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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): DECEMBER 19, 1997
PILLOWTEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TEXAS 1-11756 75-2147728
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
4111 MINT WAY, DALLAS, TEXAS 75237
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (214) 333-3225
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
GENERAL
On December 19, 1997, a wholly owned subsidiary ("Newco") of Pillowtex
Corporation ("Pillowtex") merged with and into Fieldcrest Cannon, Inc.
("Fieldcrest") pursuant to an Agreement and Plan of Merger, dated as of
September 10, 1997 (the "Merger Agreement"), among Pillowtex, Newco, and
Fieldcrest. At the effective time (the "Effective Time") of such merger (the
"Merger"), among other things, on the terms set forth in the Merger Agreement
(i) each then-outstanding share of Common Stock, par value $1.00 per share, of
Fieldcrest ("Fieldcrest Common Stock") was converted into the right to receive
total consideration consisting of (a) a cash payment in an amount equal to
$27.00 and (b) 0.269 shares of Common Stock, par value $0.01 per share, of
Pillowtex ("Pillowtex Common Stock"), (ii) each then-outstanding share of $3.00
Series A Convertible Preferred Stock, par value $0.01 per share, of Fieldcrest
was converted into the right to receive total consideration consisting of (a) a
cash payment in an amount equal to $46.15 and (b) 0.4598286 shares of Pillowtex
Common Stock, and (iii) each then-outstanding share of Common Stock, par value
$0.01 per share, of Newco was converted into one share of Common Stock, par
value $0.01 per share, of Fieldcrest (as the surviving corporation in the
Merger). Immediately following the Merger, Pillowtex owned 100% of the
outstanding capital stock of Fieldcrest.
MERGER FINANCING
INTRODUCTION
Pillowtex financed the Merger and, simultaneously with the closing of
the Merger, refinanced certain indebtedness of Pillowtex and Fieldcrest
through a combination of (i) borrowings under new senior revolving credit and
term loan facilities (the "New Pillowtex Bank Facilities"), (ii) the issuance
and sale of shares of Series A Redeemable Convertible Preferred Stock, par
value $0.01 per share, of Pillowtex (the "Pillowtex Preferred Stock"), and
(iii) the issuance and sale of new senior subordinated debt securities (the
"New Pillowtex Senior Subordinated Notes").
NEW PILLOWTEX BANK FACILITIES
The New Pillowtex Bank Facilities consist of (i) a $350.0 million
revolving credit facility (including $55.0 million for standby and commercial
letters of credit and up to $25.0 million for swing line loans) (the
"Revolver") and (ii) a $250.0 million term loan facility (the "Term Loan").
The Term Loan consists of a $125.0 million Facility A Term Loan and a $125.0
million Facility B Term Loan. The Revolver will terminate on December 31,
2003. The Facility A Term Loan and the Facility B Term Loan will begin
scheduled amortization of principal quarterly in arrears commencing in 1999 and
1998, respectively, with final maturities on December 31, 2003 and December 31,
2004, respectively. Simultaneously with the closing of the Merger, Pillowtex
drew fully on the Term Loan and drew approximately $129.9 million of the
Revolver. Pillowtex will initially pay quarterly a commitment fee of 50 basis
points per annum calculated on the unused portion of the Revolver. The
commitment fee could, however, be reduced during future periods depending upon
the ratio of Pillowtex's consolidated indebtedness to earnings before interest,
taxes, depreciation, and amortization ("EBITDA").
The Revolver and the Facility A Term Loan bear interest, at the option
of Pillowtex, at a rate per annum equal to either (i) the LIBOR interbank rate,
adjusted for reserves, plus a margin of up to 225 basis points, or (ii) the
"Base Rate" (which is the higher of (a) the prime rate then in effect and
published by NationsBank of Texas, N.A. and (b) the Federal Funds rate plus
0.5%), plus a margin of up to 75 basis points, subject to adjustments in
accordance with the terms of the New Pillowtex Bank Facilities. The specific
margin in any particular case will depend upon the ratio of Pillowtex's
consolidated indebtedness to EBITDA, as calculated based upon Pillowtex's
quarterly financial statements. The Facility B Term Loan bears interest on a
similar basis, plus an additional margin of 50 basis points, but will not bear
interest at a rate less than the LIBOR interbank rate plus 200 basis points or
the Base Rate plus 50 basis points. The initial interest rates will not be
less than (i) the LIBOR interbank rate plus 200 basis points or the Base Rate
plus 50 basis points for the Revolver and the Facility A Term Loan and (ii) the
LIBOR interbank rate plus 250 basis points or the Base Rate plus 100 basis
points for the Facility B Term Loan, and will not be subject to any change
until the receipt of Pillowtex's March 31, 1998 financial statements.
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The Revolver and the Term Loan are guaranteed by each of the domestic
subsidiaries of Pillowtex, including Fieldcrest and its domestic subsidiaries,
and is secured by first priority liens on all of the capital stock of each
domestic subsidiary of Pillowtex, including Fieldcrest and its domestic
subsidiaries, and by 65% of the capital stock of each foreign subsidiary of
Pillowtex and Fieldcrest. Pillowtex has also granted a first priority security
interest in all of its presently unencumbered and future domestic assets and
properties and all presently unencumbered and future domestic assets and
properties of each of its subsidiaries, including Fieldcrest and its
subsidiaries. The Term Loan is subject to mandatory prepayment from all net
cash proceeds of asset sales (other than sales of assets that are unnecessary
to the business operations of Pillowtex or its subsidiaries, so long as the net
proceeds therefrom are reinvested in productive tangible assets) and debt
issuances by Pillowtex or any of its subsidiaries after the Merger, 50% of the
net cash proceeds of equity issuances by Pillowtex or any of its subsidiaries
after the Merger, and 75% of excess cash flow. All mandatory prepayments will
be applied pro rata between the Facility A Term Loan and the Facility B Term
Loan (and within each facility pro rata) to reduce the remaining installments
of principal.
The documentation governing the New Pillowtex Bank Facilities includes
representations, warranties, and covenants (including financial covenants) that
are usual and customary for credit facilities such as the New Pillowtex Bank
Facilities, and the New Pillowtex Bank Facilities are subject to usual and
customary events of default, including without limitation nonpayment of
principal, interest, or fees, violation of any covenant, inaccurate
representations and warranties, bankruptcy, actual or asserted invalidity of
any loan documents or security interests, change of control, and cross-default
with other material agreements and indebtedness of Pillowtex.
PILLOWTEX PREFERRED STOCK
Introduction. Pursuant to a Preferred Stock Purchase Agreement with
Apollo Investment Fund III, L.P., Apollo Overseas Partners III, L.P., and
Apollo (UK) Partners III, L.P. (collectively "Apollo"), contemporaneously with
the closing of the Merger Pillowtex issued to Apollo 65,000 shares of Pillowtex
Preferred Stock having an aggregate liquidation preference of $65.0 million.
Liquidation Preference; Ranking. Each share of Pillowtex Preferred
Stock will have a liquidation preference of $1,000, plus accrued and unpaid
dividends (the "Liquidation Preference"). The Pillowtex Preferred Stock will
rank senior in right of payment to all common equity stock and all other
classes of preferred stock of Pillowtex (other than parity securities), but
will rank junior in right of payment to all indebtedness of Pillowtex. The
terms of the Pillowtex Preferred Stock will restrict, among other things,
Pillowtex's ability to pay dividends or make certain other restricted payments
on the Pillowtex Common Stock.
Dividends. Subject to the provisions described below, dividends will
accrue on the Pillowtex Preferred Stock from the issue date through and
including December 31, 1999 at a rate per annum equal to 3.0%. However,
Pillowtex may at its option pay dividends in cash during each quarterly period
during calendar years 1998 and 1999 at a rate in excess of 3.0%. Beginning
January 1, 2000, dividends will accrue on the Pillowtex Preferred Stock at the
Applicable Dividend Rate, which is defined as 3.0%, 7.0% or 10.0% depending
upon Pillowtex's 1999 Pro Forma EPS as set forth in the following table:
<TABLE>
<CAPTION>
Applicable Dividend
Rate at
1999 Pro Forma EPS January 1, 2000
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<S> <C>
$2.70 or greater 3.0% per annum
$2.35 to $2.69 7.0% per annum
$2.34 or less 10.0% per annum
</TABLE>
The term "1999 Pro Forma EPS" is defined as Pillowtex's diluted
earnings per share as included in its audited financial statements for the
fiscal year ending January 1, 2000, as adjusted to exclude the after-tax effect
of (i) any change in generally accepted accounting principles from September
5, 1997, other than the effects of Financial Accounting Standards Board
Statement No. 128, (ii) extraordinary gains or losses, and (iii) gain on sale
of assets having a fair market value in excess of $1.0 million ("1999 EPS"),
calculated on a pro forma basis assuming (a) the dividend rate on the Pillowtex
Preferred Stock for calendar 1997 and calendar 1998 was (1) 3.0% per annum if
1999 EPS is equal to or greater than $2.35 or (2) 10.0% per annum if 1999 EPS
is less than $2.35; (b) the dividend rate
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on the Pillowtex Preferred Stock for calendar 1999 was (1) 3.0% per annum if
1999 EPS is greater than or equal to $2.70, (2) 7.0% per annum if 1999 EPS is
greater than or equal to $2.35 but less than $2.70, and (3) 10.0% per annum if
1999 EPS is less than $2.35; and (c) any incremental dividends included
pursuant to clauses (a) and (b) which were not paid when due (either in cash or
in shares of Pillowtex Preferred Stock) were paid in additional shares of
Pillowtex Preferred Stock (including the effect of all dividends earned on
unpaid dividends).
In addition to paying dividends from and after January 1, 2000 at the
Applicable Dividend Rate, Pillowtex is required to pay a one-time dividend (a
"Catch Up Dividend") in shares of Pillowtex Preferred Stock in 1999 equal to
the difference between the aggregate amount of dividends paid (whether in cash
or additional shares of Pillowtex Preferred Stock) (the "Aggregate Dividends
Paid") and the aggregate amount of dividends that would have been paid on the
Pillowtex Preferred Stock from the issue date through and including the last
Dividend Payment Date prior to the date on which Pillowtex finally determines
the amount of 1999 Pro Forma EPS ("Aggregate Dividends Owed") assuming (i) the
dividend rate for calendar 1997 and calendar 1998 was (a) 3.0% per annum if
1999 Pro Forma EPS is equal to or greater than $2.35 or (b) 10.0% per annum if
1999 Pro Forma EPS is less than $2.35, (ii) the dividend rate for calendar 1999
was the Applicable Dividend Rate, and (iii) any incremental dividends included
in calculating dividends described in clauses (i) and (ii) which were not paid
when due (either in cash or in shares of Pillowtex Preferred Stock) were paid
in additional shares of Pillowtex Preferred Stock (including the effect of all
dividends earned on unpaid dividends). If the Aggregate Dividends Paid is more
than the Aggregate Dividends Owed, then no Catch Up Dividend will be payable
and an amount equal to the difference between Aggregate Dividends Paid and
Aggregate Dividends Owed will be offset against dividends payable on the next
succeeding Dividend Payment Date or Dividend Payment Dates, as the case may be.
All dividends will be cumulative, whether or not declared, on a daily
basis from the date of issuance and will be payable quarterly, in arrears, on
March 31, June 30, September 30, and December 31 (each a "Dividend Payment
Date"). Dividends (in the form of additional dividends due) will compound
quarterly on all unpaid dividends from the Dividend Payment Date with respect
thereto until the date of payment. At the option of Pillowtex, dividends other
than the Catch Up Dividend will be payable either in cash or in kind (through
the issuance of additional shares of Pillowtex Preferred Stock) for the first
five years after issuance and will be payable only in cash thereafter.
In the event that after the fifth anniversary of the initial issuance
of the Pillowtex Preferred Stock, Pillowtex fails to pay dividends in cash on
the Dividend Payment Date when due, the dividend rate applicable to any period
in which any such dividends remain unpaid will be increased by 0.5% per quarter
for each quarter in which any such dividends remain unpaid (such rate increase,
the "Dividend Increase"). The applicable dividend rate plus the Dividend
Increase applicable to any period will not exceed the lesser of (i) 18.0% per
annum and (ii) the maximum rate permitted by applicable law. After a Dividend
Increase, when Pillowtex pays all accrued and unpaid dividends, and upon the
payment of dividends on the next Dividend Payment Date at the rate in effect
prior to giving effect to any Dividend Increase, the annual dividend rate will
be decreased to the otherwise applicable dividend rate.
Conversion. At the option of the holders thereof, at any time or from
time to time each share of the Pillowtex Preferred Stock will be convertible
into the number of shares of Pillowtex Common Stock as is determined by
dividing (i) the sum of (a) $1,000 and (b) any unpaid dividends on such share
by (ii) an initial conversion price equal to $24.00 per share, subject to
subsequent adjustment in certain circumstances to prevent dilution.
Mandatory Redemption. Each share of Pillowtex Preferred Stock will be
subject to mandatory redemption on June 30, 2008 (the "Mandatory Redemption
Date") at a redemption price equal to $1,000, plus accrued and unpaid
dividends.
Optional Redemption. Pillowtex will have the right to, at any time
and from time to time after the fourth anniversary of the initial issuance of
the Pillowtex Preferred Stock, call all or any portion of the Pillowtex
Preferred Stock for redemption at a redemption price equal to (i) the
Liquidation Preference plus (ii) the product of (a) a premium, which declines
ratably from the percentage equal to the applicable dividend rate on such
fourth anniversary to zero on the Mandatory Redemption Date, and (b) the
Liquidation Preference (minus any accrued and unpaid dividends from the
Dividend Payment Date prior to the date fixed for redemption).
Voting Rights. Except as described below and as otherwise required by
law, holders of Pillowtex Preferred Stock are not entitled to any vote on
matters presented to shareholders of Pillowtex.
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So long as any shares of the Pillowtex Preferred Stock are
outstanding, Pillowtex may not (i) amend the Pillowtex Articles of
Incorporation (the "Pillowtex Articles") so as to (a) affect adversely the
specified rights, preferences, privileges, or voting rights of holders of
shares of Pillowtex Preferred Stock or (b) authorize the issuance of additional
shares of any class of senior securities or (ii) merge, consolidate, or enter
into any other reclassification that would (a) materially affect adversely the
special or relative rights, preferences, privileges, or voting rights of the
Pillowtex Preferred Stock or (b) result in a breach of the terms of the
Pillowtex Preferred Stock without, in any such case, the affirmative vote or
consent of holders of more than 50% of the outstanding shares of the Pillowtex
Preferred Stock. In addition, any amendment to the Pillowtex Articles that
would alter in any material respect the dividend rates, liquidation preference,
redemption rights, or conversion rights of the Pillowtex Preferred Stock will
require the affirmative vote or consent of each holder of Pillowtex Preferred
Stock.
In the event of Pillowtex's failure to pay dividends or the occurrence
of certain breaches that shall have continued for a period of 60 days after
notice thereof from any holder of Pillowtex Preferred Stock, within ten
business days of such events, the number of members on the Pillowtex Board of
Directors would be automatically increased by 25% and the holders of the
Pillowtex Preferred Stock would be entitled to elect directors to fill the new
positions created by such expansion, so long as such nonpayment of dividends
and breaches were not cured after notice thereof, except that if the event of
default related to (i) the failure to redeem the Pillowtex Preferred Stock,
(ii) a breach of certain restrictions on Pillowtex's activities, or (iii) a
bankruptcy event with respect to Pillowtex or any of its subsidiaries, there
would be no 60-day grace period or right to cure and the holders' right to so
elect directors would continue for as long as the Pillowtex Preferred Stock
were outstanding.
NEW PILLOWTEX SENIOR SUBORDINATED NOTES
Prior to the closing of the Merger, Pillowtex issued and sold $185.0
million aggregate principal amount of its New Pillowtex Senior Subordinated
Notes. The New Pillowtex Senior Subordinated Notes bear interest at a rate of
9.0% per annum, payable semiannually in arrears on June 15 and December 15 of
each year. The New Pillowtex Senior Subordinated Notes are scheduled to mature
in their entirety on December 15, 2007. Pillowtex has the option to redeem the
New Pillowtex Senior Subordinated Notes, in whole or in part, at any time on or
after December 15, 2002, at redemption prices starting at 104.5% of stated
principal on December 15, 2001 and decreasing by 1.5% per year to 100% on and
after December 15, 2005, plus all accrued and unpaid interest to the redemption
date. There is no mandatory redemption of the New Pillowtex Senior
Subordinated Notes except upon a change in control. Upon the occurrence of a
"change in control," each holder of New Pillowtex Senior Subordinated Notes
will have the right to require Pillowtex to repurchase all or any part of such
holder's New Pillowtex Senior Subordinated Notes pursuant to a "change of
control" offer at a price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and liquidated damages thereon to the
date of purchase.
The New Pillowtex Senior Subordinated Notes are guaranteed by each of
the domestic subsidiaries of Pillowtex, including Fieldcrest and each of its
domestic subsidiaries.
The New Pillowtex Senior Subordinated Notes are subject to certain
covenants which restrict, among other things, Pillowtex's ability to incur
additional indebtedness and issue preferred stock, incur liens to secure
subordinated indebtedness, pay dividends or make certain other restricted
payments, apply net proceeds from certain asset sales, enter into certain
transactions with affiliates, incur indebtedness that is subordinate in right
of payment to any senior indebtedness and senior in right of payment to the New
Pillowtex Senior Subordinated Notes, merge or consolidate with any other
person, sell stock of subsidiaries, or sell, assign, transfer, lease, convey,
or otherwise dispose of substantially all of the assets of Pillowtex.
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SOURCES AND USES
The following table sets forth the sources and uses of funds required
to effect the Merger and the related transactions:
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Assumed borrowings under the New Pillowtex Bank Facilities . . . . $397,555,162 (1)
Gross proceeds from the issuance and sale of New Pillowtex
Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . 185,000,000
Gross proceeds from the issuance and sale of Pillowtex
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . 65,000,000
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$647,555,162
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USES OF FUNDS:
Cash assumed to be paid to holders of Fieldcrest Common Stock
(9,244,120 shares at $27.00 per share) . . . . . . . . . . . . . $249,591,240
Cash assumed to be paid to holders of Fieldcrest Preferred Stock
(1,500,000 shares at $46.15 per share) . . . . . . . . . . . . . 69,225,000
Repayment of Pillowtex's revolving credit facility . . . . . . . . 85,964,329
Repayment of Fieldcrest's revolving credit facility . . . . . . . 114,084,593
Satisfaction and discharge of Fieldcrest's 11.25% Senior
Subordinated Debentures . . . . . . . . . . . . . . . . . . . . 85,000,000
Severance costs assumed to be incurred in connection with the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000
Assumed settlement costs of Fieldcrest Options and Fieldcrest
SARs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,641,000
Early call premium on Fieldcrest 11.25% Senior Subordinated
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,250,000
Fees assumed to be paid to financial advisors, legal, accounting,
and other professionals . . . . . . . . . . . . . . . . . . . . 17,799,000
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$647,555,162
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</TABLE>
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(1) At the closing of the Merger, the initial borrowings under the
New Pillowtex Bank Facilities were approximately $379.9 million. The
borrowings are expected to increase as additional expenses incurred in
connection with the Merger are paid.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired. Financial
statements for the business acquired pursuant to the Merger described in Item 2
of this Report filed as Exhibit 99.3 hereto are incorporated herein by
reference.
(b) Pro Forma Financial Information. Pro forma financial
information giving effect to the transactions described in Item 2 of this
Report will be filed by an amendment hereto no later than February 17, 1998.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of September 10, 1997, by and among Pillowtex
Corporation, Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by
reference to Appendix A to the Joint Proxy Statement/Prospectus forming a part of
Pillowtex Corporation's Registration Statement on Form S-4 (No. 333-36663) (the "S-4
Registration Statement"))
</TABLE>
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<TABLE>
<S> <C>
2.2 Amendment to Agreement and Plan of Merger, dated as of September 23, 1997, by and among
Pillowtex Corporation, Pegasus Merger Sub, Inc., and Fieldcrest Cannon, Inc.
(incorporated by reference to Appendix A to the Joint Proxy Statement/Prospectus forming
a part of the Form S-4 Registration Statement)
3.1 Restated Articles of Incorporation of Pillowtex, as amended
4.1 Indenture, dated as of December 18, 1997, among Pillowtex Corporation, the guarantors
listed on the signature page thereto, and Norwest Bank Minnesota, National Association,
as Trustee
4.2 Supplemental Indenture, dated as of December 19, 1997, among Pillowtex Corporation, the
guarantors listed on the signature page thereto, and Norwest Bank Minnesota National
Association, as Trustee
10.1 Amended and Restated Credit Agreement, dated as of December 19, 1997, among Pillowtex
Corporation, certain Lenders named therein, and NationsBank of Texas, N.A., as
Administrative Agent
10.2 Term Credit Agreement, dated as of December 19, 1997, among Pillowtex Corporation,
certain Lenders named herein, and NationsBank of Texas, N.A., as Administrative Agent
10.3 Preferred Stock Purchase Agreement, dated as of September 10, 1997, by and among
Pillowtex Corporation, Apollo Investment Fund III, L.P., Apollo Overseas Partners III,
L.P., and Apollo (UK) Partners III, L.P. (incorporated by reference to Exhibit 10.2 to
Pillowtex Corporation's Current Report on Form 8-K dated September 10, 1997, as amended
by a Form 8-K/A (Amendment No. 1) dated September 10, 1997)
10.4 Amendment No. 1 to the Preferred Stock Purchase Agreement, dated as of November 21,
1997, by and among Pillowtex Corporation, Apollo Investment Fund III, L.P., Apollo
Overseas Partners III, L.P., and Apollo (UK) Partners III, L.P. (incorporated by
reference to Exhibit 10.1 to Pillowtex Corporation's Current Report on Form 8-K dated
November 21, 1997)
10.5 Purchase Agreement, dated December 15, 1997, among Pillowtex Corporation, the guarantors
listed on the signature page thereto, and NationsBanc Montgomery Securities, Inc. and
Bear, Stearns & Co. Inc.
10.6 Purchase Agreement Supplement, dated December 19, 1997, among Pillowtex Corporation, the
guarantors listed on the signature page thereto, and NationsBank Montgomery Securities,
Inc. and Bear, Stearns & Co. Inc.
10.7 Registration Rights Agreement, dated as of December 18, 1997, among Pillowtex
Corporation, the guarantors listed on the signature page thereto, and NationsBanc
Montgomery Securities, Inc. and Bear, Stearns & Co. Inc.
10.8 Registration Rights Agreement Supplement, dated as of December 19, 1997, among Pillowtex
Corporation, the guarantors listed on the signature page thereto, and NationsBanc
Montgomery Securities, Inc. and Bear, Stearns & Co. Inc.
99.1 Press release, dated December 19, 1997, issued by Pillowtex Corporation
</TABLE>
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<TABLE>
<S> <C>
99.2 Audited Financial Statements of Pillowtex Corporation as of and for the fiscal years
ended December 30, 1995 and December 28, 1996 (incorporated by reference to pages F-1
through F-24 in Pillowtex Corporation's Annual Report on Form 10-K for the fiscal year
ended December 28, 1996) and Unaudited Financial Statements of Pillowtex Corporation as
of September 27, 1997 and for the nine months ended September 27, 1997 and September 28,
1996 (incorporated by reference to pages 3 through 11 in the Pillowtex Corporation's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 1997)
99.3 Audited Financial Statements of Fieldcrest Cannon, Inc. as of and for the fiscal years
ended December 31, 1995 and December 31, 1996 (incorporated by reference to pages 18
through 34 in Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1996) and Unaudited Financial Statements of Fieldcrest Cannon, Inc.
as of September 30, 1997 and for the nine months ended September 30, 1997 and September
30, 1996 (incorporated by reference to pages 2 through 5 in the Fieldcrest Cannon,
Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1997)
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
PILLOWTEX CORPORATION
By: /s/ J. Mark Kirkpatrick
---------------------------------
J. Mark Kirkpatrick
Vice President and Treasurer
Dated: January 6, 1998
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of September 10, 1997,
by and among Pillowtex Corporation, Pegasus Merger Sub, Inc.,
and Fieldcrest Cannon, Inc. (incorporated by reference to
Appendix A to the Joint Proxy Statement/Prospectus forming a
part of Pillowtex Corporation's Registration Statement on Form
S-4 (No. 333-36663) (the "S-4 Registration Statement"))
2.2 Amendment to Agreement and Plan of Merger, dated as of
September 23, 1997, by and among Pillowtex Corporation, Pegasus
Merger Sub, Inc., and Fieldcrest Cannon, Inc. (incorporated by
reference to Appendix A to the Joint Proxy Statement/Prospectus
forming a part of the Form S-4 Registration Statement)
3.1 Restated Articles of Incorporation of Pillowtex, as amended
4.1 Indenture, dated as of December 18, 1997, among Pillowtex
Corporation, the guarantors listed on the signature page
thereto, and Norwest Bank Minnesota, National Association,
as Trustee
4.2 Supplemental Indenture, dated as of December 19, 1997, among
Pillowtex Corporation, the guarantors listed on the signature
page thereto, and Norwest Bank Minnesota, National Association,
as Trustee
10.1 Amended and Restated Credit Agreement, dated as of December 19,
1997, among Pillowtex Corporation, certain Lenders named
therein, and NationsBank of Texas, N.A., as Administrative
Agent
10.2 Term Credit Agreement, dated as of December 19, 1997, among
Pillowtex Corporation, certain Lenders named herein, and
NationsBank of Texas, N.A., as Administrative Agent
10.3 Preferred Stock Purchase Agreement, dated as of September 10,
1997, by and among Pillowtex Corporation, Apollo Investment
Fund III, L.P., Apollo Overseas Partners III, L.P., and Apollo
(UK) Partners III, L.P. (incorporated by reference to Exhibit
10.2 to Pillowtex Corporation's Current Report on Form 8-K
dated September 10, 1997, as amended by a Form 8-K/A (Amendment
No. 1) dated September 10, 1997)
10.4 Amendment No. 1 to the Preferred Stock Purchase Agreement,
dated as of November 21, 1997, by and among Pillowtex
Corporation, Apollo Investment Fund III, L.P., Apollo Overseas
Partners III, L.P., and Apollo (UK) Partners III, L.P.
(incorporated by reference to Exhibit 10.1 to Pillowtex
Corporation's Current Report on Form 8-K dated November 21,
1997)
10.5 Purchase Agreement, dated December 15, 1997, among Pillowtex
Corporation, the guarantors listed on the signature page
thereto, and NationsBanc Montgomery Securities, Inc. and Bear,
Stearns & Co. Inc.
10.6 Purchase Agreement Supplement, dated December 19, 1997, among
Pillowtex Corporation, the guarantors listed on the signature
page thereto, and NationsBank Montgomery Securities, Inc. and
Bear, Stears & Co. Inc.
10.7 Registration Rights Agreement, dated as of December 18, 1997,
among Pillowtex Corporation, the guarantors listed on the
signature page thereto, and NationsBanc Montgomery Securities,
Inc. and Bear, Stearns & Co. Inc.
10.8 Registration Rights Agreement Supplement, dated as of December
19, 1997, among Pillowtex Corporation, the guarantors listed on
the signature page thereto, and NationsBanc Montgomery
Securities, Inc. and Bear, Stearns & Co. Inc.
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
<S> <C>
99.1 Press release, dated December 19, 1997, issued by Pillowtex
Corporation
99.2 Audited Financial Statements of Pillowtex Corporation as of and
for the fiscal years ended December 30, 1995 and December 28,
1996 (incorporated by reference to pages F-1 through F-24 in
Pillowtex Corporation's Annual Report on Form 10-K for the
fiscal year ended December 28, 1996) and Unaudited Financial
Statements of Pillowtex Corporation as of September 27, 1997
and for the nine months ended September 27, 1997 and September
28, 1996 (incorporated by reference to pages 3 through 11 in
the Pillowtex Corporation's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 27, 1997)
99.3 Audited Financial Statements of Fieldcrest Cannon, Inc. as of
and for the fiscal years ended December 31, 1995 and December
31, 1996 (incorporated by reference to pages 18 through 34 in
Fieldcrest Cannon, Inc.'s Annual Report on Form 10-K for the
fiscal year ended December 31, 1996) and Unaudited Financial
Statements of Fieldcrest Cannon, Inc. as of September 30, 1997
and for the nine months ended September 30, 1997 and September
30, 1996 (incorporated by reference to pages 2 through 5 in the
Fieldcrest Cannon, Inc.'s Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1997)
</TABLE>
<PAGE> 1
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
PILLOWTEX CORPORATION
Pursuant to the provisions of Article 4.07 of the Texas Business
Corporation Act (the "Act"), Pillowtex Corporation (the "Corporation") hereby
adopts Restated Articles of Incorporation, which accurately copy the Articles
of Incorporation and all amendments thereto that are in effect to date, as
further amended by these Restated Articles of Incorporation, and which contain
no other change in any provision thereof.
ARTICLE ONE. The name of the Corporation is Pillowtex Corporation.
ARTICLE TWO. The following amendments to the Articles of
Incorporation were adopted by the unanimous written consent of the shareholders
of the Corporation as of January 18, 1993:
Article V of the Articles of Incorporation is hereby amended to read
in its entirety as follows:
"ARTICLE V
The aggregate number of shares which the corporation
is authorized to issue is 50,000,000 shares consisting of
30,000,000 shares of Common Stock, having a par value of $0.01
per share and 20,000,000 shares of Preferred Stock, having a
par value of $0.01 per share.
The following is a statement of the relative rights,
preferences and limitations with respect to the shares of each
class of capital stock of the corporation, insofar as the same
are fixed in these Articles of Incorporation, and of the
authority expressly vested in the Board of Directors of the
corporation to divide the Preferred Stock into series and to
fix and determine the variations in the relative rights and
preferences as between series:
A. Preferred Stock
1. The Preferred Stock may, from time
to time, be divided into and issued in one or more
series. The shares of each series may have such
designations, preferences, limitations and relative
rights, including voting rights, as are stated herein
and in one or more resolutions providing for the
issue of such series adopted by the Board of
Directors as hereinafter provided.
1
<PAGE> 2
2. To the extent that these Articles of
Incorporation do not fix and determine the variations
in the relative rights and preferences of the
Preferred Stock, both in relation to the Common Stock
and as between series of Preferred Stock, the Board
of Directors of the corporation is expressly vested
with the authority to divide the Preferred Stock into
one or more series and, within the limitations set
forth in these Articles of Incorporation, to fix and
determine the designation, preferences, limitations
and relative rights of the shares of any series so
established, and, with respect to each such series,
to fix by one or more resolutions providing for the
issue of such series, the following:
(a) The maximum number of shares to
constitute such series and the distinctive
designation thereof;
(b) The annual dividend rate, if
any, on the shares of such series and the
date or dates from which dividends shall
commence to accrue or accumulate as herein
provided, and whether dividends shall be
cumulative;
(c) The price at and the terms and
conditions on which the shares of such series
may be redeemed, including, without
limitation, the time during which shares of
the series may be redeemed, the premium, if
any, over and above the par value thereof and
any accumulated dividends thereon that the
holders of shares of such series shall be
entitled to receive upon the redemption
thereof, which premium may vary at different
dates and may also be different with respect
to shares redeemed through the operation of
any retirement or sinking fund;
(d) The liquidation preference, if
any, over and above the par value thereof,
and any accumulated dividends thereon, that
the holders of shares of such series shall be
entitled to receive upon the voluntary or
involuntary liquidation, dissolution or
winding up of the affairs of the corporation;
(e) Whether or not the shares of
such series shall be subject to the operation
of a retirement or sinking fund, and, if so,
the extent and manner in which any such
retirement
2
<PAGE> 3
or sinking fund shall be applied to the
purchase or redemption of the shares of such
series for retirement or for other corporate
purposes, and the terms and provisions
relative to the operations of such retirement
or sinking fund;
(f) The terms and conditions, if
any, on which the shares of such series shall
be convertible into, or exchangeable for,
shares of any other class or classes of
capital stock of the corporation or any
series of any other class or classes, or of
any other series of the same class, including
the price or prices or the rate or rates of
conversion or exchange and the method, if
any, of adjusting the same, provided that
shares of such series may not be convertible
into shares of a series or class that has
prior or superior rights and preferences as
to dividends or distribution of assets of the
corporation upon voluntary or involuntary
liquidation, dissolution or winding up of the
affairs of the corporation;
(g) The voting rights, if any, on
the shares of such series; and
(h) Any or all other preferences
and relative, participating, optional or
other special rights, or qualifications,
limitations or restrictions thereof, as shall
not be inconsistent with the law or with this
Article V.
3. All shares of any one series of
Preferred Stock shall be identical with each other in
all respects, except that shares of any one series
issued at different times may differ as to the dates
from which dividends thereon, if any, shall be
cumulative; and all series shall rank equally and be
identical in all respects, except as provided in
Paragraph 1 of this Section A and except as permitted
by the provisions of Paragraph 2 of this Section A.
4. Except to the extent restricted or
otherwise provided in the resolution or resolutions
adopted by the Board of Directors providing for the
issue of any series of Preferred Stock, no dividends
(other than dividends payable in Common Stock) on any
class or classes of capital stock of the corporation
ranking, with respect to dividends,
3
<PAGE> 4
junior to the Preferred Stock, or any series thereof,
shall be declared, paid or set apart for payment,
until and unless the holders of shares of Preferred
Stock of each senior series shall have been paid, or
there shall have been set apart for payment, cash
dividends, when and as declared by the Board of
Directors out of funds of the corporation legally
available therefor, at the annual rate, and no more,
fixed in the resolution or resolutions adopted by the
Board of Directors providing for the issue of such
series.
5. To the extent provided in the
resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of
Preferred Stock, upon the voluntary or involuntary
liquidation, dissolution or winding up of the affairs
of the corporation, before any payment or
distribution of the assets of the corporation
(whether capital or surplus) shall be made to or set
apart for the holders of any class or classes of
capital stock of the corporation ranking junior, as
to liquidation rights, to the Preferred Stock, or any
series thereof, the holders of the shares of the
Preferred Stock shall be entitled to receive payment
at the rate fixed in the resolution or resolutions
adopted by the Board of Directors providing for the
issue of the respective series. Unless otherwise
provided in the resolution or resolutions adopted by
the Board of Directors providing for the issue of any
series of Preferred Stock, for the purposes of this
Paragraph 5 and Paragraph 2(d) of this Section A,
neither the consolidation nor merger of the
corporation with one or more other corporations shall
be deemed to be a liquidation, dissolution or winding
up.
6. The corporation, at the option of
the Board of Directors, may redeem, unless otherwise
provided in the resolution establishing a series of
Preferred Stock, at such time as is fixed (and if not
so fixed, at any time) in the resolution or
resolutions adopted by the Board of Directors
providing for the issue of a series, the whole or,
from time to time, any part of the Preferred Stock of
any series then outstanding, at the par value
thereof, plus in every case an amount equal to all
accumulated dividends, if any (whether or not earned
or declared), with respect to each share so redeemed
and, in addition thereto, the amount of the premium,
if any, payable upon such redemption fixed in the
resolution or resolutions adopted by
4
<PAGE> 5
the Board of Directors providing for the issue of
such series. The Board of Directors shall have full
power and authority, subject to the limitations and
provisions contained herein and in the Texas Business
Corporation Act, to prescribe the terms and
conditions upon which the Preferred Stock shall be
redeemed from time to time.
7. Shares of Preferred Stock that have
been redeemed, purchased or otherwise acquired by the
corporation or that, if convertible or exchangeable,
have been converted into or exchanged for shares of
capital stock of any other class or classes or any
series of any other class or classes or of any other
series of the same class, shall be cancelled and such
shares may not under any circumstances thereafter be
reissued as Preferred Stock, and the corporation
shall from time to time cause all such acquired
shares of Preferred Stock to be cancelled in the
manner provided by law.
8. Nothing herein contained shall limit
any legal right of the corporation to purchase any
shares of the Preferred Stock.
B. Common Stock
1. Shares of Common Stock may be issued
by the corporation from time to time for such
consideration as may lawfully be fixed by the Board
of Directors.
2. The Common Stock shall be entitled
to one vote per share on all matters. Cumulative
voting for directors shall not be permitted and is
hereby expressly denied.
3. Subject to the prior rights and
preferences of the Preferred Stock set forth in this
Article V, or in any resolution or resolutions
providing for the issuance of a series of Preferred
Stock, and to the extent permitted by the laws of the
State of Texas, the holders of Common Stock shall be
entitled to receive such cash dividends as may be
declared and made payable by the Board of Directors.
5
<PAGE> 6
4. After payment shall have been made
in full to the holders of any series of Preferred
Stock having preferred liquidation rights, upon any
voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the corporation, the
remaining assets and funds of the corporation shall
be distributed among the holders of the Common Stock
according to their respective shares."
Article VIII of the Articles of Incorporation is hereby amended to read in its
entirety as follows:
"ARTICLE VIII
The number of directors shall be fixed in the manner
provided in the Bylaws of the corporation. The current Board
of Directors consists of four directors, and the names and
addresses of the persons who are serving as directors until
their successors are elected and qualified are:
Name Address
---- -------
Mary R. Silverthorne 10640 Lennox Lane
Dallas, Texas 75229
Charles M. Hansen, Jr. 4111 Mint Way
Dallas, Texas 75237
Scott E. Shimizu 4111 Mint Way
Dallas, Texas 75237
Philip J. Souza 4111 Mint Way
Dallas, Texas 75237"
Article IX of the Articles of Incorporation is hereby amended to read in its
entirety as follows:
"ARTICLE IX
The corporation may purchase, directly or indirectly,
its own shares to the extent of the surplus of the
corporation."
6
<PAGE> 7
Article X of the Articles of Incorporation is hereby amended to read in its
entirety as follows:
"ARTICLE X
A. Approval of Certain Business Combinations. A Business
Combination (as hereinafter defined) shall require (i) only such
affirmative vote as is required by law and any other provision of
these Articles of Incorporation, if all of the conditions specified in
either of Paragraph 1 or Paragraph 2 of this Section A are met or (ii)
in addition to any affirmative vote required by law or these Articles
of Incorporation, the affirmative vote of the holders of at least 80%
of the voting power of the then outstanding shares of capital stock of
the corporation entitled to vote generally in the election of
directors (referred to in this Article X as the "Voting Stock"),
voting together as a single class (it being understood that for the
purposes of this Article X, each share of the Voting Stock shall have
the number of votes granted to it pursuant to Article V of these
Articles of Incorporation). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law.
1. Approval by Disinterested Directors.
The Business Combination shall have been approved by a
majority of the Disinterested Directors (as
hereinafter defined).
