNTRUST BANK, ATLANTA (formerly known as Trust Company Bank), a
Georgia banking corporation, NATIONAL CITY BANK, KENTUCKY, a
national banking association, NBD BANK, an Illinois banking
corporation, THE BANK OF TOKYO-MITSUBISHI, LTD., ATLANTA AGENCY,
the Atlanta Branch of a Japanese banking association and WACHOVIA
BANK OF GEORGIA, N.A., a national banking association
(collectively, the "Banks") and SUNTRUST BANK, ATLANTA, in its
capacity as agent for the Banks (in such capacity, the "Agent");
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the Banks and the Agent are
parties to a certain Second Amended and Restated Reducing Revolving
Credit Agreement dated as of April 10, 1996 (the "Credit
Agreement"; all terms used herein without definition shall have the
meanings ascribed to such terms in the Credit Agreement);
WHEREAS, the Borrower and the Guarantors have requested, and the
Banks and the Agent have agreed, to modify certain financial
covenants set forth in the Credit Agreement, as more particularly
set forth below;
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Section 7.10 of the Credit Agreement is hereby amended by
deleting subsections (a), (b) and (d) thereof in their entirety and
substituting the following in lieu thereof:"(a) Interest Coverage
Ratio. Maintain an Interest Coverage Ratio, calculated as of the
last day of each fiscal quarter for the immediately preceding four
quarters, of no less than 2.50:1.0.(b) Cash Flow Coverage Ratio.
Maintain a Cash Flow Coverage Ratio, calculated as of the last day
of each fiscal quarter for the immediately preceding four fiscal
quarters, of no less than 0.95:1.0.
(d) Leverage Test. Maintain a Leverage Test, calculated on the
last day of each fiscal quarter of the Holding Company, of not more
than the percentage set forth below for the indicated period:
Period Maximum Percentage
December 30, 1995
and thereafter 55%.
2. Each of the Guarantors and the Borrower hereby agrees that
nothing herein shall constitute a waiver by the Banks of any
Default or Event of Default, whether known or unknown, which may
exist under the Credit Agreement. Each of the Guarantors and the
Borrower represents and warrants to the Banks that as of the date
hereof, no Default or Event of Default exists pursuant to the
Credit Agreement which is not expressly waived herein. In
addition, each of the Guarantors and the Borrower acknowledges and
agrees that it has no knowledge of any defenses, counterclaims,
offsets or objections in its favor against the Banks with regard to
any of the obligations due under the terms of the Credit Agreement
as of the date of this Amendment.
3. Except as expressly amended and modified herein, all terms and
covenants and provisions of the Credit Agreement shall remain
unaltered and in full force and effect, and the parties hereto do
expressly ratify and confirm the Credit Agreement as modified
herein. All future references to the Credit Agreement shall be
deemed to refer to the Credit Agreement as amended hereby.
Furthermore, pursuant to the terms of the Working Capital Agreement
and Letter of Credit Agreement, this Amendment shall automatically
amend the provisions of such agreements incorporated by reference
therein.
4. This Amendment shall be effective upon receipt by
the Agent of fully executed counterparts of this Amendment in its
offices in Atlanta, Georgia.
5. This Amendment shall be binding upon and inure to the benefit
of the parties hereto, their respective heirs, successors,
successors-in-titles, and assigns.
6. This Amendment shall be governed by and construed in
accordance with the laws of the State of Georgia, notwithstanding
any principles regarding conflicts of laws thereof.
7. This Agreement sets forth the entire understanding of the
parties with respect to the matters set forth herein, and shall
supersede any prior negotiations or agreements, whether written or
oral, with respect thereto.
8. This Amendment may be executed in any number of counterparts
and by different parties hereto in separate counterparts and may be
delivered by telecopier. Each counterpart so executed and
delivered shall be deemed an original and all of which taken
together shall constitute but one and the same instrument.IN
WITNESS WHEREOF, the parties hereto have executed this Amendment
through their authorized officers as of the date first above
written.