2. Price and Procedure Requirements.
All of the following conditions shall have been met:
(a) The aggregate amount of the
cash and the Fair Market Value (as
hereinafter defined) as of the date of the
consummation of the Business Combination of
consideration other than cash to be received
per share by holders of shares of Common
Stock in such Business Combination shall be
at least equal to the higher of the
following:
(i) (if applicable) the
highest price per share (including any
brokerage commissions, transfer
taxes and soliciting dealers' fees)
paid by the Interested Shareholder
(as hereinafter defined) for any
shares of Common Stock or the common
stock of any Predecessor Corporation
(as hereinafter defined) acquired by
it (1) within the two-year
7
<PAGE> 8
period immediately prior to the first
public announcement of the terms of the
proposed Business Combination (the
"Announcement Date") or (2) in the
transaction in which it became an
Interested Shareholder, whichever is
higher; and
(ii) the Fair Market Value
per share of Common Stock on the
Announcement Date or on the date on
which the Interested Shareholder
became an Interested Shareholder
(such later date is referred to in
this Article X as the "Determination
Date"), whichever is higher.
(b) The aggregate amount of the
cash and the Fair Market Value as of the date
of the consummation of the Business
Combination of consideration other than cash
to be received per share by holders of shares
of any class of outstanding Voting Stock
other than Common Stock shall be at least
equal to the highest of the following (it
being intended that the requirements of this
Paragraph 2(b) shall be required to be met
with respect to every class of outstanding
Voting Stock, whether or not the Interested
Shareholder has previously acquired any
shares of a particular class of Voting
Stock);
(i) (if applicable) the
highest price per share (including any
brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by
the Interested Shareholder for any
shares of such class of Voting Stock or
a substantially identical class of
stock of any Predecessor Corporation
acquired by it (1) within the two-year
period immediately prior to the
Announcement Date or (2) in the
transaction in which it became an
Interested Shareholder, whichever is
higher;
(ii) (if applicable) the
highest preferential amount per share
to which the holders of shares of such
class of Voting Stock are entitled in
the event of any voluntary or
involuntary liquidation,
8
<PAGE> 9
dissolution or winding up of the
corporation; and
(iii) the Fair Market Value
per share of such class of Voting Stock
on the Announcement Date or on the
Determination Date, whichever is
higher.
(c) The consideration to be
received by holders of a particular class of
outstanding Voting Stock (including Common
Stock) shall be in cash or in the same form
as the Interested Shareholder has previously
paid for shares of such class of Voting Stock
or stock of a Predecessor Corporation. If the
Interested Shareholder has paid for shares of
any class of Voting Stock or stock of a
Predecessor Corporation with varying forms of
consideration, the form of consideration for
such class of Voting Stock shall be either
cash or the form used to acquire the largest
number of shares of such class of Voting
Stock or stock of a Predecessor Corporation
previously acquired by it. The price
determined in accordance with Paragraphs 2(a)
and 2(b) of this Section A shall be subject
to appropriate adjustment in the event of any
special dividend or other disposition of
material assets other than in the ordinary
course of business, stock dividend, stock
split, combination of shares or similar
event. Whether specific consideration
satisfies this subsection shall be determined
by vote of a majority of the Disinterested
Directors.
(d) After such Interested
Shareholder has become an Interested
Shareholder and prior to the consummation of
such Business Combination: (i) except as
approved by a majority of the Disinterested
Directors, there shall have been no failure
to declare and pay at the regular date
therefor any full quarterly dividends
(whether or not cumulative) on any
outstanding stock having preference over the
Common Stock as to dividends or upon
liquidation; (ii) there shall have been (1)
no reduction in the annual rate of dividends
paid on the Common Stock (except as necessary
to reflect any subdivision of the Common
Stock), except as approved by a majority of
the Disinterested Directors, and (2) an
increase in such annual
9
<PAGE> 10
rate of dividends as necessary to reflect any
reclassification (including any reverse stock
split), recapitalization, reorganization or
any similar transaction that has the effect
of reducing the number of outstanding shares
of the Common Stock, unless the failure so to
increase such annual rate is approved by a
majority of the Disinterested Directors; and
(c) such Interested Shareholder shall not
have become the beneficial owner of any
additional shares of Voting Stock except as
part of the transaction that results in such
Interested Shareholder becoming an Interested
Shareholder.
(e) After such Interested
Shareholder has become an Interested
Shareholder, such Interested Shareholder
shall not have received the benefit, directly
or indirectly (except proportionately as a
shareholder), of any loans, advances,
guaranties, pledges or other financial
assistance or any tax credits or other tax
advantages provided to or by the corporation,
whether in anticipation of or in connection
with such Business Combination or otherwise.
(f) A proxy or information
statement describing the proposed Business
Combination and complying with the
requirements of the Securities Exchange Act
of 1934 and the rules and regulations
thereunder (or any subsequent provisions
replacing such Act, rules or regulations)
shall have been mailed to public shareholders
of the corporation at least 30 days prior to
the consummation of such Business Combination
(whether or not such proxy or information
statement is required to be mailed pursuant
to such Act or subsequent provisions).
B. Certain Definitions. For purposes of this
Article X:
1. "Business Combination" shall mean
any transaction that is referred to in any
one or more of the following clauses (a)
through (e):
(a) any merger or consolidation of
the corporation or any Subsidiary (as
hereinafter defined) with (i) any Interested
Shareholder or (ii) any other corporation
(whether or not
10
<PAGE> 11
itself an Interested Shareholder) that is, or
after such merger or consolidation would be,
an Affiliate (as hereinafter defined) of an
Interested Shareholder; or
(b) any sale, lease, exchange,
mortgage, pledge, transfer or other
disposition (in one transaction or a series
of transactions) to or with any Interested
Shareholder or any Affiliate of any
Interested Shareholder of any assets of the
corporation or any Subsidiary having an
aggregate Fair Market Value of $5,000,000 or
more; or
(c) the issuance or transfer by the
corporation or any Subsidiary (in one
transaction or series of transactions) of any
securities of the corporation or any
Subsidiary to any Interested Shareholder or
any Affiliate of any Interested Shareholder
in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate Fair Market Value of $5,000,000 or
more; or
(d) the adoption of any plan or
proposal for the liquidation or dissolution
of the corporation proposed by or on behalf
of any Interested Shareholder or any
Affiliate of any Interested Shareholder; or
(e) any reclassification of
securities (including any reverse stock
split) or recapitalization of the
corporation, or any merger or consolidation
of the corporation with any of its
Subsidiaries or any other transaction
(whether or not with or into or otherwise
involving an Interested Shareholder) that has
the effect, directly or indirectly, of
increasing the proportionate share of the
outstanding shares of any class of Equity
Security (as hereinafter defined) of the
corporation or any Subsidiary that is
directly or indirectly owned by any
Interested Shareholder or any Affiliate of
any Interested Shareholder.
2. "Person" shall mean any individual,
firm, corporation or other entity.
3. "Interested Shareholder" shall mean
any Person (other than the corporation or any
11
<PAGE> 12
Subsidiary or employee benefit plan of the
corporation or any Subsidiary) that:
(a) is the beneficial owner,
directly or indirectly, of 10% or more of the
voting power of the outstanding Voting Stock;
or
(b) at any time within the two-year
period immediately prior to the date in
question was the beneficial owner, directly
or indirectly, of 10% or more of the voting
power of the then outstanding Voting Stock;
or
(c) is an assignee of or has
otherwise succeeded to any shares of Voting
Stock or of capital stock of any Predecessor
Corporation that were at any time within the
two-year period immediately prior to the date
in question beneficially owned by any
Interested Shareholder, if such assignment or
succession shall have occurred in the course
of a transaction or series of transactions
not involving a public offering within the
meaning of the Securities Act of 1933.
4. A person shall be a "beneficial
owner" of any stock that:
(a) such Person or any of its
Affiliates or Associates (as hereinafter
defined) beneficially owns directly or
indirectly; or
(b) such Person or any of its
Affiliates or Associates has (i) the right to
acquire (whether such right is exercisable
immediately or only after the passage of
time), pursuant to any agreement, arrangement
or understanding or upon the exercise of
conversion rights, exchange rights, warrants
or options, or otherwise, or (ii) the right
to vote pursuant to any agreement,
arrangement or understanding; or
(c) is beneficially owned, directly
or indirectly, by any other Person with which
such Person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring,
holding, voting or disposing of any shares of
such stock.
12
<PAGE> 13
5. For the purpose of determining
whether a Person is an Interested Shareholder
pursuant to Paragraph 3 of this Section B, the number
of shares of Voting Stock deemed to be outstanding
shall include shares deemed owned through application
of Paragraph 4 of this Section B but shall not
include any other shares of Voting Stock that may be
issuable pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
6. "Affiliate" and "Associate" shall
have the meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on
January 1, 1993.
7. "Subsidiary" means any corporation
of which a majority of any class of Equity security
is owned, directly or indirectly, by the corporation,
provided, however, that for purposes of the
definition of Interested Shareholder set forth-in
Paragraph 3 of this Section B, the term "Subsidiary"
shall mean only a corporation of which a majority of
each class of Equity Security is owned, directly or
indirectly, by the corporation.
8. "Disinterested Director" means any
member of the Board of Directors who is unaffiliated
with the Interested Shareholder and was a member of
the Board of Directors immediately before the time
that the Interested Shareholder became an Interested
Shareholder, and any successor of a Disinterested
Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a
Disinterested Director by a majority of Disinterested
Directors then on the Board of Directors.
9. "Fair Market Value" means: (a) in
the case of stock, (i) the highest closing sale price
of a share of stock during the 30-day period
immediately preceding the date in question on the
principal United States securities exchange
registered under the Securities Exchange Act of 1934
on which such stock is listed, or (ii) if such stock
is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such
stock during the 30-day period immediately preceding
the date in question on the National Association of
Securities Dealers, Inc. Automated Quotations System
or any similar system
13
<PAGE> 14
then in use, or (iii) if no such quotations are
available, the fair market value on the date in
question of a share of such stock as determined by a
majority of the Disinterested Directors in good
faith; or (b) in the case of property other than cash
or stock, the fair market value of such property on
the date in question as determined by a majority of
the Disinterested Directors in good faith.
10. In the event of any Business
combination in which the corporation survives, the
phrase "consideration other than cash to be received"
as used in Paragraphs 2 (a) and 2 (b) of Section A of
this Article X shall include the shares of Common
Stock and the shares of any other class of
outstanding Voting Stock retained by the holders of
such shares.
11. "Equity Security" shall have the
meaning ascribed to such term in Section 3(a)(11) of
the Securities Exchange Act of 1934, as in effect on
January 1, 1993.
12. A "Predecessor Corporation" includes
any corporation of which the corporation was at one
time a wholly-owned subsidiary, or of which the
corporation would be deemed to be a legal successor
in interest (by contract or by merger or other
operation of law).
C. Powers of the Board of Directors. A majority
of the Disinterested Directors shall have the power and duty
to determine for the purposes of this Article X, on the basis
of information known to them after reasonable inquiry, (1)
whether a Person is an Interested Shareholder, (2) the number
of shares of Voting Stock beneficially owned by any Person,
(3) whether a Person is an Affiliate or Associate of another,
(4) whether the assets that are the subject of any Business
Combination have, or the consideration to be received for the
issuance or transfer of securities by the corporation or any
subsidiary in any Business Combination has, an aggregate Fair
Market Value of $5,000,000 or more. A majority of the
Disinterested Directors shall have the further power to
interpret all of the terms and provisions of this Article X.
14
<PAGE> 15
D. No Effect on Fiduciary Obligations of
Interested Shareholders. Nothing contained in this Article X
shall be construed to relieve any Interested Shareholder from
any fiduciary obligation imposed by law.
E. Amendment of Article X. Notwithstanding any
other provisions of these Articles of Incorporation or the
Bylaws of the corporation (and notwithstanding the fact that a
lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the corporation), the
affirmative vote of the holders of 80% or more of the
outstanding Voting Stock, voting together as a single class,
shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article X or any provision hereof."
A new Article XI is hereby added to the Articles of Incorporation to read in
its entirety as follows:
"ARTICLE XI
All actions of the shareholders must be taken at an annual or
special meeting of shareholders and may not be taken by a consent or
consents in writing."
A new Article XII is hereby added to the Articles of Incorporation to read in
its entirety as follows:
"ARTICLE XII
Special meetings of shareholders of the corporation may be
called only by the Chief Executive Officer or the Board of Directors
of the corporation or by the holders of at least 50% of all shares
entitled to vote at the proposed meeting."
A new Article XIII is hereby added to the Articles of Incorporation to read in
its entirety as follows:
"ARTICLE XIII
The Board of Directors of the corporation only shall have the
power to make, alter or repeal the Bylaws of the corporation."
A new Article XIV is hereby added to the Articles of Incorporation to read in
its entirety as follows:
15
<PAGE> 16
"ARTICLE XIV
To the fullest extent permitted by Texas statutory or
decisional law, as the same exists or may hereafter be amended or
interpreted, a director of the corporation shall not be liable to the
corporation or its shareholders for any act or omission in such
director's capacity as a director. Any repeal or amendment of this
Article XIV, or adoption of any other provision of these Articles of
Incorporation inconsistent with this Article XIV by the shareholders
of the corporation shall be prospective only and shall not adversely
affect any limitation on the liability to the corporation or its
shareholders of a director of the corporation existing at the time of
such repeal, amendment or adoption of an inconsistent provision."
A new Article XV is hereby added to the Articles of Incorporation to read in
its entirety as follows:
"ARTICLE XV
No contract or other transactions between the corporation and
any other corporation, firm or individual shall be affected or
invalidated by the fact that any one or more of the directors or
officers of the corporation is or are interested in or is a director
or officer of such other corporation, or a member of such firm, and
any director or officer, individually or jointly, may be a party to or
may be interested in any contract or transaction with the corporation,
or in which the corporation is interested, and no contract, act or
transaction of the corporation with any person or persons, firms or
corporations, shall be affected or invalidated by the fact that any
director or officer of the corporation is a party to or interested in
such contract, act or transaction, or is in any way connected with
such person or persons, firms or corporations, and each and every
person who may become a director or officer of the corporation is
hereby relieved from any liability that might otherwise exist from
contracting with the corporation for the benefit of himself or any
firm or corporation in which he may be in any way interested."
ARTICLE THREE. Each amendment to the Articles of Incorporation made
by these Restated Articles of Incorporation has been effected in conformity
with the provisions of the Act.
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ARTICLE FOUR. The number of shares of Common Stock of the Corporation
outstanding and entitled to vote was 6,611 at the time of adoption of these
Restated Articles of Incorporation.
ARTICLE FIVE. The holders of all of the shares of Common Stock
outstanding and entitled to vote have signed a written consent to the adoption
of these Restated Articles of Incorporation.
ARTICLE SIX. The Articles of Incorporation and all amendments and
supplements thereto are hereby superseded by the following Restated Articles of
Incorporation:
ARTICLE I
The name of the corporation is Pillowtex Corporation.
ARTICLE II
The period of its duration is perpetual.
ARTICLE III
The purpose for which the corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE IV
The address of the initial registered office of the corporation is
4111 Mint Way, Dallas, Texas 75237, and the name of the initial registered
agent of the corporation at such address is Jeffrey D. Cordes.
ARTICLE V
The aggregate number of shares which the corporation is authorized to
issue is 50,000,000 shares consisting of 30,000,000 shares of Common Stock,
having a par value of $0.01 per share and 20,000,000 shares of Preferred Stock,
having a par value of $0.01 per share.
The following is a statement of the relative rights, preferences and
limitations with respect to the shares of each class of capital stock of the
corporation, insofar as the same are fixed in these Articles of Incorporation,
and of the authority expressly vested in the Board of Directors of the
corporation to
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divide the Preferred Stock into series and to fix and determine the variations
in the relative rights and preferences as between series:
A. Preferred Stock
1. The Preferred Stock may, from time to time, be
divided into and issued in one or more series. The shares of each
series may have such designations, preferences, limitations and
relative rights, including voting rights, as are stated herein and in
one or more resolutions providing for the issue of such series adopted
by the Board of Directors as hereinafter provided.
2. To the extent that these Articles of Incorporation do
not fix and determine the variations in the relative rights and
preferences of the Preferred Stock, both in relation to the Common
Stock and as between series of Preferred Stock, the Board of Directors
of the corporation is expressly vested with the authority to divide
the Preferred Stock into one or more series and, within the
limitations set forth in these Articles of Incorporation, to fix and
determine the designation, preferences, limitations and relative
rights of the shares of any series so established, and, with respect
to each such series, to fix by one or more resolutions providing for
the issue of such series, the following:
(a) The maximum number of shares to constitute
such series and the distinctive designation thereof;
(b) The annual dividend rate, if any, on the
shares of such series and the date or dates from which
dividends shall commence to accrue or accumulate as herein
provided, and whether dividends shall be cumulative;
(c) The price at and the terms and conditions on
which the shares of such series may be redeemed, including,
without limitation, the time during which shares of the series
may be redeemed, the premium, if any, over and above the par
value thereof and any accumulated dividends thereon that the
holders of shares of such series shall be entitled to receive
upon the redemption thereof, which premium may vary at
different dates and may also be different with respect to
shares redeemed through the operation of any retirement or
sinking fund;
(d) The liquidation preference, if any, over and
above the par value thereof, and any accumulated dividends
thereon, that the holders of shares of such series shall be
entitled to receive upon the voluntary or
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involuntary liquidation, dissolution or winding up of the
affairs of the corporation;
(e) Whether or not the shares of such series
shall be subject to the operation of a retirement or sinking
fund, and, if so, the extent and manner in which any such
retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or for
other corporate purposes, and the terms and provisions
relative to the operations of such retirement or sinking fund;
(f) The terms and conditions, if any, on which
the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes of
capital stock of the corporation or any series of any other
class or classes, or of any other series of the same class,
including the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting
the same, provided that shares of such series may not be
convertible into shares of a series or class that has prior or
superior rights and preferences as to dividends or
distribution of assets of the corporation upon voluntary or
involuntary liquidation, dissolution or winding up of the
affairs of the corporation;
(g) The voting rights, if any, on the shares of
such series; and
(h) Any or all other preferences and relative,
participating, optional or other special rights, or
qualifications, limitations or restrictions thereof, as shall
not be inconsistent with the law or with this Article V.
3. All shares of any one series of Preferred Stock shall
be identical with each other in all respects, except that shares of
any one series issued at different times may differ as to the dates
from which dividends thereon, if any, shall be cumulative; and all
series shall rank equally and be identical in all respects, except as
provided in Paragraph 1 of this Section A and except as permitted by
the foregoing provisions of Paragraph 2.
4. Except to the extent restricted or otherwise provided
in the resolution or resolutions adopted by the Board of Directors
providing for the issue of any series of Preferred Stock, no dividends
(other than dividends payable in Common Stock) on any class or classes
of capital stock of the corporation ranking, with respect to
dividends, junior to the Preferred Stock, or any series thereof, shall
be declared,
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paid or set apart for payment, until and unless the holders of shares
of Preferred Stock of each senior series shall have been paid, or
there shall have been set apart for payment, cash dividends, when and
as declared by the Board of Directors out of funds of the corporation
legally available therefor, at the annual rate, and no more, fixed in
the resolution or resolutions adopted by the Board of Directors
providing for the issue of such series.
5. To the extent provided in the resolution or
resolutions adopted by the Board of Directors providing for the issue
of any series of Preferred Stock, upon the voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
corporation before any payment or distribution of the assets of the
corporation (whether capital or surplus) shall be made to or set apart
for the holders of any class or classes of capital stock of the
corporation ranking junior, as to liquidation rights, to the Preferred
Stock, or any series thereof, the holders of the shares of the
Preferred Stock shall be entitled to receive payment at the rate fixed
in the resolution or resolutions adopted by the Board of Directors
providing for the issue of the respective series. Unless otherwise
provided in the resolution or resolutions adopted by the Board of
Directors providing for the issue of any series of Preferred Stock,
for the purposes of this Paragraph 5 and Paragraph 2(d) of this
Section A, neither the consolidation nor merger of the corporation
with one or more other corporations shall be deemed to be a
liquidation, dissolution or winding up.
6. The corporation, at the option of the Board of
Directors, may redeem, unless otherwise provided in the resolution
establishing a series of Preferred Stock, at such time as is fixed
(and if not so fixed, at any time) in the resolution or resolutions
adopted by the Board of Directors providing for the issue of a series,
the whole or, from time to time, any part of the Preferred Stock of
any series then outstanding, at the par value thereof, plus in every
case an amount equal to all accumulated dividends, if any (whether or
not earned or declared), with respect to each share so redeemed and,
in addition thereto, the amount of the premium, if any, payable upon
such redemption fixed in the resolution or resolutions adopted by the
Board of Directors providing for the issue of such series. The Board
of Directors shall have full power and authority, subject to the
limitations and provisions contained herein and in the Texas Business
Corporation Act, to prescribe the terms and conditions upon which the
Preferred Stock shall be redeemed from time to time.
7. Shares of Preferred Stock that have been redeemed,
purchased or otherwise acquired by the corporation or that, if
convertible or exchangeable, have been converted into or
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<PAGE> 21
exchanged for shares of capital stock of any other class or classes or
any series of any other class or classes or of any other series of the
same class, shall be cancelled and such shares may not under any
circumstances thereafter be reissued as Preferred Stock, and the
corporation shall from time to time cause all such acquired shares of
Preferred Stock to be cancelled in the manner provided by law.
8. Nothing herein contained shall limit any legal right
of the corporation to purchase any shares of the Preferred Stock.
B. Common Stock
1. Shares of Common Stock may be issued by the
corporation from time to time for such consideration as may lawfully
be fixed by the Board of Directors.
2. The Common Stock shall be entitled to one vote per
share on all matters. Cumulative voting for directors shall not be
permitted and is hereby expressly denied.
3. Subject to the prior rights and preferences of the
Preferred Stock set forth in this Article V, or in any resolution or
resolutions providing for the issuance of a series of Preferred Stock,
and to the extent permitted by the laws of the State of Texas, the
holders of Common Stock shall be entitled to receive such cash
dividends as may be declared and made payable by the Board of
Directors.
4. After payment shall have been made in full to the
holders of any series of Preferred Stock having preferred liquidation
rights, upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the corporation, the remaining assets and
funds of the corporation shall be distributed among the holders of the
Common Stock according to their respective shares.
ARTICLE VI
No shareholder of the corporation will by reason of his holding shares
of stock of the corporation have any preemptive or preferential rights to
purchase or subscribe to any shares of any class of stock of the corporation,
or any notes, debentures, bonds, warrants, options or other securities of the
corporation, now or hereafter to be authorized.
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ARTICLE VII
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of one Thousand Dollars
($1,000.00), consisting of money paid, labor done or property actually received.
ARTICLE VIII
The number of directors shall be fixed in the manner provided in the
Bylaws of the corporation. The current Board of Directors consists of four
directors, and the names and addresses of the persons who are serving as
directors until their successors are elected and qualified are:
Name Address
---- -------
[S] [C]
Mary R. Silverthorne 10640 Lennox Lane
Dallas, Texas 75229
Charles M. Hansen, Jr. 4111 Mint Way
Dallas, Texas 75237
Scott E. Shimizu 4111 Mint Way
Dallas, Texas 75237
Philip J. Souza 4111 Mint Way
Dallas, Texas 75237
ARTICLE IX
The corporation may purchase, directly or indirectly, its own shares
to the extent of the surplus of the corporation.
ARTICLE X
A. Approval of Certain Business Combinations. A Business
Combination (as hereinafter defined) shall require (i) only such affirmative
vote as is required by law and any other provision of these Articles of
Incorporation, if all of the conditions specified in either of Paragraph 1 or
Paragraph 2 of this Section A are met or (ii) in addition to any affirmative
vote required by law or these Articles of Incorporation, the affirmative vote
of the holders of at least 80% of the voting power of the then outstanding
shares of capital stock of the corporation entitled to vote generally in the
election of directors (referred to in this Article X as the "Voting Stock"),
voting together as a single class (it being understood that for the purposes of
this Article X, each share of the Voting Stock shall have the number of votes
granted to
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it pursuant to Article V of these Articles of Incorporation). Such
affirmative vote shall be required notwithstanding the fact that no vote may be
required, or that a lesser percentage may be specified, by law.
1. Approval by Disinterested Directors. The Business
Combination shall have been approved by a majority of the
Disinterested Directors (as hereinafter defined).
2. Price and Procedure Requirements. All of the
following conditions shall have been met:
(a) The aggregate amount of the cash and the Fair
Market Value (as hereinafter defined) as of the date of the
consummation of the Business Combination of consideration
other than cash to be received per share by holders of shares
of Common Stock in such Business Combination shall be at least
equal to the higher of the following:
(i) (if applicable) the highest price
per share (including any brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by
the Interested Shareholder (as hereinafter defined)
for any shares of Common Stock or the common stock of
any Predecessor Corporation (as hereinafter defined)
acquired by it (1) within the two-year period
immediately prior to the first public announcement of
the terms of the proposed Business Combination (the
"Announcement Date") or (2) in the transaction in
which it became an Interested Shareholder, whichever
is higher; and
(ii) the Fair Market Value per share of
Common Stock on the Announcement Date or on the date
on which the Interested Shareholder became an
Interested Shareholder (such later date is referred
to in this Article X as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and the Fair
Market Value as of the date of the consummation of the
Business Combination of consideration other than cash to be
received per share by holders of shares of any class of
outstanding Voting Stock other than Common Stock shall be at
least equal to the highest of the following (it being intended
that the requirements of this Paragraph 2(b) shall be required
to be met with respect to every class of outstanding Voting
Stock, whether or not the Interested Shareholder has
previously acquired any shares of a particular class of Voting
Stock);
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(i) (if applicable) the highest price per share (including
any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested Shareholder for any shares of such
class of Voting Stock or a substantially identical class of stock
of any Predecessor Corporation acquired by it (1) within the
two-year period immediately prior to the Announcement Date or (2)
in the transaction in which it became an Interested Shareholder,
whichever is higher;
(ii) (if applicable) the highest preferential amount per share
to which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation; and
(iii) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date,
whichever is higher.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested Shareholder has
previously paid for shares of such class of Voting Stock or stock of a
Predecessor Corporation. If the Interested Shareholder has paid for
shares of any class of Voting Stock or stock of a Predecessor
Corporation with varying forms of consideration, the form of
consideration for such class of Voting Stock shall be either cash or
the form used to acquire the largest number of shares of such class of
Voting Stock or stock of a Predecessor Corporation previously acquired
by it. The price determined in accordance with Paragraphs 2(a) and
2(b) of this Section A shall be subject to appropriate adjustment in
the event of any special dividend or other disposition of material
assets other than in the ordinary course of business, stock dividend,
stock split, combination of shares or similar event. Whether specific
consideration satisfies this subsection shall be determined by vote of
a majority of the Disinterested Directors.
(d) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such Business
Combination: (i) except as approved by a majority of the Disinterested
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding stock having preference over the Common
Stock as to dividends or upon liquidation; (ii) there shall have been
(1) no reduction
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in the annual rate of dividends paid on the Common Stock (except as
necessary to reflect any subdivision of the Common Stock), except as
approved by a majority of the Disinterested Directors, and (2) an
increase in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction that has
the effect of reducing the number of outstanding shares of the Common
Stock, unless the failure so to increase such annual rate is approved
by a majority of the Disinterested Directors; and (c) such Interested
Shareholder shall not have become the beneficial owner of any
additional shares of Voting Stock except as part of the transaction
that results in such Interested Shareholder's becoming an Interested
Shareholder.
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guaranties, pledges or other
financial assistance or any tax credits or other tax advantages
provided to or by the corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall have been mailed to public stockholders of the
corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
B. Certain Definitions. For purposes of this Article X:
1. "Business Combination" shall mean any transaction that is
referred to in any one or more of the following clauses (a) through (e):
(a) any merger or consolidation of the corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Shareholder or (ii) any other corporation (whether or not itself an
Interested Shareholder) that is, or after such merger or consolidation
would be, an Affiliate (as hereinafter defined) of an Interested
Shareholder; or
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(b) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the corporation or any Subsidiary having
an aggregate Fair Market Value of $5,000,000 or more; or
(c) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or series of transactions) of any
securities of the corporation or any Subsidiary to any Interested
Shareholder or any Affiliate of any Interested Shareholder in exchange
for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $5,000,000 or more; or
(d) the adoption of any plan or proposal for the liquidation
or dissolution of the corporation proposed by or on behalf of any
Interested Shareholder or any Affiliate of any Interested Shareholder;
or
(e) any reclassification of securities (including any reverse
stock split) or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
an Interested Shareholder) that has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of Equity Security (as hereinafter defined) of the
corporation or any Subsidiary that is directly or indirectly owned by
any Interested Shareholder or any Affiliate of any Interested
Shareholder.
2. "Person" shall mean any individual, firm, corporation or other entity.
3. "Interested Shareholder" shall mean any Person (other than the
corporation or any Subsidiary or employee benefit plan of the corporation or
any Subsidiary) that:
(a) is the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the outstanding Voting Stock; or
(b) at any time within the two-year period immediately prior
to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then outstanding
Voting Stock; or
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(c) is an assignee of or has otherwise succeeded to any shares
of Voting Stock or of capital stock of any Predecessor Corporation
that were at any time within the two-year period immediately prior to
the date in question beneficially owned by any Interested Shareholder,
if such assignment or succession shall have occurred in the course of
a transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
4. A person shall be a "beneficial owner" of any stock that:
(a) such Person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns directly or indirectly; or
(b) such Person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (ii) the right to vote pursuant to any agreement, arrangement or
understanding; or
(c) is beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
such stock.
5. For the purpose of determining whether a Person is an Interested
Shareholder pursuant to Paragraph 3 of this Section B, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of Paragraph 4 of this Section B but shall not include
any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
6. "Affiliate" and "Associate" shall have the meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1, 1993.
7. "Subsidiary" means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the
corporation, provided, however, that for purposes of the definition of
Interested Shareholder set forth in Paragraph 3 of this Section B, the term
"Subsidiary" shall
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mean only a corporation of which a majority of each class of Equity
Security is owned, directly or indirectly, by the corporation.
8. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a
member of the Board of Directors immediately before the time that the
Interested Shareholder became an Interested Shareholder, and any successor
of a Disinterested Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the Board of Directors.
9. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date
in question of a share of stock (i) on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or (ii) if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any similar system then in use, or (iii) if no such quotations
are available, the fair market value on the date in question of a share of
such stock as determined by a majority of the Disinterested Directors in
good faith; or (b) in the case of property other than cash or stock, the
fair market value of such property on the date in question as determined by
a majority of the Disinterested Directors in good faith.
10. In the event of any Business Combination in which the corporation
survives, the phrase "consideration other than cash to be received" as used
in Paragraphs 2(a) and 2(b) of Section A of this Article X shall include
the shares of Common Stock and the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
11. "Equity Security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
January 1, 1993.
12. A "Predecessor Corporation" includes any corporation of which the
corporation was at one time a wholly-owned subsidiary, or of which the
corporation would be deemed to be a legal successor in interest (by
contract or by merger or other operation of law).
C. Powers of the Board of Directors. A majority of the Disinterested
Directors shall have the power and duty to determine for the purposes of this
Article X, on the basis of information
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known to them after reasonable inquiry, (1) whether a Person is an Interested
Shareholder, (2) the number of shares of Voting Stock beneficially owned by any
Person, (3) whether a Person is an Affiliate or Associate of another, (4)
whether the assets that are the subject of any Business combination have, or
the consideration to be received for the issuance or transfer of securities by
the corporation or any Subsidiary in any Business Combination has, an aggregate
Fair Market Value of $5,000,000 or more. A majority of the Disinterested
Directors shall have the further power to interpret all of the terms and
provisions of this Article X.
D. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing
contained in this Article X shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.
E. Amendment of Article X. Notwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of the corporation (and notwithstanding
the fact that a lesser percentage may be specified by law, these Articles of
Incorporation or the Bylaws of the corporation), the affirmative vote of the
holders of 80% or more of the outstanding Voting Stock, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article X or any provision hereof.
ARTICLE XI
All actions of the shareholders must be taken at an annual or special
meeting of shareholders and may not be taken by a consent or consents in
writing.
ARTICLE XII
Special meetings of shareholders of the corporation may be called only by
the Chief Executive Officer or the Board of Directors of the corporation or by
the holders of at least 50% of all shares entitled to vote at the proposed
meeting.
ARTICLE XIII
The Board of Directors of the corporation only shall have the power to make,
alter or repeal the Bylaws of the corporation.
ARTICLE XIV
To the fullest extent permitted by Texas statutory or decisional law, as the
same exists or may hereafter be amended or
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interpreted, a director of the corporation shall not be liable to the
corporation or its shareholders for any act or omission in such director's
capacity as a director. Any repeal or amendment of this Article XIV, or adoption
of any other provision of these Articles of Incorporation inconsistent with
this Article XIV, by the shareholders of the corporation shall be prospective
only and shall not adversely affect any limitation on the liability to the
corporation or its shareholders of a director of the corporation existing at
the time of such repeal, amendment or adoption of an inconsistent provision.
ARTICLE XV
No contract or other transactions between the corporation and any other
corporation, firm or individual shall be affected or invalidated by the fact
that any one or more of the directors or officers of the corporation is or are
interested in or is a director or officer of such other corporation, or a
member of such firm, and any director or officer, individually or jointly, may
be a party to or may be interested in any contract or transaction with the
corporation, or in which the corporation is interested, and no contract, act or
transaction of the corporation with any person or persons, firms or
corporations, shall be affected or invalidated by the fact that any director or
officer of the corporation is a party to or interested in such contract, act or
transaction, or is in any way connected with such person or persons, firms or
corporations, and each and every person who may become a director or officer of
the corporation is hereby relieved from any liability that might otherwise
exist from contracting with the corporation for the benefit of himself or any
firm or corporation in which he may be in any way interested.
IN WITNESS WHEREOF, the undersigned Corporation has caused these Restated
Articles of Incorporation to be executed as of January 18, 1993.
PILLOWTEX CORPORATION
By: /s/ CHARLES M. HANSEN, JR.
-----------------------------
Charles M. Hansen, Jr.
President
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STATEMENT OF
CANCELLATION OF TREASURY SHARES
To the Secretary of State of the State of Texas:
Pursuant to the provisions of Article 4.11 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement of
cancellation by resolution of its board of directors of shares of the
corporation reacquired by it, other than redeemable shares redeemed or
purchased:
1. The name of the corporation is Pillowtex Corporation.
2. A resolution was duly adopted by all necessary action on the
part of the corporation on February 10, 1993, authorizing the cancellation of
12,545 shares of Common Stock, $0.01 par value per share, held as Treasury
Stock of the corporation.
The amount of stated capital represented by the shares to be cancelled is
One Hundred Twenty-Five and Forty-Five Hundredths Dollars ($125.45).
3. The aggregate number of issued shares, itemized by classes and series
and par value, if any, after giving effect to such cancellation is 19,155
itemized as follows:
<TABLE>
<CAPTION>
Class Par Value Number of Shares
----- --------- ----------------
<S> <C> <C>
Common Stock $0.01 19,155
</TABLE>
4. The amount of the stated capital of the corporation, after giving
effect to such cancellation, is $191.55.
Dated: February 10, 1993
PILLOWTEX CORPORATION
By: /s/ CHARLES M. HANSEN, JR.
--------------------------------
Charles M. Hansen, Jr.
President
<PAGE> 32
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PILLOWTEX CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, Pillowtex Corporation (the "Company"), hereby adopts the following
Articles of Amendment to its Articles of Incorporation.
ARTICLE ONE. The name of the corporation is Pillowtex Corporation.
ARTICLE TWO. The following amendments to the Amended and Restated Articles
of Incorporation was adopted by the shareholders of the Company as of February
15, 1993:
(a) Article X of the Amended and Restated Articles of
Incorporation be amended to read in its entirety as follows:
"ARTICLE X
A. Approval of Certain Business Combinations. A Business
Combination (as hereinafter defined) during the three-year period
immediately following the date that a shareholder became an Interested
Shareholder (as hereinafter defined) shall require (i) only such
affirmative vote as is required by law and any other provision of
these Articles of Incorporation, if all of the conditions specified in
Paragraph 1, 2, 3 or 4 of this Section A are met, or (ii) in addition
to any affirmative vote required by law or these Articles of
Incorporation, the affirmative vote of the holders of at least 66-2/3%
of the voting power of the then outstanding shares of capital stock of
the corporation that are entitled to vote generally in the election of
directors (referred to in this Article X as the "Voting Stock") and
that are not owned by the Interested Shareholder, voting together as a
single class (it being understood that for the purposes of this
Article X, each share of the Voting Stock shall have the number of
votes granted to it pursuant to Article V of these Articles of
Incorporation). Such affirmative vote shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage may be specified, by law.
1. Approval by Disinterested Directors. The Business
Combination or the transaction that resulted in the
shareholder becoming an Interested Shareholder shall
<PAGE> 33
have been approved by a majority of the Disinterested Directors
(as hereinafter defined).
2. Price and Procedure Requirements. All of the following
conditions shall have been met:
(a) The aggregate amount of the cash and the Fair Market Value
(as hereinafter defined) as of the date of the consummation of the
Business Combination of consideration other than cash to be received
per share by holders of shares of Common Stock in such Business
Combination shall be at least equal to the higher of the following:
(i) (if applicable) the highest price per share
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Shareholder
(as hereinafter defined) for any shares of Common Stock
acquired by it (1) within the three-year period immediately
prior to the first public announcement of the terms of the
proposed Business Combination (the "Announcement Date") or
(2) in the transaction in which it became an Interested
Shareholder, whichever is higher; and
(ii) the Fair Market Value per share of Common Stock on
the Announcement Date or on the date on which the Interested
Shareholder became an Interested Shareholder (such later date
is referred to in this Article X as the "Determination Date"),
whichever is higher.
(b) The aggregate amount of the cash and the Fair Market
Value as of the date of the consummation of the Business Combination
of consideration other than cash to be received per share by holders
of shares of any class of outstanding Voting Stock other than Common
Stock shall be at least equal to the highest of the following (it
being intended that the requirements of this Paragraph 2(b) shall be
required to be met with respect to every class of outstanding Voting
Stock, whether or not the Interested Shareholder has previously
acquired any shares of a particular class of Voting Stock);
(i) (if applicable) the highest price per share (including
any brokerage commissions, transfer taxes and soliciting dealers'
fees) paid by the Interested
2
<PAGE> 34
Shareholder for any shares of such class of Voting stock
acquired by it (1) within the three-year period immediately prior
to the Announcement Date or (2) in the transaction in which it
became an Interested Shareholder, whichever is higher;
(ii) (if applicable) the highest preferential amount per share
to which the holders of shares of such class of Voting Stock are
entitled in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the corporation; and
(iii) the Fair Market Value per share of such class of Voting
Stock on the Announcement Date or on the Determination Date,
whichever is higher.
(c) The consideration to be received by holders of a
particular class of outstanding Voting Stock (including Common Stock)
shall be in cash or in the same form as the Interested Shareholder has
previously paid for shares of such class of Voting Stock. If the
Interested Shareholder has paid for shares of any class of Voting
Stock with varying forms of consideration, the form of consideration
for such class of Voting Stock shall be either cash or the form used
to acquire the largest number of shares of such class of Voting Stock
previously acquired by it. The price determined in accordance with
Paragraphs 2(a) and 2(b) of this Section A shall be subject to
appropriate adjustment in the event of any special dividend or other
disposition of material assets other than in the ordinary course of
business, stock dividend, stock split, combination of shares or
similar event. Whether specific consideration satisfies this
subsection shall be determined by vote of a majority of the
Disinterested Directors.
(d) After such Interested Shareholder has become an
Interested Shareholder and prior to the consummation of such Business
combination: (i) except as approved by a majority of the Disinterested
Directors, there shall have been no failure to declare and pay at the
regular date therefor any full quarterly dividends (whether or not
cumulative) on any outstanding stock having preference over the Common
Stock as to dividends or upon liquidation; (ii) there shall have been
(1) no
3
<PAGE> 35
reduction in the annual rate of dividends paid on the Common Stock
(except as necessary to reflect any subdivision of the Common Stock) ,
except as approved by a majority of the Disinterested Directors, and
(2) an increase in such annual rate of dividends as necessary to
reflect any reclassification (including any reverse stock split),
recapitalization, reorganization or any similar transaction that has
the effect of reducing the number of outstanding shares of the Common
Stock, unless the failure so to increase such annual rate is approved
by a majority of the Disinterested Directors; and (c) such Interested
Shareholder shall not have become the beneficial owner of any
additional shares of Voting Stock except as part of the transaction
that results in such Interested Shareholder's becoming an Interested
Shareholder.
(e) After such Interested Shareholder has become an Interested
Shareholder, such Interested Shareholder shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guaranties, pledges or other
financial assistance or any tax credits or other tax advantages
provided to or by the corporation, whether in anticipation of or in
connection with such Business Combination or otherwise.
(f) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules or
regulations) shall have been mailed to public stockholders of the
corporation at least 30 days prior to the consummation of such
Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
3. Acquisition of 85% of Voting Stock. Upon consummation of the
transaction that resulted in the shareholder becoming an Interested
Shareholder, the Interested Shareholder owned at least 85% of the Voting
Stock outstanding at the time such transaction commenced.
4. Previously Proposed Business Combinations. The Business
Combination is proposed prior to the consummation or abandonment of and
subsequent to the earlier of the public announcement or the notice required
4
<PAGE> 36
hereunder of a proposed transaction that (i) constitutes one of the
transactions described in the second sentence of this Paragraph; (ii) is
with or by a person who either was not an Interested Shareholder during the
previous three years or who became an Interested Shareholder with the
approval of the corporation's Board of Directors; and (iii) is approved or
not opposed by a majority of the Disinterested Directors then in office
(but not less than one) . The proposed transactions referred to in the
preceding sentence are limited to (x) a merger or consolidation of the
corporation; (y) a sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions), whether
as part of a dissolution or otherwise, of assets of the corporation or of
any Subsidiary (as hereinafter defined) (other than to any wholly-owned
Subsidiary or to the corporation) having an aggregate Fair Market Value
equal to 50% or more of either the aggregate Fair Market Value of all of
the assets of the corporation determined on a consolidated basis or the
aggregate Fair Market Value of all the outstanding stock of the
corporation; or (z) a proposed tender or exchange offer for 50% or more of
the outstanding Voting Stock. The corporation shall give not less than 20
days notice to all Interested Shareholders prior to the consummation of any
of the transactions described in clauses (x) or (y) of the second sentence
of this Paragraph.
B. Certain Definitions. For purposes of this Article X:
1. "Business Combination" shall mean any transaction that is referred to
in any one or more of the following clauses (a) through (e):
(a) any merger or consolidation of the corporation or any
Subsidiary with (i) any Interested Shareholder or (ii) any other
corporation (whether or not itself an Interested Shareholder) that is,
or after such merger or consolidation would be, an Affiliate (as
hereinafter defined) of an Interested Shareholder; or
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or
with any Interested Shareholder or any Affiliate of any Interested
Shareholder of any assets of the corporation or any Subsidiary having
an aggregate Fair Market Value equal to 10% or more of either the Fair
Market Value of all the assets of the corporation determined on a
consolidated basis or
5
<PAGE> 37
the aggregate Fair Market Value of all the outstanding stock of the
corporation; or
(c) the issuance or transfer by the corporation or any
Subsidiary (in one transaction or series of transactions) of any
securities of the corporation or any Subsidiary to any interested
Shareholder or any Affiliate of any Interested Shareholder in
exchange for cash, securities or other property (or a combination
thereof), except (i) pursuant to the exercise, exchange or conversion
of securities exercisable for, exchangeable for or convertible into
stock of the corporation or any Subsidiary, which securities were
outstanding prior to the time that the Interested Shareholder became
such, (ii) pursuant to a dividend or distribution paid or made, or the
exercise, exchange or conversion of securities exercisable for,
exchangeable for or convertible into stock of the corporation or any
Subsidiary, which security is distributed, pro rata, to all holders of
a class or series of stock of the corporation subsequent to the time
the Interested Shareholder became such, (iii) pursuant to an exchange
offer by the corporation to purchase stock made on the same terms to
all holders of such stock, or (iv) any issuance or transfer of stock
by the corporation, provided however, that in no case under (i)
through (iv) shall there be an increase in the Interested
Shareholder's proportionate share of the stock of any class or series
of the corporation or of the Voting Stock; or
(d) the adoption of any plan or proposal for the liquidation
or dissolution of the corporation proposed by or on behalf of any
Interested Shareholder or any Affiliate of any Interested Shareholder;
or
(e) any reclassification of securities (including any reverse
stock split) or recapitalization of the corporation, or any merger or
consolidation of the corporation with any of its Subsidiaries or any
other transaction (whether or not with or into or otherwise involving
an Interested Shareholder) that has the effect, directly or
indirectly, of increasing the proportionate share of the outstanding
shares of any class of Equity Security (as hereinafter
6
<PAGE> 38
defined) of the corporation or any Subsidiary that is directly or
indirectly owned by any Interested Shareholder or any Affiliate of any
Interested Shareholder.
2. "Person" shall mean any individual, firm, corporation or other entity.
3. "Interested Shareholder" shall mean any Person (other than the
corporation or any Subsidiary or employee benefit plan of the corporation or
any Subsidiary) that:
(a) is the beneficial owner, directly or indirectly, of 15% or
more of the outstanding Voting Stock; or
(b) is an assignee of or has otherwise succeeded to any shares
of Voting Stock that were at any time within the three-year period
immediately prior to the date in question beneficially owned by any
Interested Shareholder, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities Act
of 1933.
4. A person shall be a "beneficial owner" of any stock that:
(a) such Person or any of its Affiliates or Associates (as
hereinafter defined) beneficially owns directly or indirectly; or
(b) such Person or any of its Affiliates or Associates has (i)
the right to acquire (whether such right is exercisable immediately or
only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding; or
(c) is beneficially owned, directly or indirectly, by any
other Person with which such Person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
such stock.
7
<PAGE> 39
5. For the purpose of determining whether a Person is an Interested
Shareholder pursuant to Paragraph 3 of this Section B, the number of shares
of Voting Stock deemed to be outstanding shall include shares deemed owned
through application of Paragraph 4 of this Section B but shall not include
any other shares of Voting Stock that may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion
rights, warrants or options, or otherwise.
6. "Affiliate" and "Associate" shall have the meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on January 1, 1993.
7. "Subsidiary" means any corporation of which a majority of any
class of Equity Security is owned, directly or indirectly, by the
corporation, provided, however, that for purposes of the definition of
Interested Shareholder set forth in Paragraph 3 of this Section B, the term
"Subsidiary" shall mean only a corporation of which a majority of each
class of Equity Security is owned, directly or indirectly, by the
corporation.
8. "Disinterested Director" means any member of the Board of
Directors who is unaffiliated with the Interested Shareholder and was a
member of the Board of Directors immediately before the time that the
Interested Shareholder became an Interested Shareholder, and any successor
of a Disinterested Director who is unaffiliated with the Interested
Shareholder and is recommended to succeed a Disinterested Director by a
majority of Disinterested Directors then on the Board of Directors.
9. "Fair Market Value" means: (a) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date
in question of a share of stock (i) on the principal United States
securities exchange registered under the Securities Exchange Act of 1934 on
which such stock is listed, or (ii) if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of such
stock during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any similar system then in use, or (iii) if no such quotations
are available, the fair market value on the date in question of a share of
such stock as determined by a majority of the Disinterested Directors in
good faith; or (b) in the
8
<PAGE> 40
case of property other than cash or stock, the fair market value of such
property on the date in question as determined by a majority of the
Disinterested Directors in good faith.
10. In the event of any Business Combination in which the corporation
survives, the phrase "consideration other than cash to be received" as used
in Paragraphs 2(a) and 2(b) of Section A of this Article X shall include
the shares of Common Stock and the shares of any other class of outstanding
Voting Stock retained by the holders of such shares.
11. "Equity Security" shall have the meaning ascribed to such term in
Section 3(a)(11) of the Securities Exchange Act of 1934, as in effect on
January 1, 1993.
12. "Announcement Date" shall have the meaning set forth in Section
A(2)(a)(i) of this Article X.
13. "Determination Date" shall have the meaning set forth in Section
A(2)(a)(ii) of this Article X.
14. "Voting Stock" shall have the meaning set forth in the first
paragraph of Section A of this Article X.
C. Powers of the Board of Directors. A majority of the Disinterested
Directors shall have the power and duty to determine for the purposes of this
Article X, on the basis of information known to them after reasonable inquiry,
(1) whether a Person is an Interested Shareholder, (2) the number of shares of
Voting Stock beneficially owned by any Person, (3) whether a Person is an
Affiliate or Associate of another, (4) whether the assets that are the subject
of any Business Combination have an aggregate Fair Market Value equal to 10% or
more of either the Fair Market Value of all the assets of the corporation
determined on a consolidated basis or the aggregate Fair Market Value of all
the outstanding stock of the corporation. A majority of the Disinterested
Directors shall have the further power to interpret all of the terms and
provisions of this Article X.
D. No Effect on Fiduciary Obligations of Interested Shareholders. Nothing
contained in this Article X shall be construed to relieve any Interested
Shareholder from any fiduciary obligation imposed by law.
E. Amendment of Article X. Notwithstanding any other provisions of these
Articles of Incorporation or the Bylaws of
9
<PAGE> 41
the corporation (and notwithstanding the fact that a lesser percentage
may be specified by law, these Articles of Incorporation or the Bylaws
of the corporation), the affirmative vote of the holders of 80% or more of
the outstanding Voting Stock, voting together as a single class, shall be
required to amend or repeal, or adopt any provision inconsistent with, this
Article X or any provision hereof."
(b) Article XIII of the Amended and Restated Articles of Incorporation
be amended to read in its entirety as follows:
"ARTICLE XIII
The Bylaws of the corporation may be amended or repealed or new Bylaws may
be adopted by the affirmative vote of either (a) the holders of at least
80% of the voting power of the then outstanding shares of capital stock of
the corporation entitled to vote generally in the election of directors, or
(b) the majority of the directors present at any meeting of the Board of
Directors of the corporation at which a quorum is present.
Notwithstanding any other provisions of these Articles of Incorporation or
the Bylaws of the corporation (and notwithstanding that a lesser percentage
may be specified by law, these Articles of Incorporation or the Bylaws of
the corporation), the affirmative vote of the holders of at least 80% of
the outstanding capital stock of the corporation, voting together as a
single class, shall be required to amend or repeal, or adopt any provision
inconsistent with, this Article XIII or any provision hereof."
ARTICLE THREE. The number of shares of Common Stock of the Company
outstanding and entitled to vote was 6,505,224 at the time of the adoption of
this amendment.
ARTICLE FOUR. The holders of all of the shares of Common Stock
outstanding and entitled to vote have signed a written consent to the adoption
of this amendment.
10
<PAGE> 42
DATED as of the 15th day of February, 1993.
PILLOWTEX CORPORATION
By: /s/ CHARLES M. HANSEN, JR.
-------------------------------
Charles M. Hansen, Jr.,
President
11
<PAGE> 43
ARTICLES OF CORRECTION
TO THE
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PILLOWTEX CORPORATION
Pursuant to Article 1302-7.01 et seq of the Texas Miscellaneous
Corporation Laws Act, these Articles of Correction are adopted to correct a
document which is an inaccurate record of corporate action, contains an
inaccurate or erroneous statement, or was defectively or erroneously executed,
sealed, acknowledged, or verified.
ARTICLE ONE
The name of the corporation is Pillowtex Corporation.
ARTICLE TWO
The document to be corrected is the Articles of Amendment to the Amended and
Restated Articles of Incorporation of Pillowtex Corporation filed in the Office
of the Secretary of State of Texas on February 17, 1993.
ARTICLE THREE
The Articles are erroneous, inaccurate, or incomplete because they
erroneously state in Article Four that holders of all of the shares of Common
Stock outstanding and entitled to vote have signed a written consent to the
adoption of the Articles of Amendment.
ARTICLE FOUR
These Articles of Correction correct the Articles of Amendment by
substituting the following for Article Four in its entirety:
"ARTICLE FOUR. At a special meeting of shareholders called for the
purpose of voting on adoption of this amendment, the holders of
6,284,808 shares of Common Stock outstanding and entitled to vote
voted for this amendment and the holders of -0- shares of Common Stock
outstanding and entitled to vote voted against this amendment."
<PAGE> 44
IN WITNESS WHEREOF, these Articles of Correction are dated as of March 12, 1993.
PILLOWTEX CORPORATION
By: /s/ STEPHEN P. RICHMAN
-------------------------------
Stephen P. Richman,
Vice President
2
<PAGE> 45
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PILLOWTEX CORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, Pillowtex Corporation (the "Company"), hereby adopts the following
Articles of Amendment to its Articles of Incorporation.
ARTICLE ONE. The name of the corporation is Pillowtex corporation.
ARTICLE TWO. The following amendments to the Amended and Restated Articles
of Incorporation were adopted by the shareholders of the Company as of March
12, 1993:
(a) Article XI of the Amended and Restated Articles of
Incorporation be amended to read in its entirety as follows:
"ARTICLE XI
[INTENTIONALLY LEFT BLANK]"
(b) Article XII of the Amended and Restated Articles of
Incorporation be amended to read in its entirety as follows:
"ARTICLE XII
Special meetings of shareholders of the corporation may be called
only by the Chief Executive Officer, the President or the Board of
Directors of the corporation or by the holders of at least 50% of all
shares entitled to vote at the proposed meeting."
ARTICLE THREE. The number of shares of Common Stock of the Company
outstanding and entitled to vote was 6,505,224 at the time of the adoption of
this amendment.
ARTICLE FOUR. At a special meeting of shareholders called for the
purpose of voting on adoption of this amendment, the holders of 6,284,808
shares of Common Stock outstanding and entitled to vote voted for this
amendment and the holders of -0- shares of Common Stock outstanding and entitled
to vote voted against this amendment.
<PAGE> 46
IN WITNESS WHEREOF, these Articles of Amendment are dated as of March 12, 1993.
PILLOWTEX CORPORATION
By: /s/ STEPHEN P. RICHMAN
------------------------------------
Stephen P. Richman,
Vice President
2
<PAGE> 47
STATEMENT 0F
CANCELLATION OF TREASURY SHARES
To the Secretary of State of the State of Texas:
Pursuant to the provisions of Article 4.11 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement of
cancellation by resolution of its board of directors of shares of the
corporation reacquired by it, other than redeemable shares redeemed or
purchased:
1. The name of the corporation is Pillowtex Corporation.
2. A resolution was duly adopted by all necessary action on
the part of the corporation on March 25, 1993, authorizing the cancellation of
12,343,296 shares of Common Stock, $0.01 par value per share, held as Treasury
Stock of the corporation.
The amount of stated capital represented by the shares to be cancelled is
One Hundred Twenty-Three Thousand Four Hundred Thirty-Two and Ninety-Six
Hundredths Dollars ($123,432.96).
3. The aggregate number of issued shares, itemized by classes and
series and par value, if any, after giving effect to such cancellation is
10,590,224 itemized as follows:
<TABLE>
<CAPTION>
Class Par Value Number of Shares
----- --------- ----------------
<S> <C> <C>
Common Stock $0.01 10,590,224
</TABLE>
4. The amount of the stated capital of the corporation, after
giving effect to such cancellation, is $105,902.24
Dated: March 25, 1993
PILLOWTEX CORPORATION
By: /s/ CHARLES M. HANSEN, JR.
----------------------------------
Charles M. Hansen, Jr.
President
<PAGE> 48
STATEMENT OF RESOLUTION
FOR
SERIES A REDEEMABLE CONVERTIBLE
PREFERRED STOCK
OF
PILLOWTEX CORPORATION
PURSUANT TO ARTICLE 2.13 OF THE TEXAS
BUSINESS CORPORATION ACT
I, Jeffrey D. Cordes, President of Pillowtex Corporation, a
corporation organized and existing under the Texas Business Corporation Act
(the "Company"), DO HEREBY CERTIFY that at a meeting of the Board of Directors
on December 15, 1997, at which meeting a quorum was present, the following
resolution was adopted:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of Article V of the
Company's Restated Articles of Incorporation, as amended, a series of Preferred
Stock, par value $0.01 per share, of the Company be, and hereby is, created,
and the designations, preferences, and relative rights of the shares of such
series, and the qualifications, limitations or restrictions thereof, be, and
hereby are, as follows:
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series A Redeemable Convertible Preferred Stock" (the
"Preferred Stock") and the number of shares constituting such series initially
shall be 200,000.
Section 2. Definitions. For purposes of this Statement of
Resolution, the following definitions shall apply:
"1999 EPS" shall mean EPS for the twelve month fiscal year of the
Company ending January 1, 2000.
"1999 Pro Forma EPS" shall mean 1999 EPS calculated on a pro forma
basis assuming (i) the dividend rate on the Preferred Stock for calendar 1997
(if applicable) and calendar 1998 was the Adjusted 1998 Dividend Rate; (ii) the
dividend rate on the Preferred Stock for calendar 1999 was (a) 10.0% of Stated
Value per annum if 1999 EPS is less than $2.35, (b) 7.0% of Stated Value per
annum if 1999 EPS is greater than, or equal to, $2.35 but less than $2.70, and
(c) 3.0% of Stated Value per annum if 1999 EPS is greater than, or equal to,
$2.70; and (iii) any incremental dividends included pursuant to clauses (i) and
(ii) which were not paid when due (in either cash or shares of Preferred Stock)
were paid in additional shares of Preferred Stock (including the effect of all
dividends earned on unpaid dividends).
"Adjusted 1998 Dividend Rate" shall mean (i) if 1999 EPS is equal to,
or greater than, $2.35 (as adjusted pursuant to Section 3), 3% of Stated Value
per annum, or (ii) if 1999 EPS is less than $2.35 (as adjusted pursuant to
Section 3), 10% of Stated Value per annum.
<PAGE> 49
"Affiliate" of any specified Person shall mean:
(a) any other Person which, directly or indirectly, is in
control of, is controlled by or is under common control with such
specified Person; or
(b) any other Person which beneficially owns or holds ten
percent or more of any class of the share capital normally entitled to
vote in the election of directors of such specified Person; or
(c) any other Person of which ten percent or more of the
share capital normally entitled to vote in the election of directors
of such Person is beneficially owned or held by such specified Person
or a subsidiary of such specified Person; or
(d) any other Person who is a director or officer (i) of
such specified Person; (ii) of any Subsidiary of such specified Person
or (iii) of any Person described in paragraph (a) above; and
for purposes of this definition, "control" of a Person means the power, direct
or indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Dividends Owed" shall mean the aggregate amount of
dividends which would have been paid on the Preferred Stock from the Issue Date
through and including the last Dividend Payment Date prior to the Final
Determination Date assuming (i) the dividend rate on the Preferred Stock for
calendar 1997 (if applicable) and calendar 1998 was (a) 3.0% of Stated Value
per annum if 1999 Pro Forma EPS is equal to, or greater than, $2.35 (as
adjusted pursuant to Section 3), or (b) 10.0% of Stated Value per annum if 1999
Pro Forma EPS is less than $2.35 (as adjusted pursuant to Section 3); (ii) the
dividend rate on the Preferred Stock for calendar 1999 was the Applicable
Dividend Rate; and (iii) any incremental dividends included in calculating
dividends pursuant to clauses (i) and (ii) which were not paid when due (in
either cash or shares of Preferred Stock) were paid in additional shares of
Preferred Stock (including the effect of all dividends earned on unpaid
dividends).
"Aggregate Dividends Paid" shall mean the aggregate amount of
dividends actually paid (whether in cash or additional shares of Preferred
Stock) from the Issue Date through and including the last Dividend Payment Date
prior to the Final Determination Date, including amounts actually paid in cash
pursuant to Section 3(c).
"Applicable Dividend Rate" shall have the meaning assigned to it in
Section 3.
"Asset Sales" shall mean the sale or conveyance of assets in one or a
series of related transactions (other than inventory sold in the ordinary
course of business) having a fair market value in excess of $1,000,000.
A "Bankruptcy Event" shall be deemed to have occurred with respect to
a Person if such Person shall:
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(i) generally fail to pay, or admit in writing its
inability to pay, its debts as they become due;
(ii) apply for, consent to or acquiesce in, the
appointment of a liquidator, trustee, receiver,
sequestrator or other custodian for itself or any of
its material Subsidiaries or any property of any
thereof, or make a general assignment for the benefit
of creditors;
(iii) in the absence of such application, consent or
acquiescence, permit or suffer to exist the
appointment of a liquidator, trustee, receiver,
sequestrator or other custodian for itself or any of
its material Subsidiaries or for a substantial part
of the property of any thereof and such appointment
shall not be discharged within 30 days;
(iv) commence, or permit or suffer to exist the
commencement of, any bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution,
winding up or liquidation proceeding, in respect of
such Person or any of its material Subsidiaries, and,
if such case or proceeding is not commenced by such
Person or any such Subsidiaries, such case or
proceeding shall be consented to or acquiesced in by
such Person or any of its material Subsidiaries or
shall result in the entry of any order for relief or
shall remain for 30 days undismissed; or
(v) take any action to authorize any of the foregoing.
"Board" shall mean the Board of Directors of the Company.
"Business Day" means any day which is neither a Saturday or
Sunday nor a legal holiday on which banks are authorized or required
to be closed in New York, New York.
"Capital Stock" shall mean any class or series of capital
stock of the Company.
"Catch Up Dividend" shall have the meaning set forth in
Section 3(d).
"Change of Control" shall have the meaning assigned to it in
the Indenture except that any transaction or series of transactions in
which the Apollo Purchasers (as defined in the Purchase Agreement) or
their Affiliates or any transferees of any of the foregoing (either
individually or as part of a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended) acquire 50% or more
of the Company's capital stock shall not be deemed a Change of
Control.
"Company" shall mean Pillowtex Corporation, a Texas
corporation.
"Common Stock" shall mean the Common Stock, par value $0.01,
of the Company.
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"Common Stock's Fair Market Value" shall mean (i) if the
Common Stock is listed on a national securities exchange, the closing
sale price per share on the principal exchange on which the Common
Stock is listed as reported by such exchange, (ii) if the Common Stock
is quoted in the National Market System, the closing sale price per
share as reported by NASDAQ or (iii) if the Common Stock is traded in
the over-the- counter market but not quoted in the National Market
System, the average of the closing bid and asked quotations per share
as reported by NASDAQ, or any other nationally accepted reporting
medium if NASDAQ quotations shall be unavailable.
"Control Notice" shall have the meaning assigned to it in
Section 6(c)(ii).
"Conversion Date" shall have the meaning assigned to it in
Section 7(c).
"Conversion Price" shall mean $24.00 per share; provided that
if the Determination Price is less than $23.00 then the Conversion
Price shall equal the Determination Price plus $1.00; provided
further, that the Conversion Price shall, in any event, be subject to
adjustment from time to time as provided in Section 7.
"Determination Price" shall mean the average of the closing
sales prices of the Company's Common Stock as reported on the New York
Stock Exchange Composite Transactions List for each of the 20
consecutive trading days immediately preceding the fifth trading day
prior to the Closing Date (as defined in the Agreement and Plan of
Merger dated September 10, 1997 among the Company, a Company
Subsidiary and the Target).
"Dividend Adjustment Amount" shall mean the difference between
(i) the Aggregate Dividends Owed and (ii) the Aggregate Dividends
Paid.
"Dividend Increase" shall have the meaning assigned to it in
Section 3.
"Dividend Payment Date" means each of March 31, June 30,
September 30 and December 31 upon which quarterly dividend payments
are due.
"EPS" for any fiscal year shall mean the Company's diluted
earnings per share (as calculated based on Financial Accounting
Standard Board Statement No. 128) as included in the Company's audited
financial statements for such fiscal year, as adjusted to exclude the
following items set forth, included or reflected in such audited
statements (a) the after-tax effect of any changes in GAAP from
September 5, 1997, other than the effects of Financial Accounting
Standards Board Statement No. 128, (b) the after-tax effect of any
extraordinary gains or losses, and (c) the after-tax effect of gains
on Asset Sales.
"Event of Noncompliance" shall have the meaning assigned to it
in Section 10.
"Final Determination Date" shall have the meaning assigned to
it in Section 3.
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"GAAP" shall mean generally acceptable accounting principles
consistently applied in the United States, unless any other
jurisdiction is specified, in which case it shall be the equivalent
set of accounting principles for such jurisdiction.
"Indenture" means the Indenture dated as of November 12, 1996,
between the Company, certain guarantors described therein and Bank
One, Columbus, N.A., as trustee, relating to the Series A and Series B
10% Senior Subordinated Notes of the Company.
"Issue Date" shall mean the date of original issuance of the
Preferred Stock.
"Junior Securities" shall mean Capital Stock of the Company
that, with respect to dividend distributions and distributions upon
the liquidation, winding up or dissolution of the Company, rank junior
to the Preferred Stock.
"Liquidation Preference" shall have the meaning assigned to it
in Section 4.
"Majority of the Preferred Stock" shall mean more than 50% of
the outstanding shares of Preferred Stock.
"Mandatory Redemption Date" shall have the meaning assigned to
it in Section 5(b).
"Mandatory Redemption Price" shall have the meaning assigned
to it in Section 5(b).
"Optional Redemption Date" shall have the meaning assigned to
it in Section 5(a)(i).
"Optional Redemption Price" shall have the meaning assigned to
it in Section 5(a)(i).
"Parity Securities" shall mean Capital Stock of the Company
that, with respect to dividend distributions and distributions upon
the liquidation, winding-up or dissolution of the Company, ranks on a
parity with the Preferred Stock and has a mandatory redemption date on
or after the Mandatory Redemption Date.
"Participating Holder" shall have the meaning assigned to it
in Section 6(c)(ii).
"Permitted Indebtedness" shall mean (i) term loans issued
pursuant to the Company's senior credit facilities contemplated in
Section 9.8(b) of the Purchase Agreement, (ii) the subordinated debt
contemplated in Section 9.8(c) of the Purchase Agreement, (iii) $22
million of the Company's and the Target's industrial revenue bonds,
(iv) approximately $125 million of the Company's 10% Senior
Subordinated Notes due 2006 under the Indenture and (v) approximately
$117.8 million principal amount of the Target's 6% Convertible
Subordinated Debentures due 2012 ("6% Notes") (reduced to the extent
such 6% Notes have theretofore been converted in accordance with their
terms).
"Person" shall include all natural persons, corporations,
business trusts, associations, companies, partnerships, joint ventures
and other entities and governments and agencies and political
subdivisions.
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"Preferred Stock" shall mean the Series A Redeemable
Convertible Preferred Stock of the Company.
"Purchase Agreement" shall mean the Purchase Agreement dated
as of September 10, 1997 among the Company and the purchasers named
therein pursuant to which 65,000 shares of Preferred Stock are to be
issued, including all schedules and exhibits thereto, as such Purchase
Agreement may be from time to time amended, modified or supplemented.
"Reclassification" shall mean any capital reorganization of
the Company, any reclassification of the Common Stock, the
consolidation of the Company with or the merger of the Company with or
into any other Person, a statutory share exchange having an effect
similar to a merger or consolidation, the sale, lease or other
transfer of all or substantially all of the assets of the Company to
any other Person or any similar transaction. The subdivision or
combination of shares of Common Stock issuable upon conversion of
shares of Preferred Stock at any time outstanding into a greater or
lesser number of shares of Common Stock (whether with or without par
value) shall not be deemed to be a "Reclassification" of the Common
Stock for the purposes of Section 7(d)(iv).
"Senior Securities" shall mean Capital Stock of the Company
that, with respect to dividend distributions and distributions upon
the liquidation, winding-up or dissolution of the Company, ranks
senior to the Preferred Stock or Capital Stock that, with respect to
dividend distributions and distributions upon the liquidation,
winding-up or dissolution of the Company ranks on a parity with the
Preferred Stock and has a mandatory redemption date prior to the
Mandatory Redemption Date.
"Special Redemption Date" shall have the meaning assigned to
it in Section 5(a)(ii).
"Special Redemption Price" shall have the meaning assigned to
it in Section 5(a)(ii).
"Stated Value" shall be an amount equal to $1,000 per share of
Preferred Stock.
"Subsidiary" means, as to any Person, (a) any corporation 51%
or more of the outstanding shares of capital stock of which having
ordinary voting power for the election of directors is owned directly
or indirectly by such Person and (b) any partnership, association,
joint venture or other entity in which such Person and/or one or more
Subsidiaries of such Person has 51% or more of an equity interest at
the time.
"Target" shall mean Fieldcrest Cannon, Inc., a Delaware
corporation.
"Target Acquisition" shall have the meaning assigned to it in
the Purchase Agreement.
The foregoing definitions shall be equally applicable to both
the singular and plural forms of the defined terms.
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Section 3. Dividends. The holders of the outstanding shares of
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board, out of funds legally available therefor, distributions in the form of
dividends on each share of Preferred Stock as set forth below:
(a) Right to Dividends.
(i) Subject to the provisions of this Section 3,
beginning on the Issue Date through and including December 31, 1999, at a rate
per annum of 3% of Stated Value;
(ii) Beginning on January 1, 2000 through and including
the Mandatory Redemption Date, at a rate (the "Applicable Dividend Rate") per
annum based upon 1999 Pro Forma EPS as follows: (A) if 1999 Pro Forma EPS is
less than $2.35, then the dividend rate shall be 10.0% of Stated Value per
annum; (B) if 1999 Pro Forma EPS is greater than, or equal to, $2.35 but less
than $2.70, then the dividend rate shall be 7.0% of Stated Value per annum; and
(C) if 1999 Pro Forma EPS is greater than or equal to $2.70, then the dividend
rate shall be 3.0% of Stated Value per annum;
in each case subject to increase as set forth herein.
Each of the $2.35 and $2.70 targets for 1999 Pro Forma EPS set forth
above shall be (A) appropriately adjusted for (x) subdivisions and combinations
of shares of Common Stock, (y) Reclassifications and (z) dividends on Common
Stock payable in shares of Common Stock subsequent to the Issue Date and (B)
reduced by an amount equal to (rounded to the nearest hundredth) (x) 0.065
multiplied by (y)(i) $23.00 minus (ii) the Determination Price, but the
provisions of this clause (B) shall only be applicable if the Determination
Price is less than $23.00.
(b) Determination of 1999 EPS and 1999 Pro Forma EPS. The Company
will promptly (and in any event within 5 Business Days) after determination of
1999 EPS (which date of determination shall be no later than March 31, 2000),
determine 1999 Pro Forma EPS and send to each record holder of Preferred Stock
at its record address a written statement of its calculation of 1999 EPS and
1999 Pro Forma EPS (including each adjustment thereto for the items described
in clauses (a) through (c) of the definition of EPS in Section 2 hereof and any
adjustments pursuant to the definition of 1999 Pro Forma EPS in Section 2
hereof), and a negative assurance letter from the Company's auditors to the
effect that they have reviewed such 1999 EPS and 1999 Pro Forma EPS
calculations and that nothing has come to the auditors' attention that would
cause them to believe that 1999 EPS and 1999 Pro Forma EPS were not calculated
as required by this Statement of Resolution. In the event that the holders of
a Majority of the Preferred Stock disagree with the calculation of 1999 EPS
and/or 1999 Pro Forma EPS ("Disagreeing Holders"), such Disagreeing Holders (or
their duly appointed representative) shall notify the Company in writing of
such disagreement within 30 days after the applicable notice of such 1999 EPS
and 1999 Pro Forma EPS figures have been sent by the Company. Failure to send
such notice of disagreement within such time period shall be deemed acceptance
of the Company's 1999 EPS and 1999 Pro Forma EPS figures absent fraud. Upon
receipt of such notice of disagreement, the Company shall provide to the
Disagreeing Holders and their representatives (including accountants) access to
the books and records of the Company used to calculate such 1999 EPS and 1999
Pro Forma EPS figures during reasonable business hours, as well as the auditors
that reviewed such calculations and the work papers relating to the audit of
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<PAGE> 55
the Company's financial statements and the review of the 1999 EPS and 1999 Pro
Forma EPS calculations. If, within 30 days of the Company's receipt of such
notice of disagreement, agreement as to the proper 1999 EPS and 1999 Pro Forma
EPS calculations cannot be reached, the calculation of such 1999 EPS and 1999
Pro Forma EPS figures shall be promptly determined by a "big-six" accounting
firm, which does not audit the Company and which is mutually acceptable to
holders of a majority of the shares held by the Disagreeing Holders and the
Company. The Company and such Disagreeing Holders shall promptly (and in any
event within 30 days after the expiration of the 30-day period described in the
preceding sentence) appoint such accounting firm, and such accounting firm
shall use its reasonable best efforts to calculate such 1999 EPS and 1999 Pro
Forma EPS figures within 30 days after its appointment and produce such
calculation in writing. The scope of such accounting firm's review of (i) the
1999 EPS calculation shall be limited to the items described in clauses (a)
through (c) of the definition of EPS in Section 2 hereof and (ii) the 1999 Pro
Forma EPS calculation shall be limited to any adjustments pursuant to the
definition of 1999 Pro Forma EPS in Section 2 hereof. Absent fraud, such
accounting firm's calculation of the 1999 EPS and 1999 Pro Forma EPS figures
shall be binding on the Company and all holders of Preferred Stock for all
purposes of this Statement of Resolution. If such accounting firm's
calculation of either of the 1999 EPS figure or the 1999 Pro Forma EPS figure
is lower than that calculated by the Company, the Company shall bear the fees
and expenses of such accounting firm. If such accounting firm's calculation of
both of the 1999 EPS figure and 1999 Pro Forma EPS figure is equal to or higher
than that calculated by the Company, the Disagreeing Holders shall bear the
fees and expenses of such accounting firm.
(c) Estimated Dividend Payments. Notwithstanding anything herein
to the contrary, the Company may at its option pay dividends in cash during
each quarterly period during calendar years 1998 and 1999 at a rate in excess
of 3% of Stated Value per annum.
(d) Dividend Adjustment. Following the date on which the final
determination of 1999 EPS and 1999 Pro Forma EPS is made ("Final Determination
Date"), as contemplated by Section 3(b), the Company will promptly (and in any
event within five Business Days) determine the Aggregate Dividends Paid and the
Aggregate Dividends Owed. If the Aggregate Dividends Paid is less than the
Aggregate Dividends Owed, the Company will, prior to the expiration of such
five-Business-Day period, pay to the holders of Preferred Stock a number of
additional shares of Preferred Stock (the "Catch Up Dividend") with a Stated
Value equal to the Dividend Adjustment Amount. In determining dividends
payable on the next succeeding Dividend Payment Date following the Final
Determination Date, the Company shall assume that the shares of Preferred Stock
outstanding at the prior Dividend Payment Date included all additional shares
issued in the Catch Up Dividend. If the Aggregate Dividends Paid is more than
the Aggregate Dividends Owed, then the Dividend Adjustment Amount shall be
offset against dividends payable on the next succeeding Dividend Payment Date
or Dividend Payment Dates, as the case shall be.
(e) Dividends Cumulative; Compounding. All dividends shall be
cumulative, whether or not declared, on a daily basis from the Issue Date and
shall be payable quarterly, in arrears, on each Dividend Payment Date
commencing December 31, 1997. Dividends (in the form of additional dividends
due) will compound quarterly on all unpaid dividends from the Dividend Payment
Date with respect thereto until the date of payment at the Applicable Dividend
Rate (as adjusted in accordance with this Section 3).
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(f) Payment in Kind; Fractional Shares. From the Issue Date
through the fifth anniversary of the Issue Date, dividends declared may be
paid, at the Company's option, either in cash or in additional shares of
Preferred Stock (other than the Catch Up Dividend, which shall be paid in
additional shares of Preferred Stock). Fractional shares of Preferred Stock
shall not be issued in certificated form, but shall be deemed outstanding on
the books of the Company and held of record by the appropriate stockholder for
all purposes, including the payment of dividends. Uncertificated fractional
shares held of record by a stockholder, when aggregating a whole share, shall
be issued in whole share increments. After the fifth anniversary of the Issue
Date, dividends are payable only in cash. The number of shares of Preferred
Stock to be issued in circumstances when dividends are paid in the form of
additional shares of Preferred Stock shall equal (x) the cash amount of the
dividend that would have been payable had the dividend in question been paid in
cash, divided by (y) the Stated Value, rounded to the nearest hundredth of a
full share.
(g) Increase in Rate. In the event that after the fifth
anniversary of the Issue Date, the Company shall fail to pay dividends in cash
on the Dividend Payment Date when due, the Applicable Dividend Rate applicable
to any period in which any such dividends remain unpaid shall be increased by
0.5% of Stated Value per quarter for each quarter in which any such dividends
remain unpaid (such rate increase, the "Dividend Increase"). The Applicable
Dividend Rate plus the Dividend Increase applicable to any period shall not
exceed the lesser of (i) 18.0% of Stated Value per annum and (ii) the maximum
rate permitted by applicable law. After a Dividend Increase, when the Company
pays all accrued and unpaid dividends, and upon the payment of dividends on the
next Dividend Payment Date at the rate in effect prior to giving effect to any
Dividend Increase, the annual dividend rate shall be decreased to the otherwise
Applicable Dividend Rate.
All dividends shall be paid pro rata to the holders entitled thereto.