DYERSBURG FABRICS LIMITED
PARTNERSHIP, I, a Tennessee
limited partnership
By: DYERSBURG FABRICS INC., its
sole General Partner
By:
Title:
Attest:
Title:
[CORPORATE SEAL]
DYERSBURG CORPORATION
By:
Title:
Attest:
Title:
[CORPORATE SEAL]
DYERSBURG FABRICS INC.
By:
Title:
Attest:
Title:
[CORPORATE SEAL]
DFIC, INC.
By:
Title:
Attest:
Title:
[CORPORATE SEAL]
SUNTRUST BANK, ATLANTA
By:
Title:
By:
Title:
NATIONAL CITY BANK, KENTUCKY
By:
Title:
NBD BANK
By:
Title:
THE BANK OF TOKYO-MITSUBISHI, LTD.,
ATLANTA AGENCY
By:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Title:
SUNTRUST BANK, ATLANTA, as Agent
By:
Title:
By:
Title:
CONSENT AND RATIFICATION OF AFFILIATE GUARANTORS
Each of the undersigned Affiliate Guarantors acknowledges its
receipt of and consent to the First Amendment to Second Amended and
Restated Reducing Revolving Credit Agreement attached hereto and
incorporated herein by this reference and further acknowledges and
agrees that nothing contained therein shall release, discharge,
modify, change or affect the original liability of the Affiliate
Guarantors under the Affiliate Guaranty and each Affiliate
Guarantor ratifies and affirms the terms and conditions of the
Affiliate Guaranty which remains in full force and effect.
IN WITNESS WHEREOF, each Affiliate Guarantor has executed this
Consent and Ratification under seal as of this 25th day of June,
1996.
UNITED KNITTING, INC.
By:
Jerome M. Wiggins
Treasurer
Attest:
Paul Hallock
Assistant Secretary
[CORPORATE SEAL]
UNITED KNITTING LIMITED PARTNERSHIP, I,
a Tennessee limited partnership
BY: UNITED KNITTING, INC., its sole
General Partner
By:
Jerome M. Wiggins
Treasurer
Attest:
Paul Hallock
Assistant Secretary
[CORPORATE SEAL]
UKIC, INC.
By:
Paul Hallock
Vice President
Attest:
Barbara Steen
Secretary
[CORPORATE SEAL]
<TABLE>
Exhibit 11--Computation of Earnings Per Share
(In thousands except share data)
<CAPTION>
Three Months Ended
June 29, 1996 July 1, 1995
<S> <C> <C>
Average shares
outstanding
Net income $ 13,661 $ 14,196
Earnings per share
of common stock $ 0.28 $ 0.22
Net income $ 3,881 $ 3,065
Nine Months Ended
June 29, 1996 July 1, 1995
Average shares
outstanding
Net income $ 13,905 $ 14,196
Earnings per share
of common stock $ 0.33 $ 0.38
Net income $ 4,605 $ 5,339
The effect of common stock equivalents, consisting of
stock options, calculated using the treasury stock method, was not
dilutive during either of the periods presented.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 805
<SECURITIES> 0
<RECEIVABLES> 49,068
<ALLOWANCES> 1,290
<INVENTORY> 30,340
<CURRENT-ASSETS> 80,048
<PP&E> 120,674
<DEPRECIATION> 51,576
<TOTAL-ASSETS> 209,194
<CURRENT-LIABILITIES> 19,128
<BONDS> 93,339
0
0
<COMMON> 137
<OTHER-SE> 87,766
<TOTAL-LIABILITY-AND-EQUITY> 209,194
<SALES> 136,574
<TOTAL-REVENUES> 136,574
<CGS> 108,290
<TOTAL-COSTS> 124,101
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 100
<INTEREST-EXPENSE> 5,623
<INCOME-PRETAX> 7,883
<INCOME-TAX> 3,278
<INCOME-CONTINUING> 4,605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,605
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