Section 4. Liquidation Rights of Preferred. In the event of any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of the Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its shareholders, whether such assets are capital, surplus, or earnings,
before any payment or declaration and setting apart for payment of any amount
shall be made in respect of any other class of Capital Stock of the Company
(other than Parity Securities) whether currently authorized or hereafter
created, an amount equal to $1,000 per share plus an amount equal to all
accrued and unpaid dividends thereon, whether or not earnings are available in
respect of such dividends or such dividends have been declared, to and
including the date full payment shall be tendered to the holders of the
Preferred Stock with respect to such liquidation, dissolution or winding-up,
and no more (the "Liquidation Preference"). If upon any liquidation,
dissolution, or winding-up of the Company, whether voluntary or involuntary,
the assets to be distributed to the holders of the Preferred Stock, along with
the holders of Parity Securities, if any, shall be insufficient to permit the
payment to such shareholders of the full preferential amounts aforesaid, then
all of the assets of the Company shall be distributed ratably to the holders of
the Preferred Stock and such Parity Securities on the basis of the amount due
on such liquidation if there were sufficient assets held by each such
shareholder. Neither a consolidation or merger of the Company with or into any
other company nor a merger of any other company with or into the Company, nor a
sale or transfer of all or any part of the Company's assets for cash,
securities or other property, will be considered a liquidation, dissolution or
winding-up of the Company.
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Section 5. Redemptions.
(a) Optional Redemption.
(i) The Company may, at the option of the Board of
Directors, redeem, to the extent of funds legally available therefor, at any
time on or after the fourth anniversary of the Issue Date, in whole or in part,
in the manner provided for in Section 5(c) hereof, any or all of the shares of
the Preferred Stock, at a redemption price per share equal to (x) the
Liquidation Preference plus (y) (A) the Redemption Premium (as defined below)
multiplied by (B) the Liquidation Preference (minus any accrued and unpaid
dividends from the Dividend Payment Date prior to the Optional Redemption
Date). The "Redemption Premium" shall equal the Applicable Dividend Rate on
the Preferred Stock on the fourth anniversary of the Issue Date and shall
decline ratably (pursuant to the table attached hereto as Annex I) from the
fourth anniversary of the Issue Date to the Mandatory Redemption Date so that
at the Mandatory Redemption Date the Redemption Premium of the Preferred Stock
under this Section 5(a)(i) (y) shall be equal to zero. The redemption price
per share determined under this Section 5(a)(i) is referred to herein as the
"Optional Redemption Price" and the date fixed for redemption in accordance
with Section 5(c) below is the "Optional Redemption Date." In the event of a
redemption pursuant to this Section 5(a)(i) of only a portion of the then
outstanding shares of the Preferred Stock, the Company shall effect such
redemption on a pro rata basis according to the number of shares held by each
record holder of the Preferred Stock, except that the Company may redeem such
shares held by holders of fewer than 10 shares (or shares held by holders who
would hold less than 10 shares as a result of such pro rata redemption),
without regard to the pro rata requirements of this sentence.
(ii) To the extent a Change of Control has occurred and
the Company has received a Control Notice from Participating Holders, the
Company may, at the option of the Board, redeem, to the extent of funds legally
available therefor all, but not less than all, of the Preferred Stock held by
such Participating Holders on a date fixed by the Company, which date shall be
no less than 20 days nor more than 90 days after receipt of the Control Notice
or if the Control Notice is received more than 20 days prior to the date of the
Change of Control no later than the date of the Change of Control (the "Special
Redemption Date") in the manner provided for in Section 5(c) below at a
redemption price per share equal to 101% of the Liquidation Preference
(including, without limitation, an amount equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Special
Redemption Date to the Special Redemption Date) (the "Special Redemption
Price").
(b) Mandatory Redemption. On June 30, 2008 (the "Mandatory
Redemption Date") the Company shall redeem, to the extent of funds legally
available therefor, in the manner provided for in Section 5(c) hereof, all of
the shares of the Preferred Stock then outstanding at a redemption price per
share equal to the Liquidation Preference (including, without limitation, an
amount equal to a prorated dividend for the period from the dividend payment
date immediately prior to the Mandatory Redemption Date to the Mandatory
Redemption Date) (the "Mandatory Redemption Price").
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(c) Procedures for Redemption.
(i) At least thirty (30) days and not more than sixty
(60) days prior to the date fixed for any redemption of the Preferred Stock in
accordance with Section 5(a)(i) or Section 5(b) and at least five days prior to
the Special Redemption Date for any redemption of the Preferred Stock in
accordance with Section 5(a)(ii), written notice (the "Redemption Notice")
shall be given by first class mail, postage prepaid, to each holder of record
on the mailing date of such notice at such holder's address as it appears on
the stock books of the Company (and by facsimile, if a record holder has
provided a facsimile contact); provided that no failure to give such notice nor
any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Preferred Stock to be redeemed except as to the
holder or holders to whom the Company has failed to give said notice or to whom
such notice was defective. Any holder of Preferred Stock may exercise its
conversion rights under Section 7(a) at any time up until 5:00 p.m. New York
City time on the Business Day prior to the date fixed for redemption in
accordance with this Section 5 (the "Redemption Date") and if not exercised
prior to such time, such redemption right shall expire unless the Company
defaults in making the payment due on redemption. The Redemption Notice shall
state:
(A) whether the redemption is pursuant to Section
5(a)(i), 5(a)(ii) or 5(b) hereof;
(B) the Optional Redemption Price, the Special
Redemption Price or Mandatory Redemption Price, as the case may be;
(C) whether all or less than all the outstanding
shares of the Preferred Stock are to be redeemed and the total number of shares
of the Preferred Stock being redeemed;
(D) the Redemption Date;
(E) that the holder is to surrender to the
Company or its transfer agent, in the manner, at the place or places and at the
price designated, his certificate or certificates representing the shares of
Preferred Stock to be redeemed; and
(F) that dividends on the shares of the Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Company defaults in the payment of the Optional Redemption Price, the
Special Redemption Price or the Mandatory Redemption Price, as the case may be.
(ii) Each holder of Preferred Stock shall surrender the
certificate or certificates representing such shares of Preferred Stock to the
Company, duly endorsed (or otherwise in proper form for transfer, as determined
by the Company), in the manner and at the place designated in the Redemption
Notice, and on the Redemption Date the full Optional Redemption Price, Special
Redemption Price or Mandatory Redemption Price, as the case may be, for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
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(iii) On and after the Redemption Date, unless the Company
defaults in the payment of the applicable redemption price, dividends on the
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the Optional Redemption Price, Special Redemption Price or the
Mandatory Redemption Price, as the case may be, without interest.
Section 6. Voting Rights.
(a) General. The holders of Preferred Stock, except as otherwise
required under Texas law or as set forth in Sections 6(b) and 6(c) below, shall
not be entitled or permitted to vote on any matter required or permitted to be
voted upon by the shareholders of the Company.
(b) Amendments to Articles of Incorporation; Mergers and Similar
Transactions. So long as any shares of the Preferred Stock are outstanding,
the Company shall not (i) amend its Restated Articles of Incorporation
(including this Statement of Resolution) so as to: (A) affect adversely the
specified rights, preferences, privileges or voting rights of holders of shares
of Preferred Stock (including any adjustment to the Stated Value) or (B)
authorize the issuance of additional shares of any class of Senior Securities
(or amend the provisions of any existing class of Capital Stock to make such
class of Capital Stock Senior Securities) or (ii) merge, consolidate or enter
into any other Reclassification that would (A) materially affect adversely the
special or relative rights, preferences, privileges or voting rights of the
Preferred Stock (including any adjustment to the Stated Value), or (B) result
in a breach of any of the Company's obligations under this Statement of
Resolution, without, in any such case, the affirmative vote or consent of
holders of at least a Majority of the Preferred Stock, voting or consenting, as
the case may be, as one class, given in person or by proxy, either in writing
(to the extent permitted under the Company's Restated Articles of
Incorporation) or by resolution adopted at an annual or special meeting of
shareholders. Notwithstanding the foregoing, any amendment to the Restated
Articles of Incorporation (including this Statement of Resolution) that would
alter in any material respect the dividend rates, liquidation preference,
redemption rights or conversion rights of the Preferred Stock shall require the
affirmative vote or consent of each holder of Preferred Stock.
(c) Election of Directors.
(i) The foregoing notwithstanding, in the event of the
Company's failure to pay dividends in accordance with Section 3, or the
occurrence of one or more Events of Noncompliance, within 10 Business Days of
such failure or such event, as the case may be, the Company shall notify each
holder of Preferred Stock thereof in writing, and the number of directors
constituting the Board shall thereupon be automatically increased so that the
number of new directorships of the Board so created will constitute at least
25.0% (rounded up to the nearest whole number) of the entire Board, after
giving effect to such increase, and the holders of the Preferred Stock shall
have, in addition to the other voting rights provided herein, the exclusive and
special right, voting separately as a class, to elect directors to fill such
newly created directorships (and to fill any vacancy in such directorships
until such time as the special voting rights provided by this Section 6(c)(i)
shall terminate as set forth below). If the event giving rise to the special
voting rights was a failure to pay dividends or an Event of Noncompliance
described in Section 10(a)(iii), the special voting rights will continue until
all
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accrued and unpaid dividends have been paid in full or all Events of
Noncompliance have been cured, as the case may be, subject to revesting in the
event of any future failure to pay dividends in accordance with the terms
hereof or a subsequent Event of Noncompliance. Except as provided in the prior
sentence, the special voting rights provided by this Section 6(c)(i) shall
continue as long as any Preferred Stock is outstanding. If the special voting
rights provided by this Section 6(c)(i) terminate, the terms of the additional
directors elected by the holders of Preferred Stock pursuant to this Section
6(c)(i) shall terminate and the number of directors constituting the Board
shall then be decreased to such number as constituted the whole Board
immediately prior to the occurrence of the event giving rise to such special
voting rights. The special voting rights provided in this Section 6(c)(i)
shall not preclude or affect the exercise of any other rights or remedies
provided hereby or by agreement, by law or otherwise upon the occurrence of any
event giving rise to such special rights.
(ii) The foregoing notwithstanding, the Company will give
notice to each holder of Preferred Stock within five days after the Company
becomes aware of any Change of Control that has occurred or is reasonably
likely to occur and, if a Change of Control occurs, the holders of a Majority
of the Preferred Stock shall, by written notice to the Company and the other
holders of Preferred Stock delivered before or 15 days after the Change of
Control (a "Control Notice") have the right to elect a majority of the Board in
accordance with this Section 6(c)(ii), unless the Company has theretofore
redeemed shares of any holder of Preferred Stock participating in a Control
Notice (each, a "Participating Holder") in accordance with Section 5(a)(ii).
Any holder of Preferred Stock may, at any time within ten days after receipt of
the Control Notice, elect to become a Participating Holder by delivery of
written notice of such election to the Company and the other Participating
Holders. If a Control Notice is received by the Company and the Company has
not redeemed the shares of Preferred Stock held by all Participating Holders,
upon the later to occur of (i) the occurrence of such Change of Control and
(ii) the date that the Company's redemption rights under Section 5(a)(ii) shall
have expired, the number of directors constituting the Board shall thereupon be
automatically increased by such number as will be necessary to constitute a
majority of the total number of the members, after giving effect to such
increase, of such Board, and the holders of the Preferred Stock shall have, in
addition to the other voting rights provided herein, the exclusive, special and
continuing right, voting separately as a class, to elect directors to fill such
newly created directorships (and to fill any vacancy in such directorships) and
to continually elect at least a majority of the Board as long as any Preferred
Stock is outstanding.
(iii) The directors to be elected (or if such directors
have been previously elected and any vacancy shall exist, such vacancy to be
filled) by the holders of Preferred Stock (voting as a class) shall be elected
(or filled) at (i) annual meetings of the shareholders of the Company, or (ii)
a special meeting of the holders of Preferred Stock for the purpose of electing
such directors (or filling any such vacancy), to be called by the Secretary of
the Company upon the written request of the holders of record of 10% or more of
the number of shares of Preferred Stock then outstanding; provided, however,
that if the Secretary of the Company shall fail to call any such meeting within
10 days after any such request, such meeting may be called by any holder of
Preferred Stock designated for that purpose by the holders of record of 10% or
more of the number of shares of Preferred Stock then outstanding. At any
meeting or at any adjournment thereof held for the purpose of electing
directors at which the holders of shares of Preferred Stock shall have the
special voting right provided by this Section 6(c), the presence, in person or
by proxy, of the holders of the equivalent of a Majority of the Preferred Stock
shall be required to constitute a quorum for the election of any
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director by the holders of the Preferred Stock exercising such special right.
The special right of holders of shares of Preferred Stock under this Section
6(c) may be exercised by the written consent of the holders of shares of
Preferred Stock then outstanding in accordance with the law of the Company's
jurisdiction of incorporation at such time to the extent permitted by the
Company's Restated Articles of Incorporation.
(iv) The foregoing notwithstanding, in the case of any
vacancy in the office of a director occurring among the directors elected by
the holders of the Preferred Stock pursuant to Section 6(c), the remaining
director or directors so elected by the holders of the Preferred Stock may, by
affirmative vote of a majority thereof (or the remaining director so elected if
there is only one such director), elect a successor or successors to hold the
office for the unexpired term of the director or directors whose place or
places shall be vacant. Any director who shall have been elected by the
holders of the Preferred Stock, or any director so elected as provided in the
next preceding sentence hereof, shall be removed during the aforesaid term of
office, whether with or without cause, only by the affirmative vote of the
holders of a Majority of the Preferred Stock.
(v) The Company shall promptly take all necessary action
to facilitate the implementation of the rights of the holders of Preferred
Stock to appoint directors that are provided for under this Section 6.
Section 7. Conversion Rights.
The Preferred Stock shall be convertible into Common Stock as follows:
(a) Optional Conversion. Subject to and upon compliance with the
provisions of this Section 7, the holder of any shares of Preferred Stock shall
have the right at such holder's option, at any time or from time to time, to
convert any shares of Preferred Stock into the number of fully paid and
nonassessable shares of Common Stock set forth in Section 7(b).
(b) Conversion Price. Each share of Preferred Stock converted
pursuant to Section 7(a) shall be converted into such number of shares of
Common Stock as is determined by dividing (i) the sum of (A) $1,000 plus (B)
any dividends on such share of Preferred Stock which such holder is entitled to
receive, but has not yet received (including, without limitation, an amount
equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Conversion Date to the Conversion Date), by (ii) the
Conversion Price in effect on the Conversion Date. The Conversion Price shall
be subject to adjustment as set forth in Section 7(d).
(c) Mechanics of Conversion. The holder of any shares of
Preferred Stock may exercise the conversion right specified in Section 7(a) as
to any part thereof by surrendering to the Company or any transfer agent of the
Company the certificate or certificates for the shares to be converted,
accompanied by written notice stating that the holder elects to convert all or
a specified portion of the shares represented thereby. Conversion shall be
considered to have been effected on the date when a holder of Preferred Stock
delivers notice of an election to convert shares of Preferred Stock to the
Company accompanied by certificates representing such shares, and such date is
referred to herein as the "Conversion Date." Subject to the provisions of
Section 7(d), as promptly as practicable thereafter (and after surrender of the
certificate or certificates evidencing the shares of Preferred
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Stock or delivery to the Company of an affidavit and indemnity with respect to
such certificates), the Company shall issue and deliver to or upon the written
order of such holder a certificate or certificates for the number of full
shares of Common Stock to which such holder is entitled and a check or cash
with respect to any fractional interest in a share of Common Stock as provided
in Section 7(h) hereof. Subject to the provisions of Section 7(d), the Person
in whose name the certificate or certificates for Common Stock are to be issued
shall be considered to have become a holder of record of such Common Stock on
the Conversion Date. Upon conversion of only a portion of the number of shares
covered by a certificate evidencing shares of Preferred Stock surrendered for
conversion, the Company shall issue and deliver to or upon the written order of
the holder of the certificate so surrendered for conversion, at the expense of
the Company, a new certificate covering the number of shares of Preferred Stock
representing the unconverted portion of the certificate so surrendered. The
Company will use its best efforts to deliver all stock certificates required by
this Section 7(c) within three business days after the Conversion Date.
(d) Conversion Price Adjustments. The Conversion Price shall be
subject to adjustment from time to time as follows:
(i) Stock Dividends. If the number of shares of Common
Stock outstanding at any time after the date of issuance of Preferred
Stock is increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up of shares of Common Stock, then
immediately after the record date fixed for the determination of
holders of Common Stock entitled to receive such stock dividend or the
effective date of such subdivision or split-up, as the case may be,
the Conversion Price shall be appropriately reduced so that the holder
of any shares of Preferred Stock thereafter converted shall be
entitled to receive the number of shares of Common Stock of the
Company which he would have received immediately following such action
had such shares of Preferred Stock been converted immediately prior
thereto.
(ii) Combination of Stock. If the number of shares of
Common Stock outstanding at any time after the date of issuance of
Preferred Stock is decreased by a combination of the outstanding
shares of Common Stock, then immediately after the effective date of
such combination, the Conversion Price shall be appropriately
increased so that the holder of any shares of Preferred Stock
thereafter converted shall be entitled to receive the number of shares
of Common Stock which he would have received immediately following
such action had such shares of Preferred Stock been converted
immediately prior thereto.
(iii) Adjustments for Other Dividends and Distributions.
In the event the Company at any time or from time to time after the
Issue Date makes or issues, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities or other rights
of the Company other than a dividend or other distribution payable
solely in shares of Common Stock, then and in each such event
provision shall be made so that the holders of Preferred Stock shall
receive upon conversion thereof, in addition to the number of shares
of Common Stock receivable thereupon, the amount of securities or
other rights of the Company which they would have received had their
Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such
event to and including the Conversion Date, retained
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such securities or other rights receivable by them as aforesaid during
such period, subject to all other adjustments called for during such
period under this Section 7 with respect to the rights of the holders
of the Preferred Stock.
(iv) Reclassification, etc. In case of any
Reclassification, each share of Preferred Stock shall, after such
Reclassification, be convertible into the number of shares of stock or
other securities or property to which the holder of the Common Stock
issuable (at the time of such Reclassification) upon conversion of
such share of Preferred Stock would have been entitled upon such
Reclassification; and in any such case, if necessary, the provisions
set forth herein with respect to the rights and interests thereafter
of the holders of the shares of Preferred Stock shall be appropriately
adjusted so as to be applicable, as nearly as possible, to any shares
of stock or other securities or property thereafter deliverable on the
conversion of the shares of Preferred Stock. If the holders of Common
Stock have an election with respect to the stock, securities or other
property to be received upon a Reclassification, the same election
shall be afforded to the holders of Preferred Stock.
(v) Rounding of Calculations. All calculations under
this Section 7(d) shall be made to the nearest cent or to the nearest
one hundredth (1/100th) of a share, as the case may be.
(vi) Timing of Issuance of Additional Common Stock Upon
Certain Adjustments. In any case in which the provisions of this
Section 7(d) shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer
until the occurrence of such event by (A) issuing to the holder of any
shares of Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by
such event over and above the shares of Common Stock issuable upon
such conversion before giving effect to such adjustment, and (B)
paying to such holder any amount of cash in lieu of a fractional share
of Common Stock pursuant to Section 7(h) hereof; provided, however,
that the Company upon request shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares and such cash upon the occurrence of
the event requiring such adjustment.
(e) Statement Regarding Adjustments. Whenever the Conversion
Price shall be adjusted as provided in Section 7(d), the Company shall
forthwith file, at the office of any transfer agent for such Preferred Stock
and at the principal office of the Company, a statement showing in detail the
facts requiring such adjustment and the Conversion Price that shall be in
effect after such adjustment, and the Company shall also cause a copy of such
statement to be sent by mail, first class postage prepaid, to each holder of
shares of Preferred Stock at the address appearing on the Company's records.
Each such statement shall be signed by the Company's independent public
accountants. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of
Section 7(f).
(f) Notice to Holders. In the event the Company shall propose to
take any action of the type described in Section 7(d)(i), (ii), (iii), or (iv)
the Company shall give notice to each holder of shares of Preferred Stock
affected by such action in the manner set forth in this Section 7(f), which
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notice shall specify the record date, if any, with respect to any such action
and the approximate date on which such action is to take place. Such notice
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action (to the extent such effect may
be known at the date of such notice) on the Conversion Price and the number,
kind or class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or deliverable
upon conversion of shares of Preferred Stock. In the case of any action which
would require the fixing of a record date, such notice shall be given at least
ten days prior to the date so fixed, and in the case of any other action, such
notice shall be given at least 15 days prior to the taking of such proposed
action. Failure to give such notice, or any defect therein, shall not affect
the legality or validity of any such action.
(g) Costs. The Company shall pay all documentary, stamp, transfer
or other transactional taxes attributable to the issuance or delivery of shares
of Common Stock of the Company upon conversion of any shares of Preferred
Stock; provided, however, that the Company shall not be required to pay any
taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the
holder of the shares of Preferred Stock in respect of which such shares are
being issued.
(h) Fractional Shares. No fractional shares of Common Stock shall
be issued upon conversion of Preferred Stock. If more than one share of
Preferred Stock shall be surrendered for conversion at any one time by the same
holder, the number of full shares of Common Stock issuable upon conversion
thereof shall be computed on the basis of the aggregate number of shares of
Preferred Stock so surrendered. In lieu of any fractional share to which the
holder would otherwise be entitled, the Company shall pay cash equal to the
product of such fraction multiplied by the Common Stock's Fair Market Value on
the date of conversion.
(i) Reservation of Stock Issuable Upon Conversion. The Company
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of the Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of all then outstanding shares of the Preferred Stock,
the Company will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
(j) Notices. All notices and other communications required by the
provisions of this Section 7 shall be in writing and shall be deemed to have
been duly given if delivered personally, mailed by certified mail (return
receipt requested) or sent by overnight delivery service, cable, telegram,
facsimile transmission or telex to each holder of record at the address of such
holder appearing on the books of the Company. Notice so given shall, in the
case of notice so given by mail, be deemed to be given and received on the
fourth calendar day after posting, in the case of overnight delivery service,
on the date of actual delivery and, in the case of notice so given by cable,
telegram, facsimile transmission, telex or personal delivery, on the date of
actual transmission or, as the case may be, personal delivery.
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(k) No Dilution or Impairment. The Company shall not amend its
Articles of Incorporation or participate in any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, for the purpose of avoiding or seeking to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in
carrying out all such action as may be reasonably necessary or appropriate in
order to protect the conversion rights of the holders of the Preferred Stock
against dilution or other impairment.
Section 8. Restrictions and Limitations.
(a) So long as any shares of Preferred Stock remain outstanding
and except as set forth below, the Company shall not, and shall not permit any
Subsidiary to, without the vote or written consent by the holders of a Majority
of the Preferred Stock:
(i) (A) Declare or pay any dividend or make any other
payment or distribution on account of the Equity Interests of the Company
(other than in respect of the Preferred Stock) or any of its Subsidiaries
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company or any of its Subsidiaries) or to the
direct or indirect holders of the Equity Interests of the Company or any of its
Subsidiaries in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Senior Securities or Parity Securities
(except that dividends payable on Parity Securities issued in accordance with
the provisions hereof solely in Parity Securities of the same class or series,
as the case may be, shall be permitted) of the Company, dividends or
distributions payable to the Company or any Subsidiary of the Company or
dividends or distributions made by a Subsidiary of the Company to all holders
of its Common Stock on a pro rata basis)); and
(B) Make any payment on or in respect of, or
purchase, redeem, defease or otherwise acquire or retire for value any Equity
Interests (other than the Preferred Stock in accordance with Section 5 or any
Equity Interests owned by the Company or any Subsidiary of the Company) except
at Stated Maturity.
All such payments and other actions set forth in clauses (A)
and (B) above shall be collectively referred to as "Restricted Payments".
Notwithstanding the foregoing, the Company shall be permitted
to make Restricted Payments if, at the time of and after giving effect to such
Restricted Payment:
(I) No Event of Noncompliance shall have occurred and be
continuing or would occur as a consequence thereof; and
(II) The Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four-quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 8 (a)(v); and
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(III) Such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the Issue Date (excluding Restricted Payments
permitted by clauses (v) and (w) of the next succeeding paragraph), is
less than the sum of (i) 50% of the Consolidated Net Income of the
Company for the period (taken as one accounting period) commencing on
the Issue Date to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus (ii)
100% of the aggregate net cash proceeds received by the Company from
the issue or sale since the Issue Date of Equity Interests of the
Company or of debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company or
conversion of the 6% Notes) subject to the provisions of Section
8(a)(vii), plus (iii) $7.5 million.
The foregoing provisions will not prohibit (u) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Section 8(a)(i); (v) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a Subsidiary
of the Company) of other Equity Interests of the Company (other than any Parity
Securities); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other acquisition
shall be excluded from clause (ii) of paragraph (III) above; (w) the
defeasance, redemption or repurchase of Junior Securities or Parity Securities
with the net cash proceeds from the substantially concurrent sale (other than
to a Subsidiary of the Company) of Equity Interests of the Company (other than
Parity Securities); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (ii) of paragraph (III) above; (x)
the repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Subsidiary of the Company held by any
member of the Company's (or any of its Subsidiaries') management pursuant to
any management equity subscription agreement or stock option agreement in
effect as of the Issue Date; provided that (A) the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $250,000 in any 12-month period plus the aggregate cash proceeds
received by the Company during such 12-month period from any reissuance of
Equity Interests by the Company to members of management of the Company and its
Subsidiaries, and (B) no Event of Noncompliance shall have occurred and be
continuing immediately after such transaction; and (y) so long as no Event of
Noncompliance shall have occurred and be continuing, ordinary dividends paid by
the Company in respect of its Common Stock in an aggregate amount not to exceed
$2.5 million since the Issue Date.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
or a committee of the Board of Directors having at least one Independent
director set forth in an Officers' Certificate delivered to each holder of
Preferred Stock) on the date of the Restricted Payment of the asset(s) proposed
to be transferred by the Company or such Subsidiary, as the case may be,
pursuant to the Restricted Payment. Not later than the date of making any
Restricted Payment, the Company shall deliver to each holder of Preferred Stock
an Officers' Certificate stating that such Restricted Payment is permitted and
setting
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forth the basis upon which the calculations required by this Section 8(a)(i)
were computed, which calculations may be based upon the Company's latest
available financial statements.
For purposes of this Section 8(a)(i), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.
(ii) Authorize or issue, or obligate itself to issue, any
Senior Securities;
(iii) Increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred Stock;
(iv) Enter any agreement, contract or understanding or
otherwise incur any obligation which by its terms would violate, be in conflict
with, restrict or burden the rights of the holders of Preferred Stock, or the
Company's ability to perform its obligations hereunder;
(v) Directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) or issue any Parity Securities (other than as
contemplated by Section 3) unless the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Parity Securities are issued would
have been at least 1.75 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Parity Securities had been issued, as
the case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(A) the incurrence by the Company of Indebtedness
under the Credit Agreement (and guarantees thereof by the Guarantors)
in an aggregate principal amount at any time outstanding (with letters
of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Subsidiaries thereunder)
not to exceed the greater of (x) $600.0 million and (y) the sum of (A)
80% of the Eligible Receivables and (B) 65% of Eligible Inventory,
less, in the case of each of clause (x) and clause (y), the aggregate
amount of all Net Proceeds of Asset Sales applied to permanently
reduce the commitments with respect to such Indebtedness pursuant to
Section 4.10 of the Indenture as in effect on the Issue Date;
(B) the incurrence by the Company of Permitted
Indebtedness;
(C) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations
(whether or not incurred pursuant to sale and leaseback transactions),
mortgage financing or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Subsidiary, in
an aggregate principal amount not to exceed $15.0 million at any time
outstanding;
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(D) the incurrence by the Company or any of its
Subsidiaries of Indebtedness ("Refinancing Indebtedness") in exchange
for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund, Permitted Indebtedness or
Indebtedness that was permitted to be incurred hereunder, provided
that the principal amount (or accreted value, if applicable) of such
Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness extended,
refinanced, renewed, replaced, defeased or refunded;
(E) the incurrence by the Company or any of its
Wholly Owned Subsidiaries of intercompany Indebtedness between or
among the Company and any of its Wholly Owned Subsidiaries;
(F) the incurrence by the Company of Hedging
Obligations that are incurred in the ordinary course of business for
the purpose of fixing or hedging interest rate risk;
(G) the incurrence by the Company of Hedging
Obligation under commodity hedging and currency exchange agreements;
provided that, such agreements were entered into in the ordinary
course of business for the purpose of limiting risks that arise in the
ordinary course of business;
(H) the incurrence of Indebtedness of a guarantor
represented by guarantees of Indebtedness of the Company that has been
incurred in accordance with the terms hereof; and
(I) the incurrence by the Company of Indebtedness
or the issuance by the Company of Junior Securities or Parity
Securities (in addition to Indebtedness, Junior Securities or Parity
Securities permitted by any other clause of this Section 8(a)(v)) in
an aggregate principal amount (or accreted value, as applicable) at
any time outstanding not to exceed $20.0 million.
For purposes of this Section 8(a)(v), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.
(vi) Make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(A) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained in
a comparable transaction by the Company or such Subsidiary with an unrelated
Person and (B) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving the aggregate consideration in excess of $2.0
million, the Company delivers to each holder of Preferred Stock a resolution of
the Board of Directors set forth in an Officers' Certificate certifying that
such Affiliate Transaction complies with clause (A) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (C) with respect to an Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
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consideration in excess of $5.0 million, the Company delivers to each holder of
Preferred Stock an opinion as to the fairness to the holders of Preferred Stock
of such Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing; provided
that (w) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors or the payment of fees and indemnities to directors of the Company
and its Restricted Subsidiaries in the ordinary course of business and
consistent with the past practices of the Company or such Subsidiary, (x) loans
or advances to employees in the ordinary course of business, (y) transactions
between or among the Company and/or its Wholly Owned Subsidiaries and (z)
Restricted Payments that are permitted by the provisions of Section 8(a)(i), in
each case, shall not be deemed Affiliate Transactions.
For purposes of this Section 8(a)(vi), capitalized terms used
and not defined herein shall have the meanings assigned to them in the
Indenture as in effect on the Issue Date.
(vii) Make any Restricted Investment (as such term is
defined in the Indenture as in effect on the Issue Date) unless the Company
could borrow an additional $1.00 of Indebtedness under the Fixed Charge
Coverage Ratio in Section 8(a)(v) above; except that, notwithstanding the
foregoing, the Company shall be permitted to make a Restricted Investment if
(x) such Restricted Investment is made after the Issue Date and is sold for
cash or otherwise liquidated or repaid for cash, in an amount equal to the
lesser of (a) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition) and (b) the initial amount of such
Restricted Investment or (y) such Restricted Investment is in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of Equity Interests of the Company (other than any
Senior Securities and Parity Securities); provided that the amount of any such
net cash proceeds that are utilized for any such Restricted Investment made
under (x) and (y) above shall be excluded from Section 8(a)(i)(III)(ii).
Section 9. No Reissuance of Preferred Stock.
No share or shares of Preferred Stock acquired by the Company by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be canceled, retired and eliminated from the shares which
the Company shall be authorized to issue.
Section 10. Events of Noncompliance.
(a) Definition. An Event of Noncompliance will be deemed to have
occurred if:
(i) the Company fails to make any redemption payment with
respect to the Preferred Stock which it is obligated to make hereunder, whether
or not such payment is legally permissible;
(ii) the Company breaches or otherwise fails to perform or
observe the provisions of Section 8;
22
<PAGE> 70
(iii) the Company breaches or otherwise fails to perform or
observe any other covenant or agreement set forth herein or any covenant or
agreement set forth in the Purchase Agreement (other than a covenant or
agreement set forth in Section 5.14 (the breach of which Section 5.14 shall not
be considered an Event of Noncompliance under this Section 10(a)(iii)) or in
Article 7 of the Purchase Agreement) and such breach or failure to perform or
observe continues for a period of 60 days after notice thereof from any holder
of Preferred Stock; or the Company breaches or otherwise fails to perform or
observe any covenant or agreement set forth in Article 7 of the Purchase
Agreement and such breach or failure to perform or observe continues for a
period of 30 days after notice thereof from any holder of Preferred Stock; or
(iv) a Bankruptcy Event occurs with respect to the Company
or any Subsidiary.
The Company shall promptly (and in any event within five days)
after learning of (x) any failure by the Company to observe any covenant or
agreement contained herein or in the Purchase Agreement or (y) any Event of
Noncompliance, give notice thereof to each holder of Preferred Stock.
(b) Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance (other than the failure
to pay timely dividends, which affects the dividend rate of the Preferred Stock
as provided in Section 3) has occurred, the dividend rate on the Preferred
Stock shall increase immediately to the lesser of (A) 18% per annum and (B) the
maximum rate permitted by applicable law, and shall remain at such rate as long
as any Preferred Stock is outstanding; provided, however, that if the Event of
Noncompliance is one under Section 10(a)(iii), upon the cure of such Event of
Noncompliance, the dividend rate shall be that which would otherwise be
applicable but for the application of this Section 10(b)(i).
(ii) If any Event of Noncompliance has occurred, each
holder of Preferred Stock will also have (A) rights pursuant to Section
6(c)(i), (B) any other rights which such holder may have been afforded under
any contract or agreement at any time and (C) any other rights which such
holder may have pursuant to applicable law.
Section 11. Waivers.
With the written consent of holders of a Majority of the
Preferred Stock (or each holder of Preferred Stock to the extent required
pursuant to the last sentence of Section 6(b)), the obligations of the Company
and the rights of the holders of the Preferred Stock under this Statement of
Resolution may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely). Upon the effectuation of each such waiver, the Company shall
promptly give written notice thereof to the holders of Preferred Stock who have
not previously consented thereto in writing.
23
<PAGE> 71
ANNEX 1
<TABLE>
<CAPTION>
APPLICABLE DIVIDEND RATE
--------------------------------------------------------
REDEMPTION PREMIUM APPLICABLE DURING THE 3% 7% 10%
FOLLOWING YEARS AFTER THE ISSUE DATE: -- -- ---
<S> <C> <C> <C>
1 Non-Call Non-Call Non-Call
2 Non-Call Non-Call Non-Call
3 Non-Call Non-Call Non-Call
4 Non-Call Non-Call Non-Call
5 3.000% 7.000% 10.000%
6 2.400% 5.600% 8.000%
7 1.800% 4.200% 6.000%
8 1.200% 2.800% 4.000%
9 0.600% 1.400% 2.000%
10 0.000% 0.000% 0.000%
</TABLE>
To the extent a different Applicable Dividend Rate applies, a similar ratable
decline shall apply.
24
<PAGE> 72
I, THE UNDERSIGNED, being the President of Pillowtex Corporation, do
hereby execute this Statement of Resolution, declaring and certifying under
penalties of perjury that the facts herein stated are true, and accordingly
have hereunto set my hand this 18th day of December, 1997.
/s/ JEFFREY D. CORDES
----------------------------------------
Jeffrey D. Cordes
President
ATTEST:
/s/ BRENDA SANDERS
----------------------------------------
Brenda Sanders
Assistant Secretary
25
<PAGE> 1
EXHIBIT 4.1
================================================================================
-----------------
PILLOWTEX CORPORATION
SERIES A AND SERIES B
9% SENIOR SUBORDINATED NOTES DUE 2007
INDENTURE
-----------------
Dated as of December 18, 1997
-----------------
Norwest Bank Minnesota, National Association
Trustee
-----------------
================================================================================
1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1.03. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 1.04. Rules of Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 2. THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.04. Paying Agent to Hold Money in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.06 . Transfer and Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.07. Replacement Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.08. Outstanding Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.10. Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 3. REDEMPTION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.02. Selection of Notes to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 3.06. Notes Redeemed in Part. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.07. Optional Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.09. Offer to Purchase by Application of Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 3.10. Special Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 4. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.01. Payment of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.02. Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 4.03. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 4.05. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.07. Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.08. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. . . . . . . . . . . . . 42
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. . . . . . . . . . . . . . . . . . . . . 43
Section 4.10. Asset Sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.11. Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 4.12. Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.13. Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.14. Offer to Repurchase Upon Change of Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 4.15. No Senior Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.16. Limitation on Issuances of Guarantees of Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 48
Section 4.17. Payments for Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.18. Additional Note Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.19. Deposit of Proceeds with Trustee Pending Consummation of the Merger. . . . . . . . . . . . . . . . . 49
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE 5. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.01. Merger, Consolidation, or Sale of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.02. Successor Corporation Substituted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 6. DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.04. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 6.05. Control by Majority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.07. Rights of Holders of Notes to Receive Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 7. TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 7.06. Reports by Trustee to Holders of the Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.10. Eligibility; Disqualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.11. Preferential Collection of Claims Against Company. . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . 61
Section 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 8.03. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions. . . 63
Section 8.06. Repayment to Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.01. Without Consent of Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.02. With Consent of Holders of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 9.03. Compliance with Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.04. Revocation and Effect of Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.06. Trustee to Sign Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 10. SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.01. Agreement to Subordinate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 10.02. Liquidation; Dissolution; Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.03. Default on Designated Senior Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 10.04. Acceleration of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.05. When Distribution Must Be Paid Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.06. Notice by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.07. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.08. Relative Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 10.09. Subordination May Not Be Impaired by Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.10. Distribution or Notice to Representative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
iv
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<TABLE>
<S> <C>
Section 10.11. Rights of Trustee and Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 10.12. Authorization to Effect Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.13. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE 11. NOTE GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 11.01. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 11.02. Subordination of Note Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.03. Limitation on Guarantor Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.04. Execution and Delivery of Note Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.06. Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE 12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 12.03. Communication by Holders of Notes with Other Holders of Notes. . . . . . . . . . . . . . . . . . . 75
Section 12.04. Certificate and Opinion as to Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 12.05. Statements Required in Certificate or Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.06. Rules by Trustee and Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders. . . . . . . . . . . . . 76
Section 12.08. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.09. No Adverse Interpretation of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 12.10. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.12. Counterpart Originals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 12.13. Table of Contents, Headings, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
</TABLE>
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EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF CERTIFICATE OF TRANSFER
EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE
EXHIBIT D FORM OF CERTIFICATE OF ACQUIRING IAI
EXHIBIT E FORM OF NOTE GUARANTEE
EXHIBIT F FORM OF SUPPLEMENTAL INDENTURE
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INDENTURE dated as of December 18, 1997 between Pillowtex
Corporation, a Texas corporation (the "Company"), each of the existing domestic
subsidiaries of the Company listed on the signature page of this Indenture
(together, the "Initial Guarantors") and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee").
The Company, the Initial Guarantors and the Trustee agree as
follows for the benefit of each other and for the equal and ratable benefit of
the Holders of the 9% Series A Senior Subordinated Notes due 2007 (the "Series
A Notes") and the 9% Series B Senior Subordinated Notes due 2007 (the "Series B
Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global note in the form of Exhibit
A1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary
or its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Indebtedness" means, with respect to any specified
Person, (i) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person that was not incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Restricted Subsidiary
of such specified Person, and (ii) Indebtedness secured by a Lien encumbering
any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that, beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control, except with respect to the definition
of "Related Party" herein.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer
or exchange.
"Asset Sale" means the sale, lease, conveyance or other
disposition of any assets (including; without limitation, by way of a sale and
leaseback) whether in a single transaction or a series of related transactions
that (a) have a fair market value in excess of $1,000,000 or (b) net proceeds
in excess of $1,000,000; provided that, the sale, lease, conveyance or other
disposition of all or substantially all of the assets of the Company and its
Restricted Subsidiaries taken as a whole will be governed by the provisions of
this Indenture described in Section 4.15 herein and/or the provisions described
in Section 5.01 herein and shall not be deemed to be "Asset Sales."
Notwithstanding the foregoing, the following transactions shall not constitute
Asset Sales: (i) the conveyance, sale, transfer,
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assignment or other disposition of inventory and other property in the ordinary
course of business; (ii) the sale or disposition of damaged, worn out or other
obsolete personal property in the ordinary course of business so long as such
property is no longer necessary for the proper conduct of the business of the
Company or such Restricted Subsidiary, as applicable; (iii) the surrender or
waiver of contract rights or the settlement, release or surrender of contract,
tort or other claims of any kind; (iv) the granting of Liens not prohibited by
this Indenture; (v) sales of accounts receivable and related assets customarily
transferred in an asset securitization transaction involving accounts
receivable to a Receivables Subsidiary or by a Receivables Subsidiary in
connection with a Qualified Receivables Transaction; (vi) a transfer of assets
by the Company to a Wholly Owned Restricted Subsidiary (other than a
Receivables Subsidiary) or by a Wholly Owned Restricted Subsidiary (other than
a Receivables Subsidiary) to the Company or to another Wholly Owned Restricted
Subsidiary (other than a Receivables Subsidiary); (vii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary (other than a Receivables
Subsidiary) to the Company or to another Wholly Owned Subsidiary (other than a
Receivables Subsidiary); (viii) a Restricted Payment that is permitted by
Section 4.07 herein; and (ix) the execution of contracts to provide
manufacturing consideration and other services, including in connection with
Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be required to be capitalized on a
balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than 12 months from the date of acquisition, (iii) United States
dollar or Canadian dollar denominated (or foreign currency fully hedged) time
deposits, certificates of deposit, Eurodollar time deposits or Eurodollar
certificates of deposit of (a) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500 million or (b) any bank
whose short term commercial paper rating from Standard & Poor's is at least A-1
or the equivalent thereof or from Moody's is at least A-l or the equivalent
thereof (any such bank being an "Approved Lender"), in each ease with
maturities of not more than 12 months from the date of acquisition; and (iv)
commercial paper issued by any Approved Lender (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by, any domestic
corporation rated A-2 (or the equivalent thereof) or better by Standard &
Poor's or P-2 (or the equivalent thereof) or better by Moody's and maturing
within 12 months of the date of acquisition.
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"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and its
Restricted Subsidiaries, taken as a whole to any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act) other than the Principals or their
Related Parties, (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of
which is that any "person" (as defined above), other than the Principals and
their Related Parties, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly,
of more than 50% of the Voting Stock of the Company or (iv) the first day on
which a majority of the members of the Board of Directors of the Company are
not Continuing Directors; provided, however, the Merger shall not constitute a
Change of Control.
"Collateral" means (i) the Collateral Account and the Mutual
Fund Account, (ii) the Special Redemption Amount and all other cash or Cash
Equivalents deposited in the Collateral Account and the Mutual Fund Account
from time to time pursuant to Section 4.19 hereof, (iii) all rights and
privileges of the Company with respect to the Collateral Account, the Mutual
Fund Account and such Cash and Cash Equivalents, (iv) all dividends, interest
and other payments and distributions made on or with respect to such Cash
Equivalents, the Collateral Account or the Mutual Fund Account and (v) all
proceeds of any of the foregoing.
"Company" means Pillowtex Corporation, and any and all
successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus (i)
an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash charges
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash charges in any future period or amortization of a
prepaid cash expense that was paid in a prior period) of such Person and its
Restricted Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash charges were deducted in computing such
Consolidated Net Income minus (v) non-cash items of such Person and its
Restricted Subsidiaries increasing Consolidated Net Income for such period, in
each case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization and other non-cash charges of, a
Restricted Subsidiary of the referent Person shall be added to Consolidated Net
Income to compute Consolidated Cash Flow only to the extent (and in same
proportion) that the Net Income of such Restricted Subsidiary
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was included in calculating the Consolidated Net Income of such Person and only
if a corresponding amount would be permitted at the date of determination to be
dividend to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Restricted Subsidiary or its shareholders.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (i) the Net Income (but not loss) of any
Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its shareholders, (iii) the Net Income of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded, (iv) the cumulative effect of a
change in accounting principles shall be excluded, and (v) the Net Income of
any Unrestricted Subsidiary shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as
of any date, the sum of (i) the consolidated equity of the common shareholders
of such Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date with
respect to any series of preferred stock (other than Disqualified Stock) that
by its terms is not entitled to the payment of dividends unless such dividends
may be declared and paid only out of net earnings in respect of the year of
such declaration and payment, but only to the extent of any cash received by
such Person upon issuance of such preferred stock, less (x) all write-ups
(other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months
after the acquisition of such business) subsequent to the date of the Indenture
in the book value of any asset owned by such Person or a consolidated
Restricted Subsidiary of such Person, (y) all investments as of such date in
unconsolidated Restricted Subsidiaries and in Persons that are not Subsidiaries
(except, in each case, Permitted Investments), and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the Issue Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
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"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof,
in the form of Exhibit A1 hereto except that such Note shall not bear the
Global Note Legend and shall not have the "Schedule of Exchanges of Interests
in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to
the applicable provision of this Indenture.
"Designated Senior Indebtedness" means (i) so long as Senior
Indebtedness is outstanding under the New Senior Credit Facilities, all Senior
Indebtedness outstanding under the New Senior Credit Facilities and (ii)
thereafter, any other Senior Indebtedness permitted under this Indenture the
principal amount of which is $50.0 million or more and that has been designated
by the Company as "Designated Senior Indebtedness."
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or
prior to the date that is 91 days after the date on which the Notes mature.
"Eligible Inventory" means, as of any date, all inventory of
the Company and any of its Subsidiaries, wherever located, valued in accordance
with GAAP and shown on the balance sheet of the Company for the quarterly
period most recently ended prior to such date for which financial statements of
the Company are available.
"Eligible Receivables" means, as of any date, all accounts
receivable of the Company and any of its Restricted Subsidiaries arising out of
the sale of inventory in the ordinary course of business, valued in accordance
with GAAP and shown on the balance sheet of the Company for the quarterly
period most recently ended prior to such date for which financial statements of
the Company are available.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
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"Exchange Offer Registration Statement" has the meaning set
forth in the Registration Rights Agreement.
"Existing Indebtedness" means (i) Indebtedness of the Company
and its Restricted Subsidiaries in existence on the Issue Date and (ii)
Indebtedness of Fieldcrest and its Subsidiaries outstanding on the effective
date of the Merger; provided that immediately following the consummation of the
Merger all Indebtedness of Fieldcrest outstanding under its existing credit
facilities shall be refinanced with the proceeds of borrowings under the New
Senior Credit Facility and Fieldcrest's obligations under its 11.25% Senior
Subordinated Debentures shall have been satisfied and discharged in accordance
with the terms of the Indenture governing such securities.
"Fieldcrest" means Fieldcrest Cannon, Inc., a Delaware
corporation.
"Fixed Charges" means, with respect to any Person for any
period, the sum of (i) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period calculated in conformity with GAAP,
whether paid or accrued (including, without limitation, amortization of
original issue discount, non-cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations but
excluding amortization of debt, issuance costs and deferred financing fees,
incurred in connection with the Merger on or before the Issue Date) and (ii)
the consolidated interest expense of such Person and its Restricted
Subsidiaries that was capitalized during such period, and (iii) any interest
expense on Indebtedness of another Person that is guaranteed by such Person or
one of its Restricted Subsidiaries or secured by a Lien on assets of such
Person or one of its Restricted Subsidiaries (whether or not such guarantee or
Lien is called upon) and (iv) the product of (a) all cash dividend payments
(and non-cash dividend payments in the case of a Person that is a Restricted
Subsidiary) on any series of preferred stock of such Person and its Restricted
Subsidiary, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues preferred stock
subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
"Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, guarantee or redemption
of Indebtedness, or such issuance or redemption of preferred stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
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be excluded, and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession which are in effect on the Issue Date.
"Global Notes" means, individually and collectively, each of
the Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantor" means each of (i) PTEX Holding Company, a Delaware
corporation; Pillowtex Management Services Company, a Delaware business trust;
Pillowtex, Inc., a Delaware corporation; Manetta Home Fashions, Inc., a North
Carolina corporation; Beacon Manufacturing Company, a North Carolina
corporation; and Tennessee Woolen Mills, Inc., a Tennessee corporation; (ii)
upon consummation of the Merger, Fieldcrest Cannon, Inc., a Delaware
corporation; Crestfield Cotton Company, a Tennessee corporation; Encee, Inc., a
Delaware corporation; Fieldcrest Cannon Financing, Inc., a Delaware
corporation; Fieldcrest Cannon Licensing, Inc., a Delaware corporation;
Fieldcrest Cannon Sure Fit, Inc., a Delaware corporation; Fieldcrest Cannon
Transportation, Inc., a Delaware corporation; St. Marys, Inc., a Delaware
corporation: Amoskeag Company, a Delaware corporation; Amoskeag Management
Corporation, a Delaware corporation; Bangor Investment Company, a Delaware
corporation; Moore's Falls Corporation, a Delaware corporation; and Downeast
Securities Corporation, a Delaware corporation; and (iii) any other Subsidiary
that executes and delivers to the Trustee a Supplemental Indenture in
substantially the form of Exhibit F hereto in accordance with the provisions of
this Indenture, and their respective successors and assigns.
"Guarantor Senior Indebtedness" means, with respect to any
Guarantor, (i) the guarantee of such Guarantor of the Company's Obligations
under the New Senior Credit Facilities and (ii) any other Indebtedness
permitted to be incurred by such Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of payment to the
Guarantee of such Guarantor. Notwithstanding anything to the contrary in the
foregoing, Guarantor Senior Indebtedness will not include (u) any Indebtedness
of such Guarantor representing a guarantee of Indebtedness of the Company or
any other Guarantor which Indebtedness is subordinate or junior to, or pari
passu with, the Notes or the Guarantee of such other
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Guarantor, as the case may be, (v) any Indebtedness that is expressly
subordinate or junior in right of payment to any other Indebtedness of such
Guarantor, (w) any liability for federal, state, local or other taxes owed or
owing by such Guarantor, (x) any Indebtedness of such Guarantor to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of
any Indebtedness that is incurred in violation of the Indenture.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates, the value of foreign currencies and the value of commodities
purchased by the Company or any of its Restricted Subsidiaries in the ordinary
course of business.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note in the form of Exhibit
A1 hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold to Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, (a) any
indebtedness of such Person, whether or not contingent, (i) in respect of
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments; (iii) evidenced by letters of credit (or reimbursement agreements
in respect thereof) or banker's acceptances; (iv) representing Capital Lease
Obligations; (v) representing the balance deferred and unpaid of the purchase
price of any property; or (vi) representing any net obligations under Hedging
Obligations, if and only to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, and
excluding therefrom any portion of any indebtedness constituting an accrued
expense or trade payable; (b) all indebtedness of others secured by a Lien on
any asset of such Person (whether or not such indebtedness is assumed by such
Person) and, (c) to the extent not otherwise included, the guarantee by such
Person of any indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Independent" means, with respect to the Company and its
Subsidiaries, any person who (i) is in fact independent, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Company or any of its Subsidiaries, or in any Affiliate of the Company or any
of its Subsidiaries (other than as a result of holding securities of the
Company) and (iii) is not an officer, employee, promoter, underwriter, trustee,
partner or person performing similar functions for the Company or any of its
Subsidiaries.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Purchasers" means NationsBanc Montgomery Securities,
Inc. and Bear, Stearns & Co. Inc.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act, who are not also QIBs.
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"Investment Assets" means assets and property of the Company
and its Restricted Subsidiaries held for investment on the effective date of
the Merger with an aggregate fair market value not exceeding $25.0 million.
"Investments'' means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP; provided that an acquisition of assets, Equity Interests or other
securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment.
"Issue Date'' means the date of this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
the Federal Reserve Bank, banking institutions or the Depository Trust Company
in the City of New York or at a place of payment are authorized by law,
regulation or executive order to remain closed. If a payment date is a Legal
Holiday at a place of payment, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Notes for use by such
Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction, any capital lease and any
other preferential arrangement that has substantially the same practical effect
as a security interest in an asset).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section [5] of the Registration Rights Agreement.
"Merger" means the merger of a wholly-owned subsidiary of the
Company with and into Fieldcrest.
"Net Income" with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
9
<PAGE> 17
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting, and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), amounts required to be applied to
the repayment of Indebtedness (other than Indebtedness under the New Senior
Credit Facilities) secured by a Lien on the asset or assets that were the
subject of such Asset Sale, and any reserve for adjustment in respect of the
sale price of such asset or assets established in accordance with GAAP.
"New Senior Credit Facilities" means the credit agreements to
be entered into on or prior to the Issue Date by and among the Company,
NationsBanc Montgomery Securities, Inc., as arranger and syndication agent,
certain lending parties thereto and NationsBank of Texas, N.A., as agent,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit agreements and/or
related documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the proviso to the
next succeeding sentence, irrespective of any changes in the terms and
conditions thereof. Without limiting the generality of the foregoing, the term
"New Senior Credit Facilities" shall include any amendment, amendment and
restatement, renewal, extension, restructuring, supplement or modification to
any New Senior Credit Facilities and all refundings, refinancings and
replacements of any New Senior Credit Facilities, including any agreement (i)
extending the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of the Company and its Subsidiaries
and their respective successors and assigns, or (iii) increasing the amount of
Indebtedness incurred thereunder or available to be borrowed thereunder.
"Non-Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit support
of any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in the documents governing
such Indebtedness that they will not have any recourse to the stock or assets
of the Company or any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Note Guarantee" means the Guarantee by each Guarantor of the
Company's payment obligations under this Indenture and the Notes, executed
pursuant to the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
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<PAGE> 18
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer or
the principal accounting officer of the Company, that meets the requirements of
Section 11.06 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means Indebtedness ranking part
passu in right of payment with the Notes.
"Participant" means, with respect to the Depositary, Euroclear
or Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Investment" means (i) Investments by the Company or
any Guarantor in any person that is or immediately after such Investment
becomes a Guarantor, or immediately after such Investment merges or
consolidates into the Company or any Guarantor in compliance with the terms of
the Indenture, provided that such Person is engaged in all material respects in
Related Business; (ii) Investments in the Company by any Guarantor; provided
that in the case of Indebtedness constituting any such Investment, such
Indebtedness shall be unsecured and subordinated in all respects to the
Company's obligations under the Notes; (iii) Hedging Obligations entered into
in the ordinary course of the Company's or its Subsidiaries' businesses and
otherwise in compliance with the Indenture; (iv) Investments in securities of
trade creditors or customers received in settlement of obligations that arose
in the ordinary course of business or pursuant to any plan of reorganization or
similar arrangement upon the bankruptcy or insolvency of such trade creditors
or customers; (v) Investments made by the Company or any of its Subsidiaries as
a result of non-cash consideration received in connection with an Asset Sale
made in compliance with Section 4.10 hereof; (vi) any Investment by the Company
or a Subsidiary of the Company in a Receivables Subsidiary or any Investment by
a Receivables Subsidiary in any other person or assets in connection with a
Qualified Receivables Transaction; provided, that the foregoing Investment in
any such person is in the form of a Purchase Money Note, an equity interest or
interests in accounts receivable generated by the Company or a Subsidiary of
the Company and transferred to any person in connection with a Qualified
Receivables Transaction or any such person owning such accounts receivable;
(vii) Investments by the Company outstanding on the Issue Date; (viii)
acquisitions by the Company of assets, Equity Interests or other securities for
consideration consisting
11
<PAGE> 19
solely of Capital Stock (other than Disqualified Stock) of the Company; and
(ix) Investments in Cash Equivalents or money market funds which invest solely
in Cash Equivalents.
"Permitted Junior Securities" means common equity securities
or debt securities of the Company or any Guarantor that are subordinated at
least to the same extent as the Notes Senior Indebtedness and any securities
issued in exchange for Senior Indebtedness.
"Permitted Lien" means (i) Liens existing on the Issue Date;
(ii) Liens securing Senior Indebtedness and Liens on assets of Restricted
Subsidiaries securing Guarantor Senior Indebtedness permitted to be incurred
under the Indenture; (iii) Liens securing Permitted Refinancing Indebtedness
which is incurred to refinance any Indebtedness which has been secured by a
Lien permitted under the Indenture and which has been incurred in accordance
with the provisions of the Indenture, provided, however, that such Liens (a)
are not materially less favorable to the Holders and are not materially more
favorable to the lienholders with respect to such Liens than the Liens in
respect of the Indebtedness being refinanced and (b) do not extend to or cover
any property or assets of the Company or any of its Restricted Subsidiaries not
securing the Indebtedness so refinanced; (iv) Liens securing the Notes; (v)
Liens securing Indebtedness of a Person existing at the time such Person
becomes a Subsidiary, provided that such liens were in existence prior to the
contemplation of such acquisition, merger or consolidation, were not incurred
in anticipation thereof, and do not extend to any other assets; (vi) Liens
arising from Indebtedness permitted to be incurred under clause (iii) of
Section 4.09 hereof, provided such Liens relate solely to the property, plant
or equipment which is purchased, constructed or improved pursuant to such
financing; (vii) Liens imposed by governmental authorities for taxes,
assessments or other charges or claims either (a) not delinquent or (b)
contested in good faith by appropriate proceedings and as to which the Company
or any of its Subsidiaries shall have set aside on its books such reserves as
may be required pursuant to GAAP; (viii) statutory Liens of landlords,
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
like Liens arising by operation of law in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such reserves or
other appropriate provisions, if any, as shall be required by GAAP shall have
been made in respect thereof; (ix) Liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or similar
obligations, including any Lien securing letters of credit issued in the
ordinary course of business in connection therewith, 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 (exclusive of obligations for the payment of borrowed
money) incurred in the ordinary course of business; (x) judgment Liens not
giving rise to an Event of Default so long as such Lien is adequately bonded
and any appropriate legal proceedings which may have been duly initiated for
the review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;
(xi) easements, rights-of-way, zoning restrictions, minor defects or
irregularities with title and other similar charges or encumbrances in respect
of real property not materially detracting from the value of the property
subject thereto and not interfering in any material respect with the ordinary
conduct of business of the Company or any of its Subsidiaries; (xii) Liens upon
specific items of inventory or other goods and proceeds of any person securing
such person's obligations in respect of banker's acceptances issued or created
for the account of such person to facilitate the purchase, shipment or storage
of such inventory or other goods in the ordinary course of business; (xiii)
Liens in favor of the Company or a Guarantor; (xiv) leases or subleases granted
to others not interfering in any material respect with the business of the
Company or its Subsidiaries; (xv) Liens arising out of consignment or similar
arrangements for the sale of goods entered into by the Company or any of its
Subsidiaries in the ordinary course of business; and (xvi) Liens on assets of a
Receivables Subsidiary securing Indebtedness incurred in connection with a
Qualified Receivables Transaction.
12
<PAGE> 20
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries; provided that: (i) the aggregate principal amount (or accreted
value, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the aggregate principal amount (or accreted value, if applicable) of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date later than
the final maturity date of, and has a Weighted Average Life to Maturity equal
to or greater than the Weighted Average Life to Maturity of, the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Restricted Subsidiary that is the obliger on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or agency or political subdivision thereof (including any
subdivision or ongoing business of any such entity or substantially all of the
assets of any such entity, subdivision or business).
"Principals" means Charles M. Hansen, Jr., his spouse and any
of his lineal descendants.
"Private Placement Legend" means the legend set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
where otherwise permitted by the provisions of this Indenture.
"Purchase Money Note" means a promissory note evidencing a
line of credit, which may be irrevocable, from, or evidencing other
Indebtedness owed to, the Company or any Subsidiary of the Company in
connection with a Qualified Receivables Transaction, which note shall be repaid
from cash available to the maker of such note, other than amounts required to
be established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors, and
amounts paid in connection with the purchase of newly generated receivables.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any
Subsidiary pursuant to which the Company or any Subsidiary may sell, convey or
otherwise transfer to (i) a Receivables Subsidiary (in the case of a transfer
by the Company or any Subsidiary) and (ii) any other person (in the case of a
transfer by a Receivables Subsidiary), or may grant a security interest in, any
accounts receivable (whether now existing or arising in the future) of the
Company or any Subsidiary of the Company, and any assets related thereto,
including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts
13
<PAGE> 21
receivable, proceeds of such accounts receivable and other assets which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Subsidiary" means a Wholly Owned Restricted
Subsidiary of the Company (other than a Subsidiary Guarantor) which engages in
no activities other than in connection with the financing or sale of accounts
receivable and which is designated by the Board of Directors of the Company (as
provided below) as a Receivables Subsidiary (i) no portion of any Indebtedness
or any other Obligations (contingent or otherwise) of which (a) is guaranteed
by the Company or any other Restricted Subsidiary of the Company (excluding
guarantees of obligations (other than the principal of and interest on,
Indebtedness) pursuant to Standard Securitization Undertakings, (b) is recourse
to or obligates the Company or any other Restricted Subsidiary of the Company
in any way other than pursuant to Standard Securitization Undertakings, or (c)
subjects any property or asset of the Company or any other Subsidiary of the
Company, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings, (ii) with
which neither the Company nor any other Restricted Subsidiary of the Company
has any material contract, agreement, arrangement or understanding (except in
connection with a Purchase Money Note or Qualified Receivables Transaction)
other than on terms no less favorable to the Company or such other Restricted
Subsidiary of the Company than those that might be obtained at the time from
persons that are not Affiliates of the Company, other than fees payable in the
ordinary course of business in connection with servicing accounts receivable;
and (iii) to which neither the Company nor any of its other Restricted
Subsidiaries has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors of the Company shall be
evidenced to the Trustee by the filing with the Trustee a certified copy of the
resolution of the Board of Directors of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of December 18, 1997, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a global Note bearing the
Private Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Related Business" means the business conducted (or proposed
to be conducted) by the Company and its Subsidiaries as of the Issue Date and
any and all businesses that in the good faith judgment of the Board of
Directors of the Company are materially related businesses.
"Related Party" with respect to any Principal means any trust,
corporation, partnership or other entity, the beneficiaries, shareholders,
partners, owners, or Persons beneficially holding a 50% or more controlling
interest of which consist of such Principal.
"Representative" means the indenture trustee or other trustee,
agent or representative for any Senior Indebtedness.
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<PAGE> 22
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee (or
any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing
the Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the
Private Placement Legend.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Period" means the 40-day restricted period as
defined in Regulation S.
"Restricted Subsidiary" means each Subsidiary of the Company
that is not designated as a Unrestricted Subsidiary in accordance with the
provisions of the Indenture.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means (i) Indebtedness under the New
Senior Credit Facilities (including interest in respect thereof accruing after
the commencement of any bankruptcy or similar proceeding to the extent that
such interest is allowable as a bankruptcy claim in such proceeding) and (ii)
any other Indebtedness permitted to be incurred by the Company under the terms
of the Indenture, unless the instrument under which such Indebtedness is
incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Notes. Notwithstanding anything to the contrary in the
foregoing, Senior Indebtedness will not include (v) any Indebtedness that is
expressly subordinate or junior in right of payment to any other Indebtedness
of the Company, (w) any liability for federal, state, local or other taxes owed
or owing by the Company (x) any Indebtedness of the Company to any of its
Subsidiaries or other Affiliates, (y) any trade payables or (z) that portion of
Indebtedness that is incurred in violation of the Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Special Redemption Amount" has the meaning provided in
Section 4.19.
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<PAGE> 23
"Special Redemption Date" means February 16, 1998.
"Standard Securitization Undertaking" means representations,
warranties, covenants, and indemnities entered into by the Company or any
Subsidiary of the Company that are reasonably customary in an accounts
receivable transaction.
"Stated Maturity" means, with respect to any payment of
interest on or principal of any Indebtedness, the date on which such payment
was scheduled to be made in the documentation governing such Indebtedness,
without regard to the occurrence of any subsequent event or contingency.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA.
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in
the form of Exhibit A1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive
Notes that do not bear and are not required to bear the Private Placement
Legend.
"Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution; but only to the extent that such Subsidiary: (i) has no
Indebtedness other than Non-Recourse Debt; (ii) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (iii) is a Person with respect
to which neither the Company nor any of its Restricted Subsidiaries has any
direct or indirect obligations (x) to subscribe for additional Equity Interests
or (y) to maintain or preserve such Person's financial condition or to cause
such Person to achieve any specified levels of operating results; and (iv) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the board resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing
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<PAGE> 24
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of
the Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under the covenant described under the caption
"Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall
be in default of such covenant). The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Voting Stock" means, with respect to any Person as of any
date, the Capital Stock of such Person that is at the time entitled to vote in
the election of the Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned
by such Person or by one or more Wholly Owned Subsidiaries of such Person and
one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
"Asset Sale Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Authentication Order" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
"Change of Control Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14
"Change of Control Payment" . . . . . . . . . . . . . . . . . . . . . . . . . 4.14
"Change of Control Payment Date" . . . . . . . . . . . . . . . . . . . . . . . 4.14
"Collateral Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
"Collateral Funds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
"Covenant Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"incur" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.09
"Legal Defeasance" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03
"Mutual Fund Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
"Net Offering Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
"Offer Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
</TABLE>
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<PAGE> 25
<TABLE>
<S> <C>
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Productive Assets" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.09
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Restricted Payments" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.07
"Special Redemption" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
"Special Redemption Amount" . . . . . . . . . . . . . . . . . . . . . . . . . 4.19
</TABLE>
SECTION 1.03.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Note Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Note Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular;
(5) provisions apply to successive events and
transactions; and
(6) references to sections of or rules under the
Securities Act shall be deemed to include substitute,
replacement of successor sections or rules adopted by the SEC
from time to time.
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<PAGE> 26
ARTICLE 2.
THE NOTES
SECTION 2.01.FORM AND DATING.
(a) General.
The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be bound
thereby. However, to the extent any provision of any Note conflicts with the
express provisions of this Indenture, the provisions of this Indenture shall
govern and be controlling.
(a) Global Notes.
Notes issued in global form shall be substantially in the form
of Exhibit A1 attached hereto (including the Global Note Legend thereon and the
"Schedule of Exchanges of Interests in the Global Note" attached thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit
A1 attached hereto (but without the Global Note Legend thereon and without the
"Schedule of Exchanges of Interests in the Global Note" attached thereto).
Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Notes from time to time endorsed thereon and
that the aggregate principal amount of outstanding Notes represented thereby
may from time to time be reduced or increased, as appropriate, to reflect
exchanges and redemptions. Any endorsement of a Global Note to reflect the
amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(b) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of the Regulation S Temporary Global Note, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with the Trustee, at its New York office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have
received certification of non-United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Note (except to
the extent of any beneficial owners thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Note or an IAI Global Note bearing a Private
Placement Legend, all as contemplated by Section 2.06(a)(ii) hereof), and (ii)
an Officers' Certificate from the Company. Following the termination of the
Restricted Period, beneficial interests in
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<PAGE> 27
the Regulation S Temporary Global Note shall be exchanged for beneficial
interests in Regulation S Permanent Global Notes pursuant to the Applicable
Procedures. Simultaneously with the authentication of Regulation S Permanent
Global Notes, the Trustee shall cancel the Regulation S Temporary Global Note.
The aggregate principal amount of the Regulation S Temporary Global Note and
the Regulation S Permanent Global Notes may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the Depositary
or its nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(c) Euroclear and Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the "General
Terms and Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall
be applicable to transfers of beneficial interests in the Regulation S Global
Notes that are held by Participants through Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
One Officer shall sign the Notes for the Company by manual or
facsimile signature. The Company's seal may be reproduced on the Notes and may
be in facsimile form.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers (an "Authentication Order"), authenticate Notes for original
issue up to the aggregate principal amount stated in paragraph 4 of the Notes.
The aggregate principal amount of Notes outstanding at any time may not exceed
such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and
the term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
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<PAGE> 28
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes, and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Company at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than the Company
or a Subsidiary) shall have no further liability for the money. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a).
If the Trustee is not the Registrar, the Company shall furnish to the Trustee
at least seven Business Days before each interest payment date and at such
other times as the Trustee may request in writing, a list in such form and as
of such date as the Trustee may reasonably require of the names and addresses
of the Holders of Notes and the Company shall otherwise comply with TIA Section
312(a).
SECTION 2.06 . TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to
the Depositary or to another nominee of the Depositary, or to the Depositary or
any such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes will be exchanged by the Company for Definitive
Notes if (i) the Company delivers to the Trustee notice from the Depositary
that it is unwilling or unable to continue to act as Depositary or that it is
no longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within 120 days
after the date of such notice from the Depositary or (ii) the Company in its
sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee. Upon the occurrence of either of the preceding events
in (i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other
21
<PAGE> 29
than as provided in this Section 2.06(a), however, beneficial interests in a
Global Note may be transferred and exchanged as provided in Section 2.06(b),(c)
or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes.
The transfer and exchange of beneficial interests in the
Global Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Transfers of beneficial interests in the Global Notes also
shall require compliance with either subparagraph (i) or (ii) below, as
applicable, as well as one or more of the other following subparagraphs, as
applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in
the same Restricted Global Note in (ii) accordance with the
transfer restrictions set forth in the Private Placement Legend; provided,
however, that prior to the expiration of the Restricted Period, transfers
of beneficial interests in the Regulation S Global Note may not be made to
a U.S. Person or for the account or benefit of a U.S. Person (other than
Initial Purchaser). Beneficial interests in any Unrestricted Global Note
may be transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.06(b)(i).
(iii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant (iv)
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above. Upon consummation of an Exchange
Offer by the Company in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in
the Letter of Transmittal delivered by the Holder of such beneficial
interests in the Restricted Global Notes. Upon satisfaction of all of the
requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable
under the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(v) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
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<PAGE> 30
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications and certificates and Opinion of
Counsel required by item (3) thereof, if applicable.
(vi) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note,
a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests or if the Applicable Procedures so require,
an Opinion of Counsel in form reasonably acceptable to the Registrar
to the effect that such exchange or transfer is in compliance with the
Securities Act
23
<PAGE> 31
and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for
Definitive Notes.
(vii) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest
in a Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note or to transfer such
beneficial interest to a Person who takes delivery thereof in the form
of a Restricted Definitive Note, then, upon receipt by the Registrar
of the following documentation:
(A) if the holder of such beneficial interest in
a Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (2)(a) thereof;
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such beneficial interest is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such beneficial interest is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such beneficial interest is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such beneficial interest is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and
24
<PAGE> 32
the Trustee shall authenticate and deliver to the Person designated in
the instructions a Definitive Note in the appropriate principal
amount. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)
shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c)(i) shall bear the Private Placement Legend and shall
be subject to all restrictions on transfer contained therein.
(viii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the holder of such
beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution
of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial
interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Definitive
Note that does not bear the Private Placement Legend,
a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial
interest in a Restricted Global Note proposes to
transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a
Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in
the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph
(D), if the Registrar so requests or if the Applicable
Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act
and that the restrictions on transfer contained herein
25
<PAGE> 33
and in the Private Placement Legend are no longer required in
order to maintain compliance with the Securities Act.
(ix) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest
in an Unrestricted Global Note proposes to exchange such beneficial
interest for a Definitive Note or to transfer such beneficial interest
to a Person who takes delivery thereof in the form of a Definitive
Note, then, upon satisfaction of the conditions set forth in Section
2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.06(h) hereof, and the Company shall execute and
the Trustee shall authenticate and deliver to the Person designated in
the instructions a Definitive Note in the appropriate principal
amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct
the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iii) shall not bear the
Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for
Beneficial Interests.
(x) Restricted Definitive Notes to Beneficial Interests
in Restricted Global Notes. If any Holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Notes
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive
Note proposes to exchange such Note for a beneficial interest
in a Restricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1)
thereof;
(C) if such Restricted Definitive Note is being
transferred to a Non-U.S. Person in an offshore transaction in
accordance with Rule 903 or Rule 904 under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(a) thereof;
(E) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements of
the Securities Act other than those listed in subparagraphs
(B) through (D) above, a
26
<PAGE> 34
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of
Counsel required by item (3) thereof, if applicable;
(F) if such Restricted Definitive Note is being
transferred to the Company or any of its Subsidiaries, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(b) thereof; or
(G) if such Restricted Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note,
increase or cause to be increased the aggregate principal amount of,
in the case of clause (A) above, the appropriate Restricted Global
Note, in the case of clause (B) above, the 144A Global Note, in the
case of clause (c) above, the Regulation S Global Note, and in all
other cases, the IAI Global Note.
(xi) Restricted Definitive Notes to Beneficial Interests
in Unrestricted Global Notes. A Holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person
who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive
Notes proposes to exchange such Notes for a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of Exhibit
C hereto, including the certifications in item (1)(c)
thereof; or
(2) if the Holder of such Definitive
Notes proposes to transfer such Notes to a Person who
shall take delivery thereof in the form of a
beneficial interest in the Unrestricted Global Note,
a certificate from such Holder in the form of Exhibit
B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this
subparagraph (D), if the Registrar so requests or if
the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the
Registrar to the effect that such
27
<PAGE> 35
exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend
are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of
the subparagraphs in this Section 2.06(d)(ii), the
Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate
principal amount of the Unrestricted Global Note.
(xii) Unrestricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes. A Holder of an
Unrestricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer
such Definitive Notes to a Person who takes delivery thereof
in the form of a beneficial interest in an Unrestricted Global
Note at any time. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the
Unrestricted Global Notes.
(e) Transfer and Exchange of Definitive Notes for
Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the
form of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer will be made pursuant to Rule
144A under the Securities Act, then the transferor must
deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule
903 or Rule 904, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any
other exemption from the registration requirements of the
Securities Act, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted
Definitive Notes. Any Restricted Definitive Note may be exchanged by
the Holder thereof for an Unrestricted Definitive Note or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
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(A) such exchange or transfer is effected
pursuant to the Exchange Offer in accordance with the
Registration Rights Agreement and the Holder, in the case of
an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the
Shelf Registration Statement in accordance with the
Registration Rights Agreement;
(C) any such transfer is effected by a
Participating Broker-Dealer pursuant to the Exchange Offer
Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted
Definitive Notes proposes to exchange such Notes for
an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof;
or
(2) if the Holder of such Restricted
Definitive Notes proposes to transfer such Notes to a
Person who shall take delivery thereof in the form of
an Unrestricted Definitive Note, a certificate from
such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if
the Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted
Definitive Notes. A Holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with
the Registration Rights Agreement, the Company shall issue and, upon receipt of
an Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of the beneficial interests in
the Restricted Global Notes tendered for acceptance by Persons that certify in
the applicable Letters of Transmittal that (x) they are not broker-dealers, (y)
they are not participating in a distribution of the Exchange Notes and (z) they
are not affiliates (as defined in Rule 144) of the Company, and accepted for
exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate
principal amount equal to the principal amount of the Restricted Definitive
Notes accepted for exchange in the Exchange Offer. Concurrently with the
issuance of such
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<PAGE> 37
Notes, the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Company shall
execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes in
the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B)
below, each Global Note and each Definitive Note (and all
Notes issued in exchange therefor or substitution thereof)
shall bear the legend in substantially the following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT
TO THE DELIVERY OF SUCH EVIDENCE, IF ANY, REQUIRED UNDER THE
INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER
OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE
HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT
OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN
PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT OR (D) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A
CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL TO
THE EFFECT THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER
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APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO NOTIFY ANY PURCHASER FROM IT
OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTION SET
FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global
Note or Definitive Note issued pursuant to subparagraphs
(b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii),
(e)(iii) or (f) to this Section 2.06 (and all Notes issued in
exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a
legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS
DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE
IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF,
AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE,
(II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF THE COMPANY."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular
Global Note have been exchanged for Definitive Notes or a particular Global
Note has been redeemed, repurchased or cancelled in whole and not in part, each
such Global Note shall be returned to or retained and cancelled by the Trustee
in accordance with Section 2.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest in
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and
Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes upon the Company's order or at the
Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the
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Company may require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.06,
3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being
redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment
Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the
Trustee, upon receipt of an Authentication Order, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
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SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section
2.09 hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note; however, Notes held by the Company or
a Subsidiary of the Company shall not be deemed to be outstanding for purposes
of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Notes payable on that date, then on and after that date
such Notes shall be deemed to be no longer outstanding and shall cease to
accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company,
shall be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of certificated Notes but may have variations that
the Company considers appropriate for temporary Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to the Company. The Company may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
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SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee
in writing of the amount of defaulted interest proposed to be paid on each Note
and the date of the proposed payment. The Company shall fix or cause to be
fixed each such special record date and payment date, provided that no such
special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date (other than
a redemption pursuant to Paragraph 6 of the Notes ("Special Redemption") and,
in the event of a Special Redemption, five Business Days before notice of the
Special Redemption is to be mailed to Holders (unless a shorter notice period
shall be satisfactory to the Trustee), an Officers' Certificate setting forth
(i) the clause of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed
and (iv) the redemption price.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed or, if the Notes are not so listed, on a pro rata basis,
by lot or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes
to be redeemed shall be selected, unless otherwise provided herein, not less
than 30 nor more than 60 days prior to the redemption date by the Trustee from
the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date (other than in
connection with a Special Redemption), the Company
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shall mail or cause to be mailed, by first class mail, a notice of redemption
to each Holder whose Notes are to be redeemed at its registered address. In
the event of a Special Redemption, at least 5 Business Days before mailing of
Notice of Special Redemption, the Company shall mail or cause to be mailed a
notice of redemption by first class mail, postage prepaid, to each Holder, with
a copy to the Trustee. In the event of a Special Redemption on the Special
Redemption Date the Company shall provide the Trustee with notice on or prior
to 9:30 a.m. New York City time on the Business Day immediately preceding the
Special Redemption Date to effect such Special Redemption.
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or printed on
the Notes.
At the Company's request, the Trustee shall have the option to
give the notice of redemption in the Company's name and at its expense;
provided, however, that the Company shall have delivered to the Trustee, at
least 45 days prior to the redemption date (other than in connection with a
Special Redemption), an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE
One Business Day prior to the redemption date (other than in
connection with a Special Redemption), the Company shall deposit with the
Trustee or with the Paying Agent money sufficient to pay the redemption price
of and accrued interest on all Notes to be redeemed on that date. The Trustee
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or the Paying Agent shall promptly return to the Company any money deposited
with the Trustee or the Paying Agent by the Company in excess of the amounts
necessary to pay the redemption price of, and accrued interest on, all Notes to
be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes called for redemption. If a Note is
redeemed on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest shall be paid to
the Person in whose name such Note was registered at the close of business on
such record date. If any Note called for redemption shall not be so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and, upon the Company's written request, the Trustee shall
authenticate for the Holder at the expense of the Company a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) The Notes shall not be redeemable (other than a
Special Rdemption) at the Company's option prior to December 15, 2002.
Thereafter, the Notes shall be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages thereon
to the applicable redemption date, if redeemed during the 12-month period,
beginning on December 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
(b) Any redemption pursuant to this Section 3.07 shall be
made pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes (other than a Special Redemption).
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
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The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders, with a copy to the Trustee. The notice shall contain all instructions
and materials necessary to enable such Holders to tender Notes pursuant to the
Asset Sale Offer. The Asset Sale Offer shall be made to all Holders. The
notice, which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to
this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale
Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase
Date;
(c) that any Note not tendered or accepted for payment
shall continue to accrete or accrue interest;
(j) that, unless the Company defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrete or accrue interest after the Purchase Date;
(d) that Holders electing to have a Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such Note
purchased and may not elect to have only a portion of such Note purchased;
(e) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, or transfer by book-entry transfer, to the Company, a
depositary, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(f) that Holders shall be entitled to withdraw their
election if the Company, the depositary or the Paying Agent, as the case may
be, receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(g) that, if the aggregate principal amount of Notes
surrendered by Holders exceeds the Offer Amount, the Company shall select the
Notes to be purchased on a pro rata basis (with such
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<PAGE> 45
adjustments as may be deemed appropriate by the Company so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased);
and
(h) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Notes or portions thereof tendered pursuant to the Asset
Sale Offer, or if less than the Offer Amount has been tendered, all Notes
tendered, and shall deliver to the Trustee an Officers' Certificate stating
that such Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.09. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering
Holder an amount equal to the purchase price of the Notes tendered by such
Holder and accepted by the Company for purchase, and the Company shall promptly
issue a new Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the provisions
of Sections 3.01 through 3.06 hereof.
SECTION 3.10. SPECIAL REDEMPTION.
On the Special Redemption Date, the Notes shall be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date. The Company
shall have the option to redeem the Notes at any time on or prior to the
Special Redemption Date if the Merger has not been consummated on or prior to
such date at a redemption price equal to 101% of the principal amount thereof
plus accrued and unpaid interest to the date of redemption.
ARTICLE 4.
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Notes on the dates and in the manner
provided in the Notes. Principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, if other than the Company
or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date
money deposited by the Company in immediately available funds and designated
for and sufficient to pay all principal, premium, if any, and interest then
due. The Company shall pay all Liquidated Damages, if any, in the same manner
on the dates and in the amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at
the rate equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition
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interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and Liquidated Damages (without regard to any applicable grace period)
at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may
be served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 4.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations
of the SEC, so long as any Notes are outstanding, the Company shall furnish to
the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the Commission on Forms 10-Q
and 10-K under the Exchange Act if the Company were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results
of operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial condition and results of operation of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Company were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Company shall file
a copy of all such information and reports with the Commission for public
availability and make such information available to securities analysts and
prospective investors upon request. The Company shall at all times comply with
TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the
Company and the Guarantors shall furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
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SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that
such Guarantor is so required under the TIA) shall deliver to the Trustee,
within 90 days after the end of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture, and
further stating, as to each such Officer signing such certificate, that to the
best of his or her knowledge the Company has kept, observed, performed and
fulfilled each and every covenant contained in this Indenture and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture (or, if a Default or Event of Default shall have
occurred, describing all such Defaults or Events of Default of which he or she
may have knowledge and what action the Company is taking or proposes to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the event and what action the Company is taking
or proposes to take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or Article 5 hereof
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes
to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
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SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Equity
Interests of the Company or any of its Restricted Subsidiaries (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) to the direct or
indirect holders of the Equity Interests of the Company or any of its
Restricted Subsidiaries in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company, dividends or distributions payable to the Company or any
Restricted Subsidiary of the Company (other than a Receivables Subsidiary) or
dividends or distributions made by a Restricted Subsidiary of the Company
(other than a Receivables Subsidiary) to all holders of its common stock on a
pro rata basis); (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company, any Restricted Subsidiary of the Company
or any direct or indirect parent of the Company, (other than any such Equity
Interests owned by the Company or any Restricted Subsidiary of the Company
(other than a Receivables Subsidiary)); (iii) make any payment on or in respect
of, or purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is pari passu with or subordinated to the Notes, except at
Stated Maturity or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the applicable
four quarter period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate
of all other Restricted Payments made by the Company and its
Subsidiaries after the date of the Indenture (excluding Restricted
Payments permitted by clauses (v) and (y) of the next succeeding
paragraph), is less than the sum of (i) 50% of the Consolidated Net
Income of the Company for the period (taken as one accounting period)
commencing on the effective date of the Merger to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus (ii) 100% of the aggregate
net cash proceeds received by the Company from the issue or sale
subsequent to the date of the Indenture of Equity Interests of the
Company or of debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or
convertible debt securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is
sold for cash or otherwise liquidated or paid for cash, the lesser of
(A) the cash return of capital with respect to such Restricted
Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus (iv) $20.0 million.
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The foregoing provisions will not prohibit (v) the payment of
any dividend within 60 days after the date of declaration thereof, if at said
date of declaration such payment would have complied with the provisions of
this Indenture; (w) the making of any Restricted Investment, or the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company, in exchange for, or out of the proceeds of, the substantially
concurrent sale (other than to a Restricted Subsidiary of the Company) of other
Equity Interests of the Company (other than any Disqualified Stock); provided
that the amount of any such net cash proceeds that are utilized for any such
Restricted Investment, redemption, repurchase, retirement or other acquisition
shall be excluded from clause (c) (ii) of the preceding paragraph; (x) the
defeasance, redemption or repurchase of pari passu or subordinated Indebtedness
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness or the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c) (ii) of the preceding paragraph;
(y) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Subsidiaries') management
pursuant to any management equity subscription agreement or stock option
agreement in effect as of the date of the Indenture; provided that (A) the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any 12-month period plus the
aggregate cash proceeds received by the Company during such 12-month period
from any reissuance of Equity Interests by the Company to members of management
of the Company and its Restricted Subsidiaries, and (B) no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction; and (z) so long as no Default or Event of Default shall have
occurred and be continuing, ordinary dividends paid by the Company in respect
of its Common Stock in an aggregate amount not to exceed $6.0 million since the
date of the Indenture.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated shall be deemed to be Restricted Payments at
the time of such designations and shall reduce the amount available for
Restricted Payments under the first paragraph of this Section 4.07. All such
outstanding Investments shall be deemed to constitute Investments in an amount
equal to the fair market value of such Investments at the time of such
designation. Such designation shall only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
or a committee of the Board of Directors having at least one Independent
director and set forth in an Officers' Certificate delivered to the Trustee) on
the date of the Restricted Payment of the asset(s) proposed to be transferred
by the Company or such Restricted Subsidiary, as the case may be, pursuant to
the Restricted Payment. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 4.07 were computed, which
calculations may be based upon the Company's latest available financial
statements.
The Merger (including the payment of the Merger consideration)
shall not constitute a Restricted Payment under this Section 4.07.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause
or suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) (a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (1) on its
Capital Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties
or assets to the Company or any of its Restricted Subsidiaries. The foregoing
shall not apply to encumbrances or restrictions existing under or by reason of
(a) applicable law, (b) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties
or assets of any Person, other than the Person, or the property or assets of
the Person, so acquired, (c) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices, (d) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, or (e) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced
or (f) any Purchase Money Note, or other Indebtedness or contractual
requirements of a Receivables Subsidiary, in each case, incurred in connection
with a Qualified Receivables Transaction, provided that such restrictions apply
only to such Receivables Subsidiary.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Indebtedness) and that the Company shall not issue any Disqualified
Stock, and shall not permit any of its Subsidiaries to issue any shares of
preferred stock; provided, however, that (x) the Company and the Guarantors may
incur Indebtedness (including Acquired Indebtedness) and (y) the Company may
issue shares of Disqualified Stock, in each case if the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for which
internal financial statements are available immediately preceding the date on
which such additional Indebtedness is incurred or such Disqualified Stock is
issued would have been at least 2.0 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if the
additional Indebtedness had been incurred, or the Disqualified Stock had been
issued, as the case may be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company of Indebtedness under
the New Senior Credit Facilities (and guarantees thereof by the
Guarantors) in an aggregate principal amount at any time outstanding
(with letters of credit being deemed to have a principal amount equal
to the maximum potential liability of the Company and its Subsidiaries
thereunder) not to exceed the greater of (x) $600.0 million and (y)
the sum of 80% of Eligible Receivables and 65% of Eligible Inventory,
less, in the case of each of clause (x) and clause (y), the aggregate
amount of all Net
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Proceeds of Asset Sales applied to permanently reduce the commitments
with respect to such Indebtedness pursuant to Section 4.10 hereof;
(ii) the incurrence by the Company of Indebtedness
represented by the Notes and the incurrence by the Guarantors of
Indebtedness represented by the Guarantees;
(iii) the incurrence by the Company or any of its
Subsidiaries of Indebtedness represented by Capital Lease Obligations
(whether or not incurred pursuant to sale and leaseback transactions),
mortgage financing or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Company or such Restricted
Subsidiary, in an aggregate principal amount not to exceed $15.0
million at any time outstanding;
(iv) the incurrence by the Company or any of its
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund, Existing Indebtedness or Indebtedness that
was permitted by the Indenture to be incurred (other than any such
Indebtedness incurred pursuant to clause (i), (iii), (v), (vi), (vii)
(viii) or (xiii) of this paragraph );
(v) the incurrence by the Company or any of its Wholly
Owned Subsidiaries (other than a Receivables Subsidiary) of
intercompany Indebtedness between or among the Company and any of its
Wholly Owned Subsidiaries (other than a Receivables Subsidiary);
provided, however, that (i) if the Company is the obliger on such
Indebtedness, such Indebtedness is expressly subordinate to the
payment in full of all Obligations with respect to the Notes and (ii)
(A) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Wholly Owned Subsidiary (other than a Receivables
Subsidiary) and (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Wholly
Owned Subsidiary (other than a Receivables Subsidiary) shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by the Company or such Subsidiary, as the case may be;
(vi) the incurrence by the Company or any Subsidiary of
Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk that is permitted by the terms of the
Indenture to be incurred;
(vii) the incurrence by the Company of Hedging Obligations
under commodity hedging and currency exchange agreements; provided
that, such agreements were entered into in the ordinary course of
business for the purpose of limiting risks that arise in the ordinary
course of business;
(viii) the incurrence of Indebtedness of a Guarantor
represented by guarantees of Indebtedness of the Company that has been
incurred in accordance with the terms of the Indenture;
(ix) the incurrence of Indebtedness by the Company and its
Subsidiaries solely in respect of performance bonds, workers'
compensation claims, payment obligations in connection with
self-insurance and other similar requirements (to the extent that such
incurrence does not result in the incurrence of any obligation to
repay any obligation relating to borrowed money of
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others) in the ordinary course of business in accordance with
customary industry practices, in amounts and for the purpose customary
in the Company's industry;
(x) Existing Indebtedness;
(xi) the incurrence of Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price
or similar obligations, or from guarantees or letters of credit,
surety bonds or performance bonds securing any such obligations of the
Company or any such Subsidiary pursuant to such agreements, in each
case incurred in connection with the disposition of any business,
assets or Subsidiary of the Company, other than Guarantees of
Indebtedness incurred by any Person acquiring all or any portion of
such business, assets or Subsidiary for the purpose of financing such
acquisition, provided that none of the foregoing results in
Indebtedness required to be reflected as indebtedness on the balance
sheet of the Company or any such Subsidiary in accordance with GAAP
and the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed 100% of the gross proceeds
actually received by the Company and its Subsidiaries in connection
with such disposition;
(xii) the incurrence of Indebtedness by a Receivables
Subsidiary that is not recourse to the Company or to any other
Subsidiary of the Company (other than Standard Securitization
Undertakings) incurred in connection with a Qualified Receivables
Transaction;
(xiii) the incurrence by the Company of Indebtedness (in
addition to Indebtedness permitted by any other clause of this
paragraph) in an aggregate principal amount (or accreted value, as
applicable) at any time outstanding not to exceed $20.0 million; and
(xiv) the incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Company that was not
permitted by this clause (xiv).
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to consummate an Asset Sale unless (i) the Company (or
the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors or a committee of the Board of Directors,
having at least one Independent director, and set forth in an officers'
certificate delivered to the Trustee, or by an independent appraisal by an
accounting, appraisal or investment banking firm of national standing or, in
the case of Investment Assets, an officer's certificate) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 75%
of the consideration therefor (or 50%, in the case of any Investment Assets)
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that (a) the amount of any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet) of the Company or any
such Restricted Subsidiary (other than contingent liabilities and liabilities
that by their terms are subordinated to the Notes or any guarantee thereof)
that are assumed by the transferee of any such assets (pursuant to a customary
novation agreement that releases the Company and its Restricted Subsidiaries
from all obligations in respect thereof) shall be deemed to be cash for
purposes of this provision and (b) any notes or other obligations received by
the Company or such Restricted Subsidiary from such transferee in exchange for
any such
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assets that are promptly converted into cash (to the extent of cash received)
shall be deemed to be cash for purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from an
Asset Sale, the Company may apply all such Net Proceeds, at its option, (i) to
permanently reduce Senior Indebtedness (and correspondingly reduce commitments
with respect thereto in the case of any reduction of borrowings under the New
Senior Credit Facilities), (ii) to the acquisition of a controlling interest in
another business, the making of a capital expenditure or the acquisition of
other long-term assets ("Productive Assets"), in each case, in the same or a
similar line of business as the Company was engaged in on the Issue Date, or
(iii) to reimburse the Company or its Subsidiaries for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to
loss, damage or taking to the extent that the net proceeds consist of insurance
proceeds received on account of such loss, damage or taking. Pending the final
application of any such Net Proceeds, the Company may temporarily reduce Senior
Indebtedness or otherwise invest such Net Proceeds in any manner that is not
prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not
applied or invested as provided in the first sentence of this paragraph will be
deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $10.0 million, the Company shall be required to make an offer
to all Holders of Notes and, to the extent required by the terms of any Pari
Passu Indebtedness, to all holders of such Pari Passu Indebtedness (an "Asset
Sale Offer") to repurchase the maximum principal amount of Notes and any such
Pari Passu Indebtedness that may be repurchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of purchase, in accordance with the procedures set forth in
this Indenture or such Pari Passu Indebtedness, as applicable. To the extent
that the aggregate amount of Notes and any such Pari Passu Indebtedness
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Notes and any Pari Passu Indebtedness
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes to be repurchased on a pro rata basis. Upon
completion of such offer to repurchase, the amount of Excess Proceeds shall be
reset at zero.
The Company shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer.
Notwithstanding the foregoing, the Company and its
Subsidiaries shall be permitted to consummate one or more Asset Sales with
respect to assets or properties with an aggregate fair market value not in
excess of $10.0 million in the aggregate subsequent to the Issue Date without
complying with clause (ii) of the first paragraph of this Section 4.10;
provided that (x) at least 75% of the consideration for such Asset Sale
constitutes either Productive Assets or cash, and (y) any Net Proceeds received
by the Company or any of its Restricted Subsidiaries in connection with any
Asset Sale permitted to be consummated under this paragraph shall be subject to
the provisions of the second paragraph of this Section 4.10.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing,
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an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms
that are no less favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person, (ii) with
respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.0 million the
Company delivers to the Trustee, a resolution of the Board of Directors set
forth in an Officers' Certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of Directors
and (ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, the Company delivers to the Trustee, an opinion as to the fairness to
the Holders of Notes of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing; provided that (v) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans approved
by the Board of Directors or the payment of fees and indemnities to directors
of the Company and its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such
Restricted Subsidiary, (w) loans or advances to employees in the ordinary
course of business, (x) transactions between or among the Company and/or its
Restricted Subsidiaries (other than a Receivables Subsidiary) or between
Restricted Subsidiaries (other than Receivables Subsidiaries), (y) Restricted
Payments (other than Investments) that are permitted by the provisions of
Section 4.07 hereof and (z) sales or other transfers or dispositions of
accounts receivable and other related assets customarily transferred in an
asset securitization transaction involving accounts receivable to a Receivables
Subsidiary in a Qualified Receivables Transaction, in each case, shall not be
deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Indebtedness on any asset now owned or
hereafter acquired, or any income or profits therefrom or assign or convey any
right to receive income therefrom, except Permitted Liens, unless all payments
due under this Indenture and the Notes are secured on an equal and ratable basis
with the Indebtedness so secured until such time as such is no longer secured by
a Lien; provided that if such Indebtedness is by its terms expressly
subordinated to the Notes or any Guarantee, the Lien securing such Indebtedness
shall be subordinate and junior to the Lien securing the Notes and the
Guarantees with the same relative priority as such subordinate or junior
Indebtedness shall have with respect to the Notes and the Guarantees.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
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SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this Section
4.14 and that all Notes tendered will be accepted for payment; (2) the purchase
price and the purchase date, which shall be no later than 30 business days from
the date such notice is mailed (the "Change of Control Payment Date"); (3) that
any Note not tendered will continue to accrue interest; (4) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrue interest after the Change of Control Payment Date; (5) that Holders
electing to have any Notes purchased pursuant to a Change of Control Offer will
be required to surrender the Notes, with the form entitled "Option of Holder to
Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date; (6) that Holders
will be entitled to withdraw their election if the Paying Agent receives, not
later than the close of business on the second Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of Notes
delivered for purchase, and a statement that such Holder is withdrawing his
election to have the Notes purchased; and (7) that Holders whose Notes are
being purchased only in part will be issued new Notes equal in principal amount
to the unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple thereof.
The Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of Notes
in connection with a Change of Control.
(b) On the Change of Control Payment Date, the Company
shall, to the extent lawful, (1) accept for payment all Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (2) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof so tendered and (3) deliver or cause
to be delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to each
Holder of Notes so tendered the Change of Control Payment for such Notes, and
the Trustee will promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any; provided that each such
new Note will be in a principal amount of $1,000 or an integral multiple
thereof. Prior to complying with the provisions of this Section 4.14, but in
any event within 90 days following a Change of Control, the Company shall
either repay all outstanding Senior Indebtedness or obtain the requisite
consents, if any, under all agreements governing outstanding Senior
Indebtedness to permit the repurchase of Notes required by this Section 4.14.
The Company shall publicly announce the results of the Change of Control Offer
on or as soon as practicable after the Change of Control Payment Date.
(c) Notwithstanding anything to the contrary in this
Section 4.14, the Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements
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set forth in this Section 4.14 and Section 3.09 hereof and purchases all Notes
validly tendered and not withdrawn under such Change of Control Offer.
SECTION 4.15. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment
to any Indebtedness of the Company and senior in any respect in right of
payment to the Notes, and (ii) no Guarantor shall incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness of such Guarantor
that is subordinate or junior in right of payment to any Indebtedness of such
Guarantor and senior in any respect in right of payment to the Guarantee of
such Guarantor.
SECTION 4.16. LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any of its Subsidiaries that is
not a Guarantor to incur, guarantee or secure through the granting of Liens the
payment of any Senior Indebtedness and the Company shall not and shall not
permit any of its Subsidiaries to pledge any intercompany notes representing
obligations of any of its Subsidiaries, to secure the payment of any Senior
Indebtedness, in each case unless such Subsidiary, the Company and the Trustee
execute and deliver a supplemental indenture to this Indenture evidencing such
Subsidiary's Guarantee (providing for the unconditional guarantee by such
Subsidiary, on a senior subordinated basis, of the Notes).
SECTION 4.17. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders of the Notes that consent, waive or agree
to amend in the time frame set forth in the solicitation documents relating to
such consent, waiver or agreement.
SECTION 4.18. ADDITIONAL NOTE GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or
create another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall become a Guarantor by executing a
Supplemental Indenture in the form attached hereto as Exhibit F and deliver an
Opinion of Counsel to the Trustee to the effect that such Supplemental
Indenture has been duly authorized, executed and delivered by such Subsidiary
and constitutes a valid and binding obligation of such Subsidiary, enforceable
against such Subsidiary in accordance with its terms (subject to customary
exceptions). The provisions of this Section 4.18 shall not apply to (i) any
Subsidiary organized outside of the United States and its territories or (ii)
any Subsidiary that has properly been designated as an Unrestricted Subsidiary
in accordance with this Indenture for so long as it continues to constitute an
Unrestricted Subsidiary.
SECTION 4.19. DEPOSIT OF PROCEEDS WITH TRUSTEE PENDING CONSUMMATION OF THE
MERGER.
(a) On the Issue Date, the Company shall deposit with
Nations Fund Treasury Reserves Capital Class #082 for the benefit of the
Trustee as hereinafter provided the net proceeds
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from the issuance of the Notes (the "Net Offering Proceeds") and such other
amount as, when added to the Net Offering Proceeds, equals $186,850,000 plus an
amount equal to the interest that would accrue on $185,000,000 from the Issue
Date to the Special Redemption Date at an interest rate of 9.00% per annum (the
"Special Redemption Amount").
(b) In order to secure the full and punctual payment and
performance of the Company's obligation to redeem the Notes upon a Special
Redemption, the Company hereby grants to the Trustee, for the benefit of the
Holders, a continuing security interest in and to the Collateral, whether now
owned or existing or hereafter acquired or arising. The Trustee shall have no
obligation to file any financing statement.
(c) At all times until the earlier to occur of (i)
receipt by the Trustee of (x) an Officers' Certificate stating that the Merger
is to be consummated on a date specified therein which shall be on or before
the Special Redemption Date on the terms and conditions described in the
Offering Memorandum of the Company dated December 15, 1997 relating to the
Notes in all material respects and requesting the Trustee to release the
Collateral to the order of the Company for application in connection with the
Merger and (y) an Opinion of Counsel to the effect that all conditions
precedent described in the precedent clause (x) have been satisfied in all
material respects and (ii) receipt by the Trustee of notice from the Company
pursuant to Section 3.03 hereof to effect a Special Redemption, there shall be
maintained with Nations Fund on behalf of the Trustee an account (the
"Collateral Account") designated "Pillowtex Corporate Account Pledged to
Norwest Bank Minnesota, National Association, as Trustee" which account shall
be under the sole dominion and control of the Trustee. On the Issue Date, the
Company shall cause the Special Redemption Amount to be deposited in the
Collateral Account. Amounts on Deposit in the Collateral Account shall be
invested and reinvested from time to time in shares of The Nations Fund
Treasury Reserves Capital Class #082 (in an account at the Fund in the name of
"Norwest Bank Minnesota, National Association, Trustee" (subject to a security
interest in the name of Norwest Bank Minnesota, National Association, as
Trustee) (the "Mutual Fund Account")), which shares shall be held in the
Collateral Account. Any income received with respect to the balance from time
to time standing to the credit of the Collateral Account, including any
interest or capital gains on Cash Equivalents, shall remain, or be deposited,
in the Collateral Account. The Trustee shall not be liable or accountable for
any losses resulting without negligence on the part of the Trustee from the
sale or depreciation in the market value of any investment of amounts on
deposit in the Collateral Account. Subject to Article Seven hereof, the
Trustee solely in its individual capacity hereby waives any rights it may have
in such individual capacity to the Collateral Account and all funds and
investments therein including, without limitation, any such rights arising
through any counterclaim, defense, recoupment, charge, lien or right of
set-off.
(d) Upon notice from the Company to the Trustee pursuant
to subsection (c) (i) above, the security interests in the Collateral shall
terminate and all funds in the Collateral Account (the "Collateral Funds")
shall be released as follows: (i) $186,500,000.00 plus interest deposited to
the Company to an account previously designated by the Company by wire transfer
of immediately available funds and (ii) any income with respect to Collateral
Funds shall be distributed to the Company as set forth in clause (i). Upon
notice from the Company to the Trustee pursuant to subsection (c)(ii) above,
the Trustee shall apply Collateral Funds to fund the Special Redemption and the
Trustee shall pay to the Company any amount in the Collateral Account in
excess of the amount needed to fund the Special Redemption. Section 314(d) of
the TIA shall not apply to the release of Collateral pursuant to this provision
if such release occurs prior to the filing of the Exchange Offer Registration
Statement pursuant to the Registration Rights Agreement, after which time this
sentence shall be deemed deleted from this Indenture.
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ARTICLE 5.
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
the Company) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of the Company under the Notes and this Indenture pursuant to a
supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) except in the case of a merger of the Company with or into a Wholly Owned
Subsidiary of the Company (other than a Receivables Subsidiary), the Company or
the entity or Person formed by or surviving any such consolidation or merger
(if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (A) will have
Consolidated Net Worth immediately after the transaction equal to or greater
than 95% of the Consolidated Net Worth of the Company immediately preceding the
transaction and (B) will, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of
the applicable fourth quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest on,
or Liquidated Damages with respect to, the Notes when the same becomes
due and payable and the Default continues
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for a period of 30 days, whether or not such payment is prohibited by
the provisions of Article 10 hereof;
(2) the Company defaults in the payment of the principal
of or premium, if any, on the Notes when the same becomes due and
payable at maturity, upon redemption or otherwise, whether or not such
payment is prohibited by the provisions of Article 10 hereof;
(3) the Company fails to observe or perform any covenant,
condition or agreement on the part of the Company to be observed or
performed pursuant to Sections 4.07, 4.09, 4.10, 4.14, 4.19 and 5.01
hereof;
(4) the Company fails to comply with any of its other
agreements or covenants in, or provisions of, the Notes or this
Indenture and the Default continues for a period of 60 days and after
notice;
(5) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries (or the payment of which
is Guaranteed by the Company or any of its Restricted Subsidiaries),
whether such Indebtedness or Guarantee now exists or shall be created
hereafter, which default (a) is caused by a failure to pay principal
of or premium, if any, or interest on such Indebtedness at its final
stated maturity (a "Payment Default") or (b) results in the
acceleration of such Indebtedness prior to its maturity and, in each
case, the principal amount of such Indebtedness, together with the
principal amount of any other Indebtedness as to which there has been
a Payment Default or the maturity of which has been so accelerated,
aggregates $10.0 million or more;
(6) a final judgment or final judgments for the payment
of money are entered by a court or courts of competent jurisdiction
against the Company or any of its Subsidiaries and such judgment or
judgments remain undischarged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the
aggregate of all such undischarged judgments exceeds $10.0 million;
(7) the Company or any of its Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief
against it in an involuntary case,
(c) consents to the appointment of a Custodian of
it or for all substantially all of its
property,
(d) makes a general assignment for the benefit of
its creditors, or
(e) generally is not paying its debts as they
become due;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
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(a) is for relief against the Company or any
Subsidiary in an involuntary case,
(b) appoints a Custodian of the Company or any
Subsidiary or for all or substantially all of
the property of the Company or any
Subsidiary, or
(c) orders the liquidation of the Company or any
Subsidiary,
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(9) The Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Guarantee (other
than by reason of a release of such Guarantor from its Guarantee in accordance
with the terms of this Indenture.
An Event of Default shall not be deemed to have occurred under
clause (3), (5) or (6) until the Trustee shall have received written notice
from the Company or any of the Holders or unless a Responsible Officer shall
have knowledge of such Event of Default. A Default under clause (4) is not an
Event of Default until the Trustee notifies the Company, or the Holders of at
least 25% in principal amount of the then outstanding Securities notify the
Company and the Trustee, of the Default and the Company does not cure the
Default within 60 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default."
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default
specified in clauses (7) and (8) of Section 6.01 relating to the Company, any
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in principal amount of
the then outstanding Securities by written notice to the Company and the
Trustee may declare the unpaid principal of and any accrued interest on all the
Securities to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately (together with the premium
referred to in Section 6.01, if applicable); provided however, that if any
Senior Indebtedness is outstanding under the New Senior Credit Facilities, upon
a declaration of acceleration, the Notes shall be payable upon the earlier of
(x) the day which is five Business Days after the provision to the Company and
the agent under the New Credit Senior Facilities of written notice of such
declaration and (y) the date of acceleration of any Indebtedness under the New
Senior Credit Facilities. If an Event of Default specified in clause (7) or
(8) of Section 6.01 relating to the Company, any Significant Subsidiary or any
group of Subsidiaries that, taken together, would constitute a Significant
Subsidiary occurs, such an amount shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal or interest that has become due solely because
of the acceleration) have been cured or waived.
If an Event of Default occurs on or after December 15, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent
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premium shall also become and be immediately due and payable, to the extent
permitted by law, anything in this Indenture or in the Notes to the contrary
notwithstanding. If an Event of Default occurs prior to December 15, 2002 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding the prohibition on redemption of
the Notes prior to such date, then, upon acceleration of the Notes, an
additional premium shall also become and be immediately due and payable in an
amount, for each of the years beginning on December 15 of the years set forth
below, as set forth below :
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109.000%
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108.000%
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107.000%
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.000%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105.000%
</TABLE>
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase);
provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
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SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and,
if requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Note, on or after the
respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Notes), its creditors or its
property and shall be entitled and empowered to collect, receive and distribute
any money or other property payable or deliverable on any such claims and any
custodian in any such judicial proceeding is hereby authorized by each Holder
to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the
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Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium and Liquidated Damages, if
any and interest, respectively; and
Third: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture, and use the same degree
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of care and skill in its exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is
subject to paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The
Trustee shall be under no obligation to exercise any of its rights and
powers under this Indenture at the request of any Holders, unless such
Holder shall have offered to the Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with
the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or
matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or
Opinion of
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Counsel. The Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents
and shall not be responsible for the misconduct or negligence of any
agent appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith that it believes to be authorized
or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company
shall be sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders unless such Holders shall
have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes,
it shall not be accountable for the Company's use of the proceeds from the
Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of the Holders of
the Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders of the Notes a brief report
dated as of such reporting date that complies with TIA Section 313(a) (but if
no event described in TIA Section 313(a) has occurred within the twelve months
preceding the reporting date, no report need be transmitted). The Trustee also
shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are
listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in connection
with the acceptance or administration of its duties under this Indenture,
including the costs and expenses of enforcing this Indenture against the
Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other person) or
liability in connection with the exercise or performance of any of its powers
or duties hereunder, except to the extent any such loss, liability or expense
may be attributable to its negligence or bad faith. The Trustee shall notify
the Company promptly of any claim for which it may seek indemnity. Failure by
the Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the
expenses and the compensation for the services (including the fees and expenses
of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
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The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of Notes of a majority in principal amount of the then outstanding
Notes may remove the Trustee by so notifying the Trustee and the Company in
writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Notes of at least 10% in principal amount of the
then outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note
who has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $100 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article
Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
on the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 hereof and the other Sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and accrued and unpaid interest and Liquidated Damages on
such Notes when such payments are due from the trust referred to below,(b) the
Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (c) the rights, powers, trusts, duties and immunities
of the Trustee, and the
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Company's obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17 and 14.8, hereof with
respect to the outstanding Notes on and after the date the conditions set forth
in Section 8.04 are satisfied (hereinafter, "Covenant Defeasance"), and the
Notes shall thereafter be deemed not "outstanding" for the purposes of any
direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and
such Notes shall be unaffected thereby. In addition, upon the Company's
exercise under Section 8.01 hereof of the option applicable to this Section
8.03 hereof, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(3) through 6.01(6) hereof shall not constitute
Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of Notes, cash in
United States dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and accrued and
unpaid interest and Liquidated Damages on the outstanding Notes on the
stated maturity or on the applicable redemption date, as the case may
be, and the Company must specify whether the Notes are being defeased
to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company
shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that (i)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (ii) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
opinion of counsel shall confirm that, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and
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will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company
shall have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit (other than a
Default or Event of Default resulting from the borrowing of funds to
be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than this Indenture)
to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound;
(f) the Company must have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company must deliver to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of Notes over the
other creditors of the Company or any Guarantor with the intent of
defeating, hindering, delaying or defrauding creditors, any Guarantor
of the Company or others; and
(h) the Company must deliver to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to
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Section 8.04 hereof or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for the account of
the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon the request of the Company any money or non-callable Government
Securities held by it as provided in Section 8.04 hereof which, in the opinion
of a nationally recognized firm of independent public accountants expressed in
a written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Note and remaining unclaimed for two years
after such principal, and premium, if any, or interest has become due and
payable shall be paid to the Company on its request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in the New York Times and The Wall Street
Journal (national edition), notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit
had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 8.02 or 8.03 hereof, as the case may be; provided, however, that, if
the Company makes any payment of principal of, premium, if any, or interest on
any Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company,
the Guarantors and the Trustee may amend or supplement this Indenture, the Note
Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
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(b) to provide for uncertificated Notes in addition to or
in place of certificated Notes or to alter the provisions of Article 2
hereof (including the related definitions) in a manner that does not
materially adversely affect any Holder;
(c) to provide for the assumption of the Company's or a
Guarantor's obligations to the Holders of the Notes by a successor to
the Company or a Guarantor pursuant to Article 5 or Article 10 hereof;
(d) to make any change that would provide any additional
rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Note;
or
(e) to comply with requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
the Guarantors in the execution of any amended or supplemental Indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into such amended or supplemental
Indenture that affects its own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Section 3.09,
4.10 and 4.14 hereof), the Note Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including consents obtained in connection with a tender offer or exchange
offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07
hereof, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of the principal of, premium, if any, or interest on
the Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture, the Note
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class (including consents obtained in connection with a tender offer or
exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall
determine which Notes are considered to be "outstanding" for purposes of this
Section 9.02.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture directly affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its discretion,
but shall not be obligated to, enter into such amended or supplemental
Indenture.
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It shall not be necessary for the consent of the Holders of
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a non-
consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver,
(b) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption or
repurchase of the Notes (other than provisions relating to Sections
4.10 or 4.14 hereof),
(c) reduce the rate of or change the time for payment of
interest on any Note,
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of
the payment default that resulted from such acceleration),
(e) make any Note payable in money other than that stated in
the Notes,
(f) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes
to receive payments of principal of or premium, if any, or interest on
the Notes,
(g) waive a redemption payment with respect to any Note (other
than a payment required by Sections 4.10 or 4.14 hereof),
(h) release any Guarantor from any of its obligations under
its Guarantee or the Indenture, except in accordance with the terms of
this Indenture,
(i) make any change to the provisions of Section 4.19 of this
Indenture, or
(j) make any change in the foregoing amendment and waiver
provisions. In addition, any amendment to the provisions of Article
10 of this Indenture (which relate to subordination) or the related
definitions will require the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding if such
amendment would adversely affect the rights of Holders of Notes.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental Indenture that complies with
the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent
Holder of a Note may revoke the consent as to its Note if the Trustee receives
written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. The
Company in exchange for all Notes may issue and the Trustee shall, upon receipt
of an Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental Indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 11.04 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
Prior to the Merger, the Notes will be senior obligations of
the Company pari passu with all other unsubordinated Indebtedness of the
Company and senior to all subordinated Indebtedness of the Company. After the
Merger, the Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in the manner provided in this Article 10, to the prior payment
in full of all Senior Indebtedness (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Indebtedness.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
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SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY
Upon any distribution to creditors of the Company in a
liquidation or dissolution of the Company or in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the Company or its
property, in an assignment for the benefit of creditors or any marshalling of
the Company's assets and liabilities:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full of all Obligations due in respect of such Senior
Indebtedness (including, in the case of Senior Indebtedness under the New
Senior Credit Facilities, interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness) before
Holders of the Notes shall be entitled to receive any payment with respect to
the Notes
(2) until all Obligations with respect to Senior
Indebtedness (as provided in subsection (1) above) are paid in full, any
distribution to which Holders would be entitled but for this Article 10 shall
be made to holders of Senior Indebtedness (except that Holders of Notes may
receive (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof), as their interests may appear.
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the
Trustee or any Holder in respect of Obligations with respect to the Notes and
may not acquire from the Trustee or any Holder any Notes for cash or property
(other than (i) Permitted Junior Securities and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section 8.01
hereof) until all principal and other Obligations with respect to the Senior
Indebtedness have been paid in full if:
(i) a default in the payment of the principal of, premium, if
any, or interest on Designated Senior Indebtedness occurs and is continuing
beyond any applicable period of grace; or
(ii) any other default occurs and is continuing with respect to
Designated Senior Indebtedness that permits holders of the Designated
Senior Indebtedness as to which such default relates to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment
Blockage Notice") from the Company or the holders of any Designated Senior
Indebtedness. Payments on the Notes may and shall be resumed (a) in the
case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date
on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Indebtedness has been accelerated. No
new period of payment blockage may be commenced unless and until (i) 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (ii) all scheduled payments of principal, premium, if
any, and interest on the Notes that have come due have been paid in full in
cash. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 90 days.
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SECTION 10.04. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any
payment of any Obligations with respect to the Notes at a time when the Trustee
or such Holder, as applicable, has actual knowledge that such payment is
prohibited by Section 10.04 hereof, such payment shall be held by the Trustee
or such Holder, in trust for the benefit of, and shall be paid forthwith over
and delivered, upon written request, to, the holders of Senior Indebtedness as
their interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness may have been issued,
as their respective interests may appear, for application to the payment of all
Obligations with respect to Senior Indebtedness remaining unpaid to the extent
necessary to pay such Obligations in full in accordance with their terms, after
giving effect to any concurrent payment or distribution to or for the holders
of Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform only such obligations on the part of the Trustee
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
SECTION 10.06. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure
to give such notice shall not affect the subordination of the Notes to the
Senior Indebtedness as provided in this Article 10.
SECTION 10.07. SUBROGATION.
After all Senior Indebtedness is paid in full and until the
Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
of Notes have been applied to the payment of Senior Indebtedness. A
distribution made under this Article 10 to holders of Senior Indebtedness that
otherwise would have been made to Holders of Notes is not, as between the
Company and Holders, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of
Notes and holders of Senior Indebtedness. Nothing in this Indenture shall:
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(1) impair, as between the Company and Holders of Notes,
the obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Indebtedness; or
(3) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject
to the rights of holders and owners of Senior Indebtedness to receive
distributions and payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Indebtedness, the distribution may be made and the notice
given to their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
Any Agent may do the same with like rights.
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SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of
the time to file such claim, the Agent is hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
The provisions of this Article 10 shall not be amended or
modified without the written consent of the holders of all Senior Indebtedness.
ARTICLE 11.
NOTE GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 10, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Notes or the obligations of the Company hereunder or thereunder,
that: (a) the principal of and interest on the Notes will be promptly paid in
full when due, whether at maturity, by acceleration, redemption or otherwise,
and interest on the overdue principal of and interest on the Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the Trustee
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (b) in case of any extension
of time of payment or renewal of any Notes or any of such other obligations,
that same will be promptly paid in full when due or performed in accordance
with the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice
and all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company
or the Guarantors, any amount paid by either to the Trustee or such
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Holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Note Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF NOTE GUARANTEE.
Prior to the Merger, the Guarantees will be senior obligations
of the Guarantors, pari passu with all other unsubordinated Indebtedness of the
Guarantors and senior to all subordinated Indebtedness of the Guarantors. From
and after the effective time of the Merger, the Obligations of each Guarantor
under its Note Guarantee pursuant to this Article 10 shall be junior and
subordinated to the Senior Debt of such Guarantor on the same basis as the
Notes are junior and subordinated to Senior Debt of the Company. For the
purposes of the foregoing sentence, the Trustee and the Holders shall have the
right to receive and/or retain payments by any of the Guarantors only at such
times as they may receive and/or retain payments in respect of the Notes
pursuant to this Indenture, including Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Note
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Note Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Note Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Note Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Note Guarantee set forth in Section 11.01,
each Guarantor hereby agrees that a notation of such Note Guarantee
substantially in the form included in Exhibit E shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.
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Each Guarantor hereby agrees that its Note Guarantee set forth
in Section 10.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the
Note Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Note Guarantee is endorsed, the Note
Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Note
Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by Section
4.18 hereof, the Company shall cause such Subsidiaries to execute supplemental
indentures to this Indenture and Note Guarantees in accordance with Section
4.18 hereof and this Article 11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another Person whether
or not affiliated with such Guarantor unless:
(a) subject to this Section 11.05 hereof, the Person
formed by or surviving any such consolidation or merger (if other than a
Guarantor or the Company) unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, the Indenture and the
Note Guarantee on the terms set forth herein or therein; and
(b) immediately after giving effect to such transaction,
no Default or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Note Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Note Guarantees to be endorsed upon all of the Notes issuable
hereunder which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Note Guarantees so issued shall in all
respects have the same legal rank and benefit under this Indenture as the Note
Guarantees theretofore and thereafter issued in accordance with the terms of
this Indenture as though all of such Note Guarantees had been issued at the
date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
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SECTION 11.06. RELEASES
Upon the release by all holders of Senior Indebtedness and
Guarantor Senior Indebtedness of all guarantees issued by a Guarantor relating
to such Senior Indebtedness and Guarantor Senior Indebtedness and all Liens on
the property and assets of such Guarantor relating to Senior Indebtedness and
Guarantor Senior Indebtedness or in the event of a sale or other disposition of
all of the assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the capital stock of any
Guarantor, then such Guarantor (in the event of clause (i) above or a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
In the event the Company (i) designates a Restricted Subsidiary to be an
Unrestricted Subsidiary in accordance with this Indenture or (ii) designates a
Subsidiary as a Receivables Subsidiary in accordance with this Indenture, then
such newly designated Unrestricted Subsidiary or Receivables Subsidiary, as the
case may be, shall be released from its obligations under its Subsidiary
Guarantee. Upon delivery by the Company to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof,
the Trustee shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its obligations under its Note
Guarantee.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 10.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person
or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, to the others' address
If to the Company and/or any Guarantor:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Treasurer
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If to the Trustee:
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minneapolis, MN 55479-0069
Telecopier No.: (612) 667-9825
Attention: Corporate Trust
The Company any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices
or communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in the
mail, postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the statements set
forth in Section 12.05 hereof) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been satisfied.
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SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions
of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
or she has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or such Guarantor under
the Notes, the Note Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
76
<PAGE> 84
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
77
<PAGE> 85
SIGNATURES
Dated as of December 18, 1997
PILLOWTEX CORPORATION
BY: /S/ JEFFREY D. CORDES
---------------------------------
Name: Jeffrey D. Cordes
Title: Chief Operating Officer
The Initial Guarantors:
PTEX HOLDING COMPANY
PILLOWTEX, INC.
MANETTA HOME FASHIONS, INC.
BEACON MANUFACTURING COMPANY
PILLOWTEX MANAGEMENT SERVICES
COMPANY
TENNESSEE WOOLEN MILLS, INC.
BY: /S/ JEFFREY D. CORDES
---------------------------------
Name: Jeffrey D. Cordes
Title: Chief Operating Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
BY: /S/ RAYMOND S. HAVERSTOCK
---------------------------------
Name: Raymond S. Haverstock
Title: Vice President
<PAGE> 86
EXHIBIT A1
(Face of Note)
================================================================================
CUSIP/CINS
-------------------
9% [Series A] [Series B] Senior Subordinated Notes due 2007
No. $
----- --------------
PILLOWTEX CORPORATION
promises to pay to
---------------------------------------------------
or registered assigns,
the principal sum of
------------------------------------------------
Dollars on December 15, 2007.
Interest Payment Dates: June 15 and December15
Record Dates: June 1 and December 1
DATED: DECEMBER 18, 1997
PILLOWTEX CORPORATION
BY:
-----------------------------------
Name: Charles M. Hansen, Jr.
Title: Chief Executive Officer
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
Norwest Bank Minnesota, National Association
as Trustee
By:
----------------------------------
Authorized Signatory
================================================================================
A1-1
<PAGE> 87
(Back of Note)
9% [Series A] [Series B] Senior Subordinated Notes due 2007
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE
MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE SECURITY EVIDENCED
HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 1444A
THEREUNDER OR ANOTHER EXEMPTION UNDER THE SECURITIES ACT. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1)(A) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENT OF RULE 144A, (B) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), SUBJECT TO THE RECEIPT BY THE REGISTRAR OF A CERTIFICATION OF THE
TRANSFEROR AND AN OPINION OF COUNSEL TO THE EFFECT THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF
THE RESALE RESTRICTION SET FORTH IN (A) ABOVE.
A1-2
<PAGE> 88
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Pillowtex Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9% per annum from December 18, 1997 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company will pay interest and
Liquidated Damages semi-annually on June 15 and December 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be June 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on
the Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank
Minnesota, National Association, the Trustee under the Indenture, will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE . The Company issued the Notes under an
Indenture dated as of December December 18, 1997 ("Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. To the extent any provision of
this Note conflicts with the express provisions of the Indenture, the
provisions of the Indenture shall govern and be controlling. The Notes are
obligations of the Company limited to
A1-3
<PAGE> 89
$185,000,000 million in aggregate principal amount, plus amounts, if any,
issued to pay Liquidated Damages on outstanding Notes as set forth in Paragraph
2 hereof.
5. OPTIONAL REDEMPTION.
The Notes shall not be redeemable at the Company's option
prior to December 15, 2002. Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the 12- month period, beginning on December 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
6. SPECIAL REDEMPTION.
On the Special Redemption Date, the Notes will be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date. Pillowtex will
also have the option to redeem the Notes at any time on or prior to the Special
Redemption Date if the Merger has not been consummated on or prior to such date
at a redemption price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of redemption.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.
8. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to Section 4.15 of
the Indenture and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
A1-4
<PAGE> 90
Date; (6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of Notes delivered for purchase, and a statement that such
Holder is withdrawing his election to have the Notes purchased; and (7) that
Holders whose Notes are being purchased only in part will be issued new Notes
equal in principal amount to the unpurchased portion of the Notes surrendered,
which unpurchased portion must be equal to $1,000 in principal amount or an
integral multiple thereof. The Company shall comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of Notes in connection with a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates
any Asset Sales, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10 million, the Company shall commence an offer to all
Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness as
applicable. To the extent that the aggregate amount of Notes and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes and any Pari Passu
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata
basis. Upon completion of such offer to repurchase, the amount of Excess
Proceeds shall be reset at zero. If the aggregate principal amount of Notes and
any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a
pro rata basis. Upon completion of such offer to repurchase, the amount of
Excess Proceeds shall be reset at zero.
9. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a
Note may be treated as its owner for all purposes.
A1-5
<PAGE> 91
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the Note
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.
13. DEFAULTS AND REMEDIES. Events of Default include:
(i) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14,
4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness at its final stated maturity or (b) results in the acceleration of
such Indebtedness prior to its maturity and, in each case, the principal amount
of which Indebtedness, together with the principal amount of any other such
Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million
or more; (vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Note Guarantee
(other than by reason of a release of such Guarantor from its Note Guarantee in
accordance with the terms of the Indenture).
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately, provided
however, that if any Senior Indebtedness is outstanding under the New Senior
Credit Facilities, upon a declaration of acceleration, the Notes shall be
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company and the agent under the New Credit Senior Facilities
of written notice of such declaration and (y) the date of acceleration of any
Indebtedness under the New Senior Credit Facilities. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a
A1-6
<PAGE> 92
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company, as such, shall not have
any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
17. ABBREVIATIONS. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of December 18, 1997, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A1-7
<PAGE> 93
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Treasurer
A1-8
<PAGE> 94
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint___________________________________________________to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
---------------
Your Signature:
---------------------------
(Sign exactly as your name appears on the
face of this Note)
Signature Guarantee.
A1-9
<PAGE> 95
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________
Date: Your Signature:
------------ -----------------------
(Sign exactly as your name appears on
the Note)
Tax Identification Number:
------------
--------------------------------------
SIGNATURE GUARANTEE.
A1-10
<PAGE> 96
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this Global
Note, have been made:
<TABLE>
<CAPTION>
Principal
Amount of this
Amount of Amount of Global Note Signature of
decrease in increase in following such authorized officer
Principal Amount of Principal Amount decrease (or of Trustee or Note
Date of Exchange this Global Note of this Global Note increase) Custodian
- ---------------- ---------------- ------------------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A1-11
<PAGE> 97
EXHIBIT A2
(Face of Regulation S Global Note)
================================================================================
CUSIP/CINS
---------------
9% [Series A] [Series B] Senior Subordinated Notes due 2007
No. $
----- ---------------
PILLOWTEX CORPORATION
promises to pay to
----------------------------------------------
or registered assigns,
the principal sum of
--------------------------------------------
Dollars on December 15, 2007
Interest Payment Dates: June 15, and December 15
Record Dates: June 1, and December 1
Dated: December 18, 1997
PILLOWTEX CORPORATION
By:
------------------------------
Name: Charles M. Hansen, Jr.
Title: Chief Executive Officer
This is one of the Regulation S Global
Notes referred to in the
within-mentioned Indenture:
Norwest Bank Minnesota, National Association,
as Trustee
By:
---------------------------------
Authorized Signatory
================================================================================
A2-1
<PAGE> 98
(Back of Regulation S Global Note)
9% [Series A] [Series B] Senior Subordinated Notes due 2007
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)
(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
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<PAGE> 99
1. INTEREST. Pillowtex Corporation, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount
of this Note at 9% per annum from December 18, 1997 until maturity and shall
pay the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company will pay interest and
Liquidated Damages semi-annually on June 15 and December 15 of each year, or if
any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be June 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest
and Liquidated Damages (without regard to any applicable grace periods) from
time to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for
one or more Regulation S Permanent Global Notes, the Holder hereof shall not be
entitled to receive payments of interest hereon; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Senior Subordinated Notes under the Indenture.
2. METHOD OF PAYMENT. The Company will pay interest on
the Notes (except defaulted interest) and Liquidated Damages to the Persons who
are registered Holders of Notes at the close of business on the June 1 or
December 1 next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to defaulted
interest. The Notes will be payable as to principal, premium and Liquidated
Damages, if any, and interest at the office or agency of the Company maintained
for such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages may be made
by check mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest, premium and
Liquidated Damages on, all Global Notes and all other Notes the Holders of
which shall have provided wire transfer instructions to the Company or the
Paying Agent. Such payment shall be in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank
Minnesota, National Association, the Trustee under the Indenture, will act as
Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE . The Company issued the Notes under an
Indenture dated as of December 18, 1997 ("Indenture") between the Company and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended (15 U.S. Code Sections
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of
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<PAGE> 100
the Indenture shall govern and be controlling. The Notes are obligations of
the Company limited to $185,000,000 million in aggregate principal amount, plus
amounts, if any, issued to pay Liquidated Damages on outstanding Notes as set
forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
The Notes shall not be redeemable at the Company's option
prior to December 15, 2002. Thereafter, the Notes shall be subject to
redemption at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date, if
redeemed during the 12- month period, beginning on December 15 of the years
indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.500%
2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.000%
2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.500%
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
6. SPECIAL REDEMPTION.
On the Special Redemption Date, the Notes will be subject to
mandatory redemption at a redemption price equal to 101% of the principal
amount of the Notes, plus accrued interest to the date of redemption, if the
Merger is not consummated prior to the Special Redemption Date. Pillowtex will
also have the option to redeem the Notes at any time on or prior to the Special
Redemption Date if the Merger has not been consummated on or prior to such date
at a redemption price equal to 101% of the principal amount thereof plus
accrued and unpaid interest to the date of redemption.
7. MANDATORY REDEMPTION.
Except as set forth in paragraph 8 below, the Company shall
not be required to make mandatory redemption payments with respect to the
Notes.
8. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each
Holder of Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, if any, and Liquidated Damages thereon to the
date of repurchase (the "Change of Control Payment"). Within 10 days following
any Change of Control, the Company shall mail a notice to each Holder stating:
(1) that the Change of Control Offer is being made pursuant to Section 4.15 of
the Indenture and that all Notes tendered will be accepted for payment; (2) the
purchase price and the purchase date, which shall be no later than 30 business
days from the date such notice is mailed (the "Change of Control Payment
Date"); (3) that any Note not tendered will continue to accrue interest; (4)
that, unless the Company defaults in the payment of the Change of Control
Payment, all Notes accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date; (5)
that Holders electing to have any Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the Paying Agent at the address specified in the
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<PAGE> 101
notice prior to the close of business on the third Business Day preceding the
Change of Control Payment Date; (6) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing his election to have the Notes
purchased; and (7) that Holders whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. The Company shall comply
with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of Notes in
connection with a Change of Control.
(b) If the Company or a Restricted Subsidiary consummates
any Asset Sales, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $10 million, the Company shall commence an offer to all
Holders of Notes and, to the extent required by the terms of any Pari Passu
Indebtedness, to all holders of such Pari Passu Indebtedness (as "Asset Sale
Offer") pursuant to Section 3.09 of the Indenture to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date fixed for the closing of such offer, in accordance with the
procedures set forth in the Indenture or such Pari Passu Indebtedness as
applicable. To the extent that the aggregate amount of Notes and such Pari
Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the
Excess Proceeds, the Company may use such deficiency for general corporate
purposes. If the aggregate principal amount of Notes and any Pari Passu
Indebtedness surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be repurchased on a pro rata
basis. Upon completion of such offer to repurchase, the amount of Excess
Proceeds shall be reset at zero. If the aggregate principal amount of Notes and
any Pari Passu Indebtedness surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes to be repurchased on a
pro rata basis. Upon completion of such offer to repurchase, the amount of
Excess Proceeds shall be reset at zero.
9. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest Payment
Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a
Note may be treated as its owner for all purposes.
A2-5
<PAGE> 102
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Note Guarantees or the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class, and
any existing default or compliance with any provision of the Indenture, the
Note Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes voting as a single
class. Without the consent of any Holder of a Note, the Indenture, the Note
Guarantees or the Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
or Guarantor's obligations to Holders of the Notes in case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, to comply with the
requirements of the Commission in order to effect or maintain the qualification
of the Indenture under the Trust Indenture Act, or to allow any Guarantor to
execute a supplemental indenture to the Indenture and/or a Note Guarantee with
respect to the Notes.
13. DEFAULTS AND REMEDIES. Events of Default include:
(i) default for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company to
comply with the provisions described under Sections 4.07, 4.09, 4.10, 4.14,
4.19 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice to comply with any of its other agreements in the Indenture or the
Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries) whether such Indebtedness or guarantee now exists,
or is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such
Indebtedness at its final stated maturity or (b) results in the acceleration of
such Indebtedness prior to its maturity and, in each case, the principal amount
of which Indebtedness, together with the principal amount of any other such
Indebtedness described in clauses (a) and (b) above, aggregates $10.0 million
or more; (vi) failure by the Company or any of its Subsidiaries to pay final
judgments aggregating in excess of $10.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (viii) certain events of
bankruptcy or insolvency with respect to the Company or any of its Significant
Subsidiaries; or (ix) the Note Guarantee of any Guarantor is held in judicial
proceedings to be unenforceable or invalid or ceases for any reason to be in
full force and effect (other than in accordance with the terms of this
Indenture) or any Guarantor or any Person acting on behalf of any Guarantor
denies or disaffirms such Guarantor's obligations under its Note Guarantee
(other than by reason of a release of such Guarantor from its Note Guarantee in
accordance with the terms of the Indenture).
If any Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately, provided
however, that if any Senior Indebtedness is outstanding under the New Senior
Credit Facilities, upon a declaration of acceleration, the Notes shall be
payable upon the earlier of (x) the day which is five Business Days after the
provision to the Company and the agent under the New Credit Senior Facilities
of written notice of such declaration and (y) the date of acceleration of any
Indebtedness under the New Senior Credit Facilities. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a
A2-6
<PAGE> 103
Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of Notes notice of any continuing Default or
Event of Default (except a Default or Event of Default relating to the payment
of principal or interest) if it determines that withholding notice is in their
interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. A director, officer,
employee, incorporator or stockholder, of the Company, as such, shall not have
any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
16. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
17. ABBREVIATIONS. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in
common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL
NOTES AND RESTRICTED DEFINITIVE NOTES. In addition to the rights provided to
Holders of Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the A/B
Exchange Registration Rights Agreement dated as of December 18, 1997, between
the Company and the parties named on the signature pages thereof (the
"Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Company has caused CUSIP numbers to be printed on the Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
A2-7
<PAGE> 104
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Treasurer
A2-8
<PAGE> 105
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint____________________________________________________ to
transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:
-----------------
Your Signature:
--------------------
(Sign exactly as your name appears
on the face of this Note)
SIGNATURE GUARANTEE.
A2-9
<PAGE> 106
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________
Date: Your Signature:
------------ ---------------------
(Sign exactly as your name appears
on the Note)
Tax Identification Number:
-----------
SIGNATURE GUARANTEE.
A2-10
<PAGE> 107
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S
Temporary Global Note for an interest in another Global Note, or of other
Restricted Global Notes for an interest in this Regulation S Temporary Global
Note, have been made:
<TABLE>
<CAPTION>
Principal
Amount of this
Amount of Amount of Global Note Signature of
decrease in increase in following such authorized officer
Principal Amount of Principal Amount decrease (or of Trustee or Note
Date of Exchange this Global Note of this Global Note increase) Custodian
- ---------------- ---------------- ------------------- --------- ---------
<S> <C> <C> <C> <C>
</TABLE>
A2-11
<PAGE> 108
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069
Re: 9% Senior Subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as of
December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer
(the "Company"), and Norwest Bank Minnesota, National Association, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
______________, (the "Transferor") owns and proposes to
transfer the Note[s] or interest in such Note[s] specified in Annex A hereto,
in the principal amount of $___________ in such Note[s] or interests (the
"Transfer"), to __________ (the "Transferee"), as further specified in Annex A
hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Note for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and
such Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A
and such Transfer is in compliance with any applicable blue sky securities laws
of any state of the United States. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST
IN THE REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S.
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been
B-1
<PAGE> 109
made in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of a
plan or scheme to evade the registration requirements of the Securities Act and
(iv) if the proposed transfer is being made prior to the expiration of the
Restricted Period, the transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser). Upon
consummation of the proposed transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will be
subject to the restrictions on Transfer enumerated in the Private Placement
Legend printed on the Regulation S Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A
BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY
PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [ ] such Transfer is being effected pursuant to
and in accordance with Rule 144 under the Securities Act;
or
(b) [ ] such Transfer is being effected to the
Company or a subsidiary thereof;
or
(c) [ ] such Transfer is being effected pursuant to
an effective registration statement under the Securities Act and in compliance
with the prospectus delivery requirements of the Securities Act;
or
(d) [ ] such Transfer is being effected to an
Institutional Accredited Investor and pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A, Rule 144
or Rule 904, and the Transferor hereby further certifies that it has not
engaged in any general solicitation within the meaning of Regulation D under
the Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or Restricted
Definitive Notes and the requirements of the exemption claimed, which
certification is supported by (1) a certificate executed by the Transferee in
the form of Exhibit D to the Indenture and (2) if such Transfer is in respect
of a principal amount of Notes at the time of transfer of less than $250,000,
an Opinion of Counsel provided by the Transferor or the Transferee (a copy of
which the Transferor has attached to this certification), to the effect that
such Transfer is in compliance with the Securities Act. Upon consummation of
the proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the IAI Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. [ ] Check if Transferee will take delivery of a beneficial
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
B-2
<PAGE> 110
(a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144.
(i) The Transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION
S. (i) The Transfer is being effected pursuant to and in accordance with Rule
903 or Rule 904 under the Securities Act and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be subject to
the restrictions on transfer enumerated in the Private Placement Legend printed
on the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER
Exemption. (i) The Transfer is being effected pursuant to and in compliance
with an exemption from the registration requirements of the Securities Act
other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer
restrictions contained in the Indenture and any applicable blue sky securities
laws of any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will not be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes or Restricted Definitive Notes and in the
Indenture.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
By:
------------------------
Name:
Title:
Dated:
B-3
<PAGE> 111
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP _________), or
(ii) [ ] Regulation S Global Note
(CUSIP _________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(b) [ ] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [ ] a beneficial interest in the:
(i) [ ] 144A Global Note (CUSIP ________), or
(ii) [ ] Regulation S Global Note (CUSIP
________), or
(iii) [ ] IAI Global Note (CUSIP ________); or
(iv) [ ] Unrestricted Global Note (CUSIP __); or
(b) [ ] a Restricted Definitive Note; or
(c) [ ] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE> 112
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069
Re: 9% Senior Subordinated Notes due 2007
(CUSIP______________)
Reference is hereby made to the Indenture, dated as of
December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as issuer
(the "Company"), and Pillowtex Corporation, as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.
____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interests (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Notes or Beneficial
Interests in an Unrestricted Global Note
(a) [ ] Check if Exchange is from beneficial interest
in a Restricted Global Note to beneficial interest in an Unrestricted Global
Note. In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Global Notes and pursuant to and in accordance with the
United States Securities Act of 1933, as amended (the "Securities Act"), (iii)
the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest in an Unrestricted Global Note
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
(b) [ ] Check if Exchange is from beneficial interest
in a Restricted Global Note to Unrestricted Definitive Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global
Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without transfer,
(ii) such Exchange has been effected in compliance with the transfer
restrictions applicable to the Restricted Global Notes and pursuant to and in
accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with
C-1
<PAGE> 113
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Owner's Exchange of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the
Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive
Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES
(a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued will continue to be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Definitive Note and
in the Indenture and the Securities Act.
(b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's Restricted Definitive Note for a
beneficial interest in the 144A Global Note, Regulation S Global Note,
IAI Global Note with an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any
applicable blue sky securities laws of any state of the United States. Upon
consummation of the proposed Exchange in accordance with the terms of the
Indenture, the beneficial interest issued will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the relevant
Restricted Global Note and in the Indenture and the Securities Act.
C-2
<PAGE> 114
This certificate and the statements contained herein are
made for your benefit and the benefit of the Company.
----------------------------
[Insert Name of Owner]
By:
-------------------------
Name:
Title:
Dated: ,
---------------- ----
C-3
<PAGE> 115
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minnesota, MN 55479-0069
Re: 9% Senior subordinated Notes due 2007
Reference is hereby made to the Indenture, dated as
of December 18, 1997 (the "Indenture"), between Pillowtex Corporation, as
issuer (the "Company"), and Norwest Bank Minnesota, National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
In connection with our proposed purchase of
$____________ aggregate principal amount of:
(a) [ ] a beneficial interest in a Global Note, or
(b) [ ] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of
the Notes or any interest therein is subject to certain restrictions and
conditions set forth in the Indenture and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Notes or any interest
therein except in compliance with, such restrictions and conditions and the
United States Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the
Notes have not been registered under the Securities Act, and that the Notes and
any interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell the Notes
or any interest therein, we will do so only (A) to the Company or any
subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined therein), (c) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to
you and to the Company a signed letter substantially in the form of this letter
and, if such transfer is in respect of a principal amount of Notes, at the time
of transfer of less than $250,000, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such transfer is in compliance
with the Securities Act, (D) outside the United States in accordance with Rule
904 of Regulation S under the Securities Act, (E) pursuant to the provisions of
D-1
<PAGE> 116
Rule 144(k) under the Securities Act or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to
provide to any person purchasing the Definitive Note or beneficial interest in
a Global Note from us in a transaction meeting the requirements of clauses (A)
through (E) of this paragraph a notice advising such purchaser that resales
thereof are restricted as stated herein.
3. We understand that, on any proposed resale of
the Notes or beneficial interest therein, we will be required to furnish to you
and the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Notes
purchased by us will bear a legend to the foregoing effect. We further
understand that any subsequent transfer by us of the Notes or beneficial
interest therein acquired by us must be effected through one of the Placement
Agents.
4. We are an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act) and have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.
5. We are acquiring the Notes or beneficial
interest therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
--------------------------------------
Insert Name of Accredited Investor
By:
-----------------------------------
Name:
Title:
Dated: ,
---------------- -----
D-2
<PAGE> 117
EXHIBIT E
FORM OF NOTATION OF GUARANTEE
For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of December 18, 1997 (the
"Indenture") among Pillowtex Corporation, the Guarantors listed on the
signature page thereto and Norwest Bank Minnesota, National Association, as
trustee (the "Trustee"), (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes (as defined in the Indenture),
whether at maturity, by acceleration, redemption or otherwise, the due and
punctual payment of interest on overdue principal and premium, and, to the
extent permitted by law, interest, and the due and punctual performance of all
other obligations of the Company to the Holders or the Trustee all in
accordance with the terms of the Indenture and (b) in case of any extension of
time of payment or renewal of any Notes or any of such other obligations, that
the same will be promptly paid in full when due or performed in accordance with
the terms of the extension or renewal, whether at stated maturity, by
acceleration or otherwise. The obligations of the Guarantors to the Holders of
Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are
expressly set forth in Article 10 of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Note Guarantee. Each Holder of a
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee, on behalf of such Holder,
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that the
Indebtedness evidenced by this Note Guarantee shall cease to be so subordinated
and subject in right of payment upon any defeasance of this Note in accordance
with the provisions of the Indenture.
By:
---------------------------
Name:
Title:
E-1
<PAGE> 118
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
as of ________________, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Pillowtex Corporation (or its permitted
successor), a ________ corporation (the "Company"), the Company, the other
Guarantors (as defined in the Indenture referred to herein) and Norwest Bank
Minnesota, National Association, as trustee under the indenture referred to
below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated as of December 18, 1997
providing for the issuance of an aggregate principal amount of up to $
185,000,000 of 9% Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the "Note
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary
hereby agrees as follows:
(a) Along with all Guarantors named in the
Indenture, to jointly and severally Guarantee to each Holder
of a Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns, irrespective of
the validity and enforceability of the Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes
will be promptly paid in full when due,
whether at maturity, by acceleration,
redemption or otherwise, and interest on the
overdue principal of and interest on the
Notes, if any, if lawful, and all other
obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in
accordance with the terms hereof and thereof;
and
F-1
<PAGE> 119
(ii) in case of any extension of time of payment
or renewal of any Notes or any of such other
obligations, that same will be promptly paid
in full when due or performed in accordance
with the terms of the extension or renewal,
whether at stated maturity, by acceleration
or otherwise. Failing payment when due of
any amount so guaranteed or any performance
so guaranteed for whatever reason, the
Guarantors shall be jointly and severally
obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce
the same or any other circumstance which might
otherwise constitute a legal or equitable discharge
or defense of a guarantor.
(c) The following is hereby waived diligence
presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of
the Company, any right to require a proceeding first
against the Company, protest, notice and all demands
whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in
the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the
Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either
the Company or the Guarantors, any amount paid by
either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to
any right of subrogation in relation to the Holders
in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture
for the purposes of this Note Guarantee,
notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such
obligations as provided in Article 6 of the
Indenture, such obligations (whether or not due and
payable) shall forthwith become due and payable by
the Guarantors for the purpose of this Note
Guarantee.
(h) The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as
the exercise of such right does not impair the rights
of the Holders under the Guarantee.
F-2
<PAGE> 120
(i) Pursuant to Section 10.02 of the Indenture, after
giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent
conveyance laws, and after giving effect to any
collections from, rights to receive contribution from
or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other
Guarantor under Article 10 of the Indenture shall
result in the obligations of such Guarantor under its
Note Guarantee not constituting a fraudulent transfer
or conveyance.
3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary
agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON
CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person
formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note
Guarantee on the terms set forth herein or therein;
and
(ii) immediately after giving effect to such transaction,
no Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Note Guarantee
endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such
successor corporation thereupon may cause to be signed any or
all of the Note Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued shall in all respects have the same
legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance
with the terms of the Indenture as though all of such Note
Guarantees had been issued at the date of the execution
hereof.
(c) Except as set forth in Articles 4 and 5 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
F-3
<PAGE> 121
5. RELEASES.
(a) In the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all to the
capital stock of any Guarantor, then such Guarantor (in the
event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the
applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note
Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal
of and interest on the Notes and for the other obligations of
any Guarantor under the Indenture as provided in Article 10 of
the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or
future director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are
for convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
F-4
<PAGE> 122
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: ,
----------------- -----
[Guaranteeing Subsidiary]
By:
------------------------------
Name:
Title:
Pillowtex Corporation
By:
------------------------------
Name:
Title:
[EXISTING GUARANTORS]
By:
------------------------------
Name:
Title
Norwest Bank Minnesota, National
Association as Trustee
By:
------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.2
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated
December 19, 1997, among Fieldcrest Cannon, Inc., Crestfield Cotton Company,
Encee, Inc., Fieldcrest Cannon Financing, Inc., Fieldcrest Cannon Licensing,
Inc., Fieldcrest Cannon International, Inc., Fieldcrest Cannon Sure Fit, Inc.,
Fieldcrest Cannon Transportation, Inc., St. Marys Inc., Amoskeag Company,
Amoskeag Management Corporation, Bangor Investment Company, Moore's Falls
Corporation, Downeast Securities Corporation and FCC Canada Inc. (the
"Guaranteeing Subsidiary"), a subsidiary of Pillowtex Corporation (or its
permitted successor), a Texas corporation (the "Company"), the Company, the
other Guarantors (as defined in the Indenture referred to herein) and Norwest
Bank Minnesota, National Association, as trustee under the indenture referred
to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an indenture (the "Indenture"), dated December 18, 1997 providing
for the issuance of an aggregate principal amount of up to $ 185,000,000 of 9%
Senior Subordinated Notes due 2007 (the "Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Guaranteeing Subsidiary shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary
shall unconditionally guarantee all of the Company's Obligations under the
Notes and the Indenture on the terms and conditions set forth herein (the "Note
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein
without definition shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary
hereby agrees as follows:
(a) Along with all Guarantors named in the Indenture, to
jointly and severally Guarantee to each Holder of a
Note authenticated and delivered by the Trustee and
to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of
the Indenture, the Notes or the obligations of the
Company hereunder or thereunder, that:
<PAGE> 2
(i) the principal of and interest on the Notes
will be promptly paid in full when due,
whether at maturity, by acceleration,
redemption or otherwise, and interest on the
overdue principal of and interest on the
Notes, if any, if lawful, and all other
obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in
accordance with the terms hereof and thereof;
and
(ii) in case of any extension of time of payment
or renewal of any Notes or any of such other
obligations, that same will be promptly paid
in full when due or performed in accordance
with the terms of the extension or renewal,
whether at stated maturity, by acceleration
or otherwise. Failing payment when due of
any amount so guaranteed or any performance
so guaranteed for whatever reason, the
Guarantors shall be jointly and severally
obligated to pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any
judgment against the Company, any action to enforce
the same or any other circumstance which might
otherwise constitute a legal or equitable discharge
or defense of a guarantor.
(c) The following is hereby waived diligence
presentment, demand of payment, filing of claims with
a court in the event of insolvency or bankruptcy of
the Company, any right to require a proceeding first
against the Company, protest, notice and all demands
whatsoever.
(d) This Note Guarantee shall not be discharged except by
complete performance of the obligations contained in
the Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court
or otherwise to return to the Company, the
Guarantors, or any Custodian, Trustee, liquidator or
other similar official acting in relation to either
the Company or the Guarantors, any amount paid by
either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to
any right of subrogation in relation to the Holders
in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the
Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture
for the
<PAGE> 3
purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed
hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in
Article 6 of the Indenture, such obligations (whether
or not due and payable) shall forthwith become due
and payable by the Guarantors for the purpose of this
Note Guarantee.
(h) The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as
the exercise of such right does not impair the rights
of the Holders under the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after
giving effect to any maximum amount and any other
contingent and fixed liabilities that are relevant
under any applicable Bankruptcy or fraudulent
conveyance laws, and after giving effect to any
collections from, rights to receive contribution from
or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other
Guarantor under Article 10 of the Indenture shall
result in the obligations of such Guarantor under its
Note Guarantee not constituting a fraudulent transfer
or conveyance.
3 EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary
agrees that the Note Guarantees shall remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such Note
Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON
CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 11.05 of the Indenture, the Person
formed by or surviving any such consolidation or
merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Note
Guarantee on the terms set forth herein or therein;
and
(ii) immediately after giving effect to such transaction,
no Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor corporation, by
supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of the Note Guarantee
endorsed upon the Notes and the due and punctual performance
of all of the covenants and conditions of the Indenture to be
performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same
effect as if it had been named herein as a Guarantor. Such
<PAGE> 4
successor corporation thereupon may cause to be signed any or
all of the Note Guarantees to be endorsed upon all of the
Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued shall in all respects have the same
legal rank and benefit under the Indenture as the Note
Guarantees theretofore and thereafter issued in accordance
with the terms of the Indenture as though all of such Note
Guarantees had been issued at the date of the execution
hereof.
(c) Except as set forth in Articles 4 and 5 of the
Indenture, and notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the
assets of any Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all to the
capital stock of any Guarantor, then such Guarantor (in the
event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of
such Guarantor) or the corporation acquiring the property (in
the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be
released and relieved of any obligations under its Note
Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the
applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other
disposition was made by the Company in accordance with the
provisions of the Indenture, including without limitation
Section 4.10 of the Indenture, the Trustee shall execute any
documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note
Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal
of and interest on the Notes and for the other obligations of
any Guarantor under the Indenture as provided in Article 10 of
the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or
future director, officer, employee, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of the Company or any Guaranteeing Subsidiary under the Notes, any Note
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of the Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
<PAGE> 5
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL
INDENTURE BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION
WOULD BE REQUIRED THEREBY.
8. COUNTERPARTS. The parties may sign any number of
copies of this Supplemental Indenture. Each signed copy shall be an original,
but all of them together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are
for convenience only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in
any manner whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guaranteeing Subsidiary and the
Company.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: December 19, 1997
PILLOWTEX CORPORATION
By: /s/ Jeffrey D. Cordes
-----------------------------------
Name: Jeffrey D. Cordes
Title: Chief Operating Officer
FIELDCREST CANNON, INC.
ENCEE, INC.
FIELDCREST CANNON FINANCING, INC.
FIELDCREST CANNON LICENSING, INC.
FIELDCREST CANNON INTERNATIONAL, INC.
FIELDCREST CANNON SURE FIT, INC.
FIELDCREST CANNON TRANSPORTATION, INC.
ST. MARYS, INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
MOORE'S FALLS CORPORATION
DOWNEAST SECURITIES CORPORATION
CRESTFIELD COTTON COMPANY
BANGOR INVESTMENT COMPANY
FCC CANADA, INC.
By: /s/ Jeffrey D. Cordes
-----------------------------------
Name: Jeffrey D. Cordes
Title: President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
as Trustee
By: /s/ Raymond S. Haverstock
-----------------------------------
Name: Raymond S. Haverstock
Title: Vice President
<PAGE> 1
EXHIBIT 10.1
================================================================================
$350,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
PILLOWTEX CORPORATION
CERTAIN LENDERS NAMED HEREIN
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT
NATIONSBANC MONTGOMERY SECURITIES, INC., AS ARRANGER
December 19, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE 1
Definitions
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Amendments and Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2
Advances
Section 2.1 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.5 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.6 Reduction of Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.7 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . 32
Section 2.8 Payment of Principal of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.9 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.10 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.11 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.12 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.13 Calculation of LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.15 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the Initial Letters of Credit . . . . . . 45
Section 3.2 Conditions Precedent to All Advances and Letters of Credit . . . . . . . . . . . . . . . . 47
Section 3.3 Conditions Precedent to Conversions and Continuations . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE 5
General Covenants
Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.7 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 5.9 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5.10 Environmental Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 6
Information Covenants
Section 6.1 Quarterly Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.2 Annual Financial Statements and Information; Certificate of No Default . . . . . . . . . . 63
Section 6.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.4 Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.5 Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.6 ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 7
Negative Covenants
Section 7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.4 Liquidation, Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
</TABLE>
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<PAGE> 4
<TABLE>
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Section 7.5 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.6 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.7 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.8 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.9 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 7.11 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.12 Minimum Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.13 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7.14 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.15 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.17 Amendment of Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.18 Amendments and Waivers of Institutional Debt . . . . . . . . . . . . . . . . . . . . . . . 72
Section 7.19 Foreign Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE 8
Default
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 9.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 9.4 Effect On Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 9.6 Replacement Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.7 Replacement by the Borrower of a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.2 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 10.3 Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
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<TABLE>
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ARTICLE 11
Miscellaneous
Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.4 Calculation by the Lenders Conclusive and Binding . . . . . . . . . . . . . . . . . . . . . 87
Section 11.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.9 Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Section 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.12 Exception to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.13 No Liability of Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.14 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.15 Amendment, Restatement, Extension, Renewal and Increase . . . . . . . . . . . . . . . . . . 93
SECTION 11.16 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 11.17 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 11.18 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
- iv -
<PAGE> 6
Schedules and Exhibits
<TABLE>
<S> <C>
Schedule 1: Commitments and Specified Percentages
Schedule 2: LIBOR Lending Offices
Schedule 3: Existing Liens
Schedule 4: Existing Litigation
Schedule 5: Subsidiaries
Schedule 6: Existing Investments
Schedule 7: Existing Indebtedness
Schedule 8: Qualification and Good Standing
Schedule 9: Labor Relations
Schedule 10: Fieldcrest Cannon Assets
Schedule 11: Existing Letters of Credit
Exhibit A: Note
Exhibit B: General Security Agreement
Exhibit C: Intellectual Property Security Agreement and Assignment
Exhibit D: Compliance Certificate
Exhibit E: Assignment Agreement
Exhibit F: Subsidiary Guaranty
Exhibit G: Notice of Borrowing
Exhibit H-1: Leasehold Deed of Trust
Exhibit H-2: Fee Simple Deed of Trust
Exhibit I-1: Landlord's Agreement
Exhibit I-2: Landlord's Waiver
Exhibit J: Swing Line Note
Exhibit K: Notice of Continuation/Conversion
Exhibit L: Intercreditor Agreement
</TABLE>
- v -
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of December 19,
1997, among PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), the
Lenders from time to time party hereto, and NATIONSBANK OF TEXAS, N.A., a
national banking association, as administrative agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower funds to (a)
consummate the Fieldcrest Cannon Transaction (as hereinafter defined), (b)
refinance a portion of the existing debt of the Borrower and Fieldcrest Cannon
(as hereinafter defined) and its subsidiaries, including, but not limited to,
the debt of the Borrower outstanding pursuant to the terms of that certain
Restated Credit Agreement, dated as of November 12, 1996, among the Borrower,
the lenders party thereto, and NationsBank of Texas, N.A., as the Agent, as
amended (the "Existing Credit Agreement"), (c) pay certain fees and expenses
related to the Fieldcrest Cannon Transaction, and (d) finance the ongoing
working capital and general corporate requirements of the Borrower and its
Subsidiaries (as hereinafter defined). The Lenders have agreed to provide a
portion of such financing, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree that the Existing Credit Agreement shall be amended,
restated and superseded as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, or (ii) makes any existing corporation a Subsidiary of the Borrower
or such Subsidiary, or causes any corporation, other than a Subsidiary of the
Borrower or such Subsidiary, to be merged into the Borrower or such Subsidiary
(or agrees to be merged into any other corporation other than a wholly-owned
Subsidiary (excluding directors' qualifying shares) of the Borrower or such
Subsidiary), or
<PAGE> 8
(b) purchases all or more than 50% of the business or assets of any Person or
of any operating division, facility or group of facilities of any Person.
"Additional Costs" has the meaning specified in Section 9.5 hereof.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for
any Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR
Advance for any Interest Period.
"Administrative Agent" means NationsBank of Texas, N.A., a national
banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Administrative Agent Fee Letter" has the meaning specified in Section
2.4(b)(i) hereof.
"Advance" means any amount advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person, or in the case of any Lender
which is an investment fund, the investment advisor thereof and any investment
fund having the same investment advisor or an Affiliate thereof.
"Agreement" means this Amended and Restated Credit Agreement, as
amended, modified, supplemented or restated from time to time to the extent
permitted pursuant hereto and pursuant to the Intercreditor Agreement.
"Agreement Date" means the date of this Agreement.
"Applicable Base Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Percentage
------------- ----------
<S> <C> <C>
(a) Initial Pricing Period 0.500%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or equal to 0.750%
5.50 to 1
(2) The Leverage Ratio is less than 5.50 to 1 but 0.500%
greater than or equal to 5.00 to 1
</TABLE>
- 2 -
<PAGE> 9
<TABLE>
<S> <C> <C>
(3) The Leverage Ratio is less than 5.00 to 1 but 0.250%
greater than or equal to 4.50 to 1
(4) The Leverage Ratio is less than 4.50 to 1 0.000%
</TABLE>
During the Subsequent Pricing Period, the Applicable Base Rate Margin payable
by the Borrower on the Base Rate Advances outstanding hereunder shall be
subject to reduction or increase, as applicable and as set forth in the table
above, according to the performance of the Borrower as tested quarterly by
using the Leverage Ratio calculated as of the end of each fiscal quarter;
provided, that each adjustment in the Base Rate Basis as a result of a change
in the Applicable Base Rate Margin shall be effective on the date which is two
Business Days following receipt by the Administrative Agent of the financial
statements required to be delivered pursuant to Section 6.1 or 6.2 hereof, as
applicable, and the corresponding Compliance Certificate required pursuant to
Section 6.3 hereof. If such financial statements and Compliance Certificate
are not received by the Administrative Agent by the date required, the
Applicable Base Rate Margin shall be increased to the Applicable Base Rate
Margin next higher than the Applicable Base Rate Margin currently in effect
until such time as such financial statements and Compliance Certificate are
received.
"Applicable Environmental Laws" means applicable Laws pertaining to
the regulation or protection of human health or the environment, including
without limitation, CERCLA and RCRA.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and final orders of governmental
bodies or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
Tribunals in proceedings or actions to which the Person in question is a party,
and (b) in respect of contracts relating to interest or finance charges that
are made or performed in the State of Texas, "Applicable Law" shall mean the
laws of the United States of America, including without limitation 12 USC
Sections 85 and 86(a), as amended from time to time, and any other statute of
the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of
the State of Texas, including, without limitation, Art. 1H, if applicable, and
if Art. 1H is not applicable, Art. 1D, and any other statute of the State of
Texas prescribing maximum rates of interest and extensions of credit; provided
that the parties hereto agree that the provisions of Chapter 15, Title 79,
Revised Civil Statutes of Texas, 1925, amended, shall not apply to Advances,
this Agreement, the Notes or any other Loan Documents.
- 3 -
<PAGE> 10
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Percentage
------------- ----------
<S> <C> <C>
(a) Initial Pricing Period 2.000%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or equal to 2.250%
5.50 to 1
(2) The Leverage Ratio is less than 5.50 to 1 but 2.000%
greater than or equal to 5.00 to 1
(3) The Leverage Ratio is less than 5.00 to 1 but 1.750%
greater than or equal to 4.50 to 1
(4) The Leverage Ratio is less than 4.50 to 1 but 1.500%
greater than or equal to 4.00 to 1
(5) The Leverage Ratio is less than 4.00 to 1 but 1.250%
greater than or equal to 3.50 to 1
(6) The Leverage Ratio is less than 3.50 to 1 but 1.000%
greater than or equal to 3.00 to 1
(7) The Leverage Ratio is less than 3.00 to 1 0.750%
</TABLE>
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin payable
by the Borrower on the LIBOR Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above,
according to the performance of the Borrower as tested quarterly by using the
Leverage Ratio calculated as of the end of each fiscal quarter; provided, that
each adjustment in the LIBOR Basis as a result of a change in the Applicable
LIBOR Rate Margin shall be effective on the date which is two Business Days
following receipt by the Administrative Agent of the financial statements
required to be delivered pursuant to Section 6.1 or 6.2 hereof, as applicable,
and the corresponding Compliance Certificate required pursuant to Section 6.3
hereof. If such financial statements and Compliance Certificate are not
received by the Administrative Agent by the date required, the Applicable LIBOR
Rate Margin shall be increased to the Applicable Base Rate Margin next higher
than the Applicable Base Rate Margin currently in effect until such time as
such financial statements and Compliance Certificate are received.
"Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.
"Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.
- 4 -
<PAGE> 11
"Assignment Agreement" has the meaning specified in Section 11.6(d)
hereof.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Base Rate Margin or (b) the sum of (i) the
Prime Rate on such day plus (ii) the Applicable Base Rate Margin. The Base
Rate Basis shall be adjusted automatically without notice as of the opening of
business on the effective date of each change in the Prime Rate or Federal
Funds Rate, as applicable, to account for such change.
"Borrower Preferred Stock" means that certain Series A Redeemable
Convertible Preferred Stock issued by the Borrower in connection with
Fieldcrest Cannon Transaction.
"Bridge Notes" means those certain notes of the Borrower to be issued
in connection with the Fieldcrest Cannon Transaction (but only in the event
that the aggregate principal amount of the 1997 Senior Subordinated Notes does
not equal or exceed $135,000,000) not to exceed $150,000,000.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of commercial banking business in Dallas, Texas, and (b) with
respect to any LIBOR Advance, for the transaction of international commercial
banking business (including dealings in Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the capitalized cost of the item) computed in accordance with
GAAP.
"Capitalized Lease Obligations" means that portion of any obligation
of the Borrower or any of its Subsidiaries as lessee under a lease which at the
time would be required to be capitalized on a balance sheet of the Borrower or
such Subsidiary prepared in accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital
stock in any Person that is a corporation, and each class of partnership
interest (including, without limitation, general, limited and preference units)
in any Person that is a partnership, and each class of member interest in any
Person that is a limited liability company.
- 5 -
<PAGE> 12
"Cash and Cash Equivalents" means with respect to the Borrower and
each of its Subsidiaries
(a) cash,
(b) money market funds that invest only in debt securities
(including, without limitation, banker's acceptance, bearer deposit notes, loan
participations, promissory notes and medium-term notes) which
(i) for any such investment issued by a financial
institution, the issuer (A) maintains a long-term debt rating of at
least "BBB" (or its then equivalent) according to Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc. or a Thompson Bankwatch
rating of at least "C" and (B) has combined capital and surplus of not
less than $100,000,000, or any other financial institution if the
amount on deposit is fully insured by the Federal Deposit Insurance
Corporation, and
(ii) for any corporate issuer, such investment is rated
"P-2" (or its then equivalent) according to Moody's Investors Service,
Inc., "A-2" (or its then equivalent) according to Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., "F-2" (or its then
equivalent) according to Fitch's Investors Service, Inc. or "D-2" (or
its then equivalent) according to Duff & Phelps, or a better rating,
or, which if unrated, are determined by the fund to be of comparable
quality to debt securities which have such ratings, and
(c) investments (directly or through a money market mutual fund) in
(i) certificates of deposit, eurodollar time deposits,
repurchase agreements, bankers' acceptances and other interest bearing
deposits or accounts with any Lender or with any United States
commercial bank having a combined capital and surplus of at least
$100,000,000, which certificates, time deposits, repurchase
agreements, bankers' acceptances, deposits and accounts mature within
one year from the date of investment,
(ii) obligations issued or unconditionally guaranteed by
the United States government, or issued by any agency or
instrumentality thereof and backed by the full faith and credit of the
United States government,
(iii) direct obligations issued by any state or political
subdivision of the United States, which have the highest rating
obtainable from Standard & Poor's Ratings Group, a Division of
McGraw-Hill, Inc. or Moody's Investors Service, Inc. on the date of
investment, and
(iv) commercial paper issued by any Lender or any
Affiliate of any Lender, and commercial paper which has one of the
highest ratings obtainable from Standard &
- 6 -
<PAGE> 13
Poor's Ratings Group, a Division of McGraw-Hill, Inc. or Moody's
Investors Service, Inc.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 as amended from time to time.
"Change of Control" means the occurrence of any of the following
events after the Agreement Date: (a) any Person or Group shall beneficially
own (as defined in Rule 13d-3 of the Securities and Exchange Commission under
the Exchange Act or any successor provision thereto) more than 50% of the
aggregate Voting Power of the Borrower (other than ownership by (A) any Person
or Group who beneficially own in excess of 10% of the aggregate Voting Power of
the Borrower on the Agreement Date or (B) Charles M. Hansen, Jr., any Person
under the Control of Charles M. Hansen, Jr., any trusts established by or for
the benefit of Charles M. Hansen, Jr. or any of his lineal descendants or any
family member of Charles M. Hansen, Jr.); (b) during any period of twenty-four
consecutive months, individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Borrower was approved by a vote of a majority of the
directors of the Borrower then still in office who were either 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
Board of Directors of the Borrower then in office; or (c) any "Change of
Control", "Change in Control" or similar event or circumstance, however defined
or designated, under any agreement or document governing any Institutional
Debt.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral hereafter granted by any Person to
the Administrative Agent for the benefit of the Lenders to secure the
Obligations.
"Collateral Agent" means NationsBank of Texas, N.A., in its capacity
as Collateral Agent under the Intercreditor Agreement.
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commercial Letter of Credit" means, any letter of credit issued by
the Issuing Bank pursuant to Section 2.15(a) hereof (or any Existing Letter of
Credit), which is drawable upon presentation of documents evidencing the sale
or shipment of goods purchased by the Borrower or any of its Subsidiaries in
the ordinary course of its business.
"Commitment" means the commitment of the Lenders, subject to the terms
and conditions hereof, to make Advances or to issue or participate in Letters
of Credit up to an aggregate principal amount of $350,000,000, as such amount
may be reduced pursuant to Section 2.6, hereof.
- 7 -
<PAGE> 14
"Commitment Fee" has the meaning specified in Section 2.4(a) hereof.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit D, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of voting securities, by
contract or otherwise, but not solely by being an officer or director of that
Person); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 10% or more (in number of votes) of the
securities having ordinary Voting Power with respect to a corporation shall be
conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Creditor" means a creditor of the Borrower or any of its Subsidiaries
and shall not include any Affiliate of any such creditor.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
"Deed of Trust" means any leasehold or fee simple Deed of Trust or
Mortgage, as applicable, relating to the certain property and improvements
leased or owned by the Borrower or its Domestic Subsidiaries, in substantially
the form set forth in Exhibit H-1 and Exhibit H-2, as amended, modified,
renewed, supplemented or restated from time to time.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, hereto regardless of whether there shall have occurred any
passage of time or giving of notice that would be necessary in order to
constitute such event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a)
with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis
then in effect plus 2.00%.
"Determining Lenders" means, on any date of determination, any
combination of Lenders whose Specified Percentages aggregate more than 50%;
provided, however, in the event that the Commitment has been terminated,
"Determining Lenders" means, on any date of determination,
- 8 -
<PAGE> 15
any combination of Lenders having more than 50% of Advances (other than Swing
Line Advances) then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a dividend in stock or in the right to acquire stock)
on, or the making of any distribution on account of, any Equity Interests of
such Person and (b) any purchase, redemption, or other acquisition or
retirement for value of any Capital Stock of such Person.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than
a Foreign Subsidiary.
"Earnings from Operations" has the meaning given to such term pursuant
to GAAP.
"EBITDA" means, for any period, determined in accordance with GAAP on
a consolidated basis for the Borrower and its Subsidiaries, the sum of (a)
Earnings From Operations plus (b) depreciation, amortization and other non-cash
charges (to the extent included in determining Earnings From Operations). For
purposes hereof, EBITDA shall be adjusted on a pro forma basis to exclude from
any period under consideration personnel costs that have been eliminated
concurrent with, or during the twelve-month period subsequent to, the Agreement
Date.
"Eligible Assignee" means (a) any Lender; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $1,000,000,000; (c) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $500,000,000, and not in receivership
or conservatorship; (d) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is described in this clause; and (e) the central bank of any
country which is a member of the Organization for Economic Cooperation and
Development; (f) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and having a combined capital and
surplus or total assets of at least $100,000,000, (g) any other entity (other
than a natural person) that is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses, and (h) any other entity approved by both the
Borrower and the Administrative Agent, provided that no Affiliate of the
Borrower shall qualify as an Eligible Assignee.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
- 9 -
<PAGE> 16
"ERISA Event" means, with respect to the Borrower and its
Subsidiaries, (a) a Reportable Event (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC pursuant to regulations issued
under Section 4043 of ERISA), (b) the withdrawal of any such Person or any
member of its Controlled Group from a Plan subject to Title IV of ERISA during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate under
Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a
Plan by the PBGC, (e) the failure to make required contributions which could
result in the imposition of a lien under Section 412 of the Code or Section 302
of ERISA, or (f) any other event or condition which could reasonably be
expected to constitute grounds under Section 4042 (other than Section
4042(a)(3)) of ERISA for the termination by the PBGC of, or the appointment by
the appropriate United States District Court of a trustee to administer, any
Plan or the imposition of any liability under Title IV of ERISA other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1
hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
"Existing Credit Agreement" has the meaning specified in the
Background provision of this Agreement.
"Existing Letters of Credit" means those Letters of Credit set forth
on Schedule 11 hereto.
"Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average of the quotations
for the day for such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it.
"Fieldcrest Cannon" means Fieldcrest Cannon, Inc., a Delaware
corporation, which upon completion of the Fieldcrest Cannon Merger will be a
wholly-owned subsidiary of the Borrower.
"Fieldcrest Cannon Merger" means the merger of Pegasus, a wholly-owned
Subsidiary of the Borrower, with and into Fieldcrest Cannon with Fieldcrest
Cannon as the surviving
- 10 -
<PAGE> 17
corporation, pursuant to the terms of that certain Agreement and Plan of Merger
among the Borrower, Pegasus and Fieldcrest Cannon, dated as of September 10,
1997, as amended, or modified with the consent of the Administrative Agent,
which consent shall not be unreasonably withheld.
"Fieldcrest Cannon Subordinated Debentures" means those certain 6%
Convertible Subordinated Debentures of Fieldcrest Cannon due 2012 in aggregate
outstanding principal amount of $116,500,000.
"Fieldcrest Cannon Transaction" means, collectively, (a) the
Fieldcrest Cannon Merger, (b) the issuance by the Borrower of (i) the 1997
Senior Subordinated Notes, (ii) the Bridge Notes, but only to the extent that
1997 Senior Subordinated Notes in an aggregate principal amount at least equal
to $135,000,000 are not issued by the Borrower, (iii) the Borrower Preferred
Stock, and (iv) the common Capital Stock of the Borrower for an amount not less
than the sum of (A) 20.58% of the aggregate value of all Capital Stock of
Fieldcrest Cannon plus (B) 20.58% of all conversion consideration requested by
the holders of the Fieldcrest Cannon Subordinated Debentures, and (c) the
refinancing of certain existing Indebtedness of Fieldcrest Cannon and the
Borrower.
"Fieldcrest Cannon Transaction Documents" means all agreements,
documents and instruments executed in connection with or related to the
Fieldcrest Cannon Transaction.
"Financial Statements" has the meaning specified in Section 4.1(j)
hereof.
"Fiscal Month" means a period of four, five, or six weeks having seven
days in each week ending on a Saturday and that otherwise approximates a
calendar-monthly period. Reference to a Fiscal Month by the name of a calendar
month means the fiscal month that encompasses the most of that calendar month
(e.g., the Fiscal Month of January 1998 ends on January 31, 1998).
"Fiscal Quarter" means any quarter of a fiscal year ending on the last
day of a Fiscal Month (e.g., the third Fiscal Quarter in 1998 ends on September
26, 1998).
"Fiscal Year" means the Borrower's fiscal year for accounting and tax
purposes, which consists of a 52- or 53- week period beginning on the first day
after the end of the immediately preceding fiscal year and ending on the
Saturday nearest December 31 following that first day. Reference to a Fiscal
Year with a number corresponding to any calendar year means the Fiscal Year
ending on the Saturday nearest to December 31 during that calendar year (e.g.,
Fiscal Year 1999 ends on January 1, 2000).
"Fixed Charges" means, for any date of calculation, calculated for
Borrower and its Subsidiaries on a consolidated basis, the sum of, without
duplication, (a) scheduled principal payments in respect of Indebtedness, plus
(b) cash interest expense (including interest expense pursuant to Capitalized
Lease Obligations), plus (c) cash Dividends paid.
- 11 -
<PAGE> 18
"Fixed Charge Coverage Ratio" means the ratio of Pretax Cash Flow to
Fixed Charges, calculated (a) with respect to Pretax Cash Flow, for the four
consecutive Fiscal Quarters ending on the date of calculation and (b) with
respect to Fixed Charges (i) for the first three Fiscal Quarters of Fiscal Year
1998, on an annualized basis and (ii) for each Fiscal Quarter thereafter, for
the four consecutive Fiscal Quarters ending on the date of calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"Form 1001" has the meaning specified in Section 2.13(e)(i)(B) hereof.
"Form 4224" has the meaning specified in Section 2.13(e)(i)(A) hereof.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles applied in a current period are comparable in
all material respects to those applied in a preceding period.
"General Security Agreement" means a security agreement relating to
all personal property assets of the Borrower and its Domestic Subsidiaries,
substantially in the form of Exhibit B hereto, as amended, modified, renewed,
supplemented or restated from time to time.
"Group" means any Persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act or any successor
provision thereto.
"Guarantor" means each direct and indirect Subsidiary of the Borrower,
other than any Foreign Subsidiary.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including, without
limiting the foregoing, any reimbursement obligations with respect to amounts
which may be drawn by beneficiaries of outstanding letters of credit and (b) an
agreement, direct or indirect, contingent or otherwise, to maintain the net
worth, working capital, earnings or other financial performance of another
Person; provided, however, Guaranty does not mean (y) the endorsement of
instruments for collection or deposit in the ordinary course of business and
(z) customary indemnities given in connection with asset sales in the ordinary
course of business.
"Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, currency
- 12 -
<PAGE> 19
exchange rates, forward rates applicable to such party's assets, commodity
prices (including commodity hedging agreements), liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, and
forward rate currency or interest rate options, as the same may be amended or
modified and in effect from time to time, and any and all cancellations, buy
backs, reversals, terminations or assignments of any of the foregoing.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the weekly rate ceiling described in and computed in accordance with the
provisions of Art. 1H, or (b) either the quarterly ceiling or the annualized
ceiling computed pursuant to Art. 5069-1D.008, Title 79, Revised Civil Statutes
of Texas, as amended; provided, however, that at any time the weekly rate
ceiling, the quarterly ceiling or the annualized ceiling shall be less than 18%
per annum or more than 24% per annum, the provisions of Art. 5069-1D.009(a) and
(b), Title 79, Revised Civil Statutes of Texas, as amended, shall control for
purposes of such determination, as applicable.
"Increased Advance Costs" has the meaning specified in Section 9.3
hereof.
"Increased Advance Costs Retroactive Effective Date" has the meaning
specified in Section 9.3 hereof.
"Increased Advance Costs Set Date" has the meaning specified in
Section 9.3 hereof.
"Increased Letter of Credit Costs" has the meaning specified in
Section 2.15(d) hereof.
"Increased Letter of Credit Costs Retroactive Effective Date" has the
meaning specified in Section 2.15(d) hereof.
"Increased Letter of Credit Costs Set Date" has the meaning specified
in Section 2.15(d) hereof.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable in the
ordinary course of business), (e) all obligations secured by any Lien on any
property or asset owned by
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<PAGE> 20
such Person, whether or not the obligation secured thereby shall have been
assumed, (f) to the extent not otherwise included, all Capitalized Lease
Obligations of such Person, all obligations in respect of letters of credit,
bankers' acceptances and similar instruments, and all obligations under Hedge
Agreements, (g) any "withdrawal liability" of such Person as such term is
defined under Part I of Subtitle E of Title IV or ERISA, (h) all preferred
stock issued by such Person and required by the terms thereof to be redeemed,
or for which mandatory sinking fund payments are due, by a fixed date, (i) the
principal portion of all obligations of such Person under any Synthetic Lease,
and (j) any Guaranty of such Person of any obligation of another Person
constituting obligations of a type set forth above.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Indentures" means the 1996 Senior Subordinated Notes Indenture, the
1997 Senior Subordinated Notes Indenture and any other indenture providing for
the issuance of any other Subordinated Debt.
"Initial Pricing Period" means the period from and including the
Agreement Date to and including the Rate Adjustment Date.
"Institutional Debt" means unsecured Indebtedness for borrowed money
which may be raised by the Borrower in the private placement or public debt
markets on terms reasonably satisfactory to the Determining Lenders, and shall
include Subordinated Debt, with only such changes or amendments which are not
prohibited by Section 7.18 hereof.
"Intellectual Property Security Agreement" means a security agreement
and assignment relating to all intellectual property of the Borrower and its
Domestic Subsidiaries substantially in the form of Exhibit C hereto, as
amended, modified, renewed, supplemented or restated from time to time.
"Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the Agreement Date, among the Borrower, the Administrative Agent,
the Lenders hereunder, the administrative agent under the Term Credit
Agreement, the lenders under the Term Credit Agreement, and the Collateral
Agent, in substantially the form of Exhibit L hereto, as amended, modified,
renewed, supplemented or restated from time to time to the extent permitted
pursuant thereto.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business
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<PAGE> 21
Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iii) there shall be outstanding at any one time no more
than eight Interest Periods in the aggregate.
"Investment" means any direct or indirect purchase or other
acquisition of, capital stock or other securities of, or beneficial interest
in, any other Person, or any direct or indirect loan, advance (other than loans
or advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital
contribution to, or investment in any other Person, including without
limitation the purchase of accounts receivable of any other Person that are not
current assets or do not arise in the ordinary course of business.
"Issuing Bank" means NationsBank of Texas, N.A., in its capacity as
issuer of the Letters of Credit, or any other Lender which agrees to issue a
Letter of Credit.
"Landlord's Agreement" means that Landlord's Agreement substantially
in the form of Exhibit I-1 hereto.
"Landlord's Waiver" means that Landlord's Waiver substantially in the
form of Exhibit I-2 hereto.
"Law" means any statute, law, ordinance, regulation, rule, order,
writ, injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of the
Commitment or is owed any part of the Obligations (including the Administrative
Agent in its individual capacity), and each Eligible Assignee that hereafter
becomes a party hereto pursuant to Section 11.6 hereof, subject to the
limitations set forth therein (but not any Participant).
"L/C Cash Collateral Account" has the meaning specified in Section
2.15(g)(i) hereof.
"L/C Related Documents" has the meaning specified in Section
2.15(e)(i) hereof.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit issued pursuant to the terms hereof (and shall include any
Existing Letter of Credit).
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<PAGE> 22
"Letter of Credit Agreement" has the meaning specified in Section
2.15(b) hereof.
"Letter of Credit Facility" has the meaning specified in Section
2.15(a) hereof.
"Leverage Ratio" means, for any date of calculation, the ratio of
Total Debt as of the date of determination to EBITDA calculated for the four
consecutive Fiscal Quarters ending on the date of calculation. For purpose of
calculation of the Leverage Ratio only, with respect to assets not owned at all
times during the four Fiscal Quarters immediately preceding the date of
calculation of EBITDA, there shall be (i) included in EBITDA the proforma
EBITDA of any assets acquired during any such four Fiscal Quarters for the
twelve months preceding the date of calculation and (ii) excluded from EBITDA
the EBITDA of any assets disposed of during any of such Fiscal Quarters for the
twelve months preceding the date of calculation.
"LIBOR Advance" means any Advance bearing interest at the LIBOR Basis.
"LIBOR Basis" means, with respect to any LIBOR Advance, a simple per
annum interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b)
the sum of the Adjusted LIBOR Rate applicable to such LIBOR Advance plus the
Applicable LIBOR Rate Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 2 attached hereto, and such
other office of the Lender or any of its Affiliates hereafter designated by
written notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement, levy, execution, seizure, attachment, garnishment or other
similar encumbrance of any kind in respect of such property, whether or not
choate, vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or
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<PAGE> 23
investigations under or pursuant to any environmental, occupational, safety and
health, antitrust, unfair competition, securities, Tax or other Law, or under
or pursuant to any contract, agreement or other instrument.
"Loan Documents" means this Agreement, the Notes, the Security
Agreements, the Deeds of Trust, any other Collateral Document, any Subsidiary
Guaranty, the L/C Related Documents, the Underwriting Fee Letter, the
Administrative Agent Fee Letter, any Hedge Agreements entered into with any
Person that is or was a Lender or an Affiliate of a Lender at the time of
entering into such Hedge Agreements, and any other document or agreement
executed or delivered from time to time by the Borrower and any of its
Subsidiaries or any other Person in connection herewith or as security for the
Obligations.
"Material Adverse Effect" means any act or circumstance or event that
(a) could reasonably be expected to be material and adverse to the business,
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or (b) in any manner whatsoever does or could
reasonably be expected to materially and adversely affect (i) the validity or
enforceability of any Loan Document, (ii) any material Collateral, (iii) the
ability of the Borrower and its Subsidiaries taken as a whole to perform their
respective Obligations under the Loan Documents, or (iv) the Rights of the
Lenders or the Administrative Agent under any of the Loan Documents.
"Maturity Date" means December 31, 2003, or the earlier date of
termination in whole of the Commitment pursuant to Section 2.6 or 8.2 hereof.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any Tribunal or any Person necessary to enable the Borrower or any of its
Subsidiaries to maintain and operate its business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset by or of, or the issuance of Capital Stock or
Institutional Debt to, any Person, the amount of cash received by such Person
in connection with such transaction (including cash proceeds of any property
received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction
or to any asset that may be the subject thereof: (i) reasonable brokerage
commissions, legal fees, finder's fees, financial
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<PAGE> 24
advisory fees, fees for solvency opinions, accounting fees, underwriting fees,
investment banking fees and other similar commissions and fees, and expenses,
in each case, to the extent paid or payable by such Person; (ii) filing,
recording or registration fees or charges or similar fees or charges paid by
such Person; (iii) taxes paid or payable by such Person or any shareholder,
partner or member of such Person to governmental taxing authorities as a result
of such sale or other disposition (after taking into account any available tax
credits or deductions or any tax sharing arrangements); (iv) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on
any Indebtedness that is secured by a Lien on the asset in question and that is
required to be repaid under the terms thereof as a result of such asset sale;
and (v) any reserve for adjustment in respect of the price of any such sale,
lease, transfer or other disposition of such asset or assets established in
accordance with GAAP.
"Net Income" means net earnings (or deficit) after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
"Net Worth" means an amount equal to the sum of (a) the stockholders'
equity of the Borrower and its Subsidiaries, on a consolidated basis,
determined in accordance with GAAP, plus (b) the Borrower Preferred Stock.
"1996 Senior Subordinated Notes" means those Series A and Series B 10%
Senior Subordinated Notes due 2006 in the aggregate principal amount of
$125,000,000, which are subordinated to the Obligations on the terms set forth
in the 1996 Senior Subordinated Notes Indenture.
"1996 Senior Subordinated Notes Indenture" means that certain
Indenture, dated as of November 12, 1996, among the Borrower, the Subsidiaries
of the Borrower listed on a schedule thereto, and Bank One, Columbus, N.A., as
Trustee.
"1997 Senior Subordinated Notes" means those certain senior
subordinated notes of the Borrower due 2007 to be issued by the Borrower in
connection with the Fieldcrest Cannon Transaction not to exceed $185,000,000,
which shall be subordinated to the Obligations on the terms set forth in the
1997 Senior Subordinated Notes Indenture.
"1997 Senior Subordinated Notes Indenture" means that certain
Indenture, dated as of December 18, 1997, among the Borrower, the Subsidiaries
of the Borrower listed on a schedule thereto, and Norwest Bank, N.A., as
trustee.
"Notes" means, collectively, the Revolving Credit Notes and the Swing
Line Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(d) hereof.
"Notice of Issuance" has the meaning specified in Section 2.15(b)
hereof.
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<PAGE> 25
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent, including the Reimbursement Obligations) of
the Borrower or any other Obligor to any Lender or the Administrative Agent or
any Affiliate of any Lender under any of the Loan Documents as they may be
amended from time to time, and (b) all obligations of the Borrower or any other
Obligor for losses, damages, expenses or any other liabilities of any kind that
any Lender, the Administrative Agent or any Affiliate of any Lender may suffer
by reason of a breach by the Borrower or any other Obligor of any obligation,
covenant or undertaking with respect to any Loan Document payable by the
Borrower or any other Obligor under any Loan Document.
"Obligor" means the Borrower and each Guarantor.
"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Other Taxes" has the meaning specified in Section 2.14(b) hereof.
"Ownership Information" has the meaning specified in Section 11.6(j)
hereof.
"Participants" has the meaning specified in Section 11.6(c) hereof.
"Participations" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pegasus" means Pegasus Merger Sub, Inc., a Delaware corporation
which, upon the Fieldcrest Cannon Merger, will be merged with and into
Fieldcrest Cannon with Fieldcrest Cannon as the surviving corporation.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of (i) the Collateral Agent, the
Administrative Agent or the Lenders or any Affiliate of any Lender (or former
Lender or Affiliate of a Lender still party to a Hedge Agreement with the
Borrower or any of its Subsidiaries) to secure the Obligations hereunder or
(ii) the Collateral Agent, the administrative agent or the lenders (or any
affiliate thereof) under the Term Credit Agreement to secure the Obligations
(as defined in the Term Credit Agreement) thereunder;
(b) Liens for taxes, assessments, governmental charges, levies or
claims that are not yet delinquent or that are being diligently contested in
good faith by appropriate proceedings in
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<PAGE> 26
accordance with Section 5.6 hereof and for which adequate reserves shall have
been set aside on such Person's books, but only so long as no foreclosure,
restraint, sale or similar proceedings have been commenced with respect
thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers,
landlords and materialmen and other similar Liens incurred in the ordinary
course of business or by operation of Law for sums not yet due or being
contested in good faith, if such reserve or appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance,
pensions or other social security programs or similar legislation;
(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere in any material
respect with the ordinary conduct of the business of such Person;
(f) Liens and negative pledges created to secure the purchase
price of assets acquired (or existing on property at the time such property is
acquired) by such Person or created to secure Indebtedness permitted by Section
7.1(c) or 7.1(h) hereof, which is incurred solely for the purpose of financing
the acquisition of such assets and incurred at the time of acquisition or which
exists against such assets at the time of acquisition thereof, so long as each
such Lien shall at all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so long as any such
Lien remains solely on the asset or assets acquired (and the proceeds thereof)
and the amount of Indebtedness related thereto is not increased;
(g) Any Liens which are described on Schedule 3 hereto, and Liens
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower;
(h) Liens arising from filing Uniform Commercial Code financing
statements for precautionary purposes relating solely to operating leases of
personal property permitted by this Agreement under which the Borrower or any
of its Subsidiaries is a lessee;
(i) Any zoning or similar law or right reserved to or vested in
any Tribunal to control or regulate the use of any real property;
(j) Any other title or survey exception with respect to real
property assets disclosed by any preliminary title report, title commitment
report, survey or other search of title provided to the Administrative Agent in
accordance with this Agreement unless disapproved in writing by the
Administrative Agent prior to the Agreement Date;
(k) Liens incurred or deposits made to secure the performance of
bids, tenders, leases, trade contracts (other than for Indebtedness), statutory
obligations, surety and appeal
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<PAGE> 27
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business;
(l) Any leases or subleases currently in effect, entered into in
the ordinary course of business or entered into in compliance with the Loan
Documents; and
(m) Any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (a)(ii), (f), (g), (h) and
(l) hereof.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA (including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pretax Cash Flow" means, for any date of calculation, calculated for
the Borrower and its Subsidiaries on a consolidated basis (including Fieldcrest
Cannon and its Subsidiaries on a pro forma basis with respect to any period
prior to the Agreement Date), an amount equal to the sum of (a) EBITDA, minus
(b) Capital Expenditures, plus (c) cash proceeds received from the sale of
assets pursuant to Section 7.5(d) hereof.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Reference Lender as its
"prime rate;" it being understood that such rate may not be the lowest rate of
interest charged by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
December, beginning December 31, 1997.
"Rate Adjustment Date" means the date which is two Business Days
following the date that the Lenders receive the financial statements for the
first Fiscal Quarter for Fiscal Year 1998 required to be delivered pursuant to
Section 6.1 hereof.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 as
amended from time to time.
"Reference Lender" means NationsBank; provided that if NationsBank
shall cease to be the Administrative Agent hereunder, NationsBank shall cease
to be the Reference Lender, and the new Administrative Agent (after
consultation with the Borrower) shall, with notice to the Borrower and the
Lenders, designate itself as the Reference Lender.
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<PAGE> 28
"Register" has the meaning specified in Section 11.6(j) hereof.
"Regulatory Modification" has the meaning specified in Section 9.5
hereof.
"Regulatory Modification Retroactive Effective Date" has the meaning
specified in Section 9.5 hereof.
"Regulatory Modification Set Date" has the meaning specified in
Section 9.5 hereof.
"Reimbursement Obligations" means, in respect of any Letter of Credit
as at any date of determination, the sum of (a) the maximum aggregate amount
which is then available to be drawn under such Letter of Credit plus (b) the
aggregate amount of all drawings under such Letter of Credit not theretofore
reimbursed by the Borrower.
"Related Person" means (a) any Affiliate of the Borrower, (b) any
individual or entity who directly or indirectly holds 10% or more of any class
of Capital Stock of the Borrower, (c) any relative of such individual by blood,
marriage or adoption not more remote than first cousin and (d) any officer or
director of the Borrower.
"Release Date" means the date on which the Notes have been paid in
full, all other Obligations due and owing have been paid and performed in full,
and the Commitment has been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA.
"Reserve Requirement " means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted LIBOR Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include LIBOR Advances. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change
in the Reserve Requirement.
"Responsible Officer" means, of any Person, the President, chief
operating officer, chief executive officer, chief financial officer, chief
accounting officer or treasurer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, and (b) any
(i) payment or prepayment of principal, premium (but not interest) or penalty
(but not liquidated damages in respect of the 1997 Senior Subordinated Notes)
on any Institutional Debt of the Borrower or any of its Subsidiaries or any
defeasance, redemption, purchase, repurchase or other acquisition or
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<PAGE> 29
retirement for value, in whole or in part, of any Institutional Debt
(including, without limitation, the setting aside of assets or the deposit of
funds therefor), and (ii) prepayment of interest on any Institutional Debt.
"Revolver Availability" means an amount equal to the result of (a) the
Commitment minus (b) the sum of (i) the outstanding Revolving Credit Advances,
plus (ii) the outstanding Reimbursement Obligations, plus (iii) the outstanding
Swing Line Advances.
"Revolving Credit Advance" means an Advance made pursuant to
Section 2.1(a) hereof.
"Revolving Credit Notes" means the promissory notes of Borrower
evidencing Revolving Credit Advances hereunder, substantially in the form of
Exhibit A hereto, together with any extension, renewal, or amendment thereof,
or substitution therefor.
"Rights" means rights, remedies, powers and privileges.
"Security Agreements" mean the General Security Agreements and the
Intellectual Property Security Agreements.
"Solvent" means, with respect to any Person, that as of the date of
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person, and (c) such Person does not have
unreasonably small capital with which to carry on its business. In computing
the amount of contingent or unliquidated liabilities at any time, such
liabilities will be computed at the amount which, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability discounted to present
value at rates believed to be reasonable by such Person.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 1 hereto as its Specified Percentage, or
as adjusted or specified in any amendment to this Agreement or in any
Assignment Agreement.
"Standby Letter of Credit" means any letter of credit issued by the
Issuing Bank pursuant to Section 2.15(a) hereof (or any Existing Letter of
Credit) which is not a Commercial Letter of Credit.
"Subordinated Debt" means (a) the subordinated Indebtedness existing
on the Agreement Date, and (b) any other Indebtedness of the Borrower or any of
its Subsidiaries having maturities
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<PAGE> 30
and terms and which is subordinated to payment of the Obligations in a manner
approved in writing by the Administrative Agent and the Determining Lenders in
their reasonable discretion, in each case with only such changes or amendments
as are not prohibited by Section 7.18 hereof.
"Subsequent Pricing Period" means the period from and including the
date which is the first day following the end of the Initial Pricing Period to
and including the Release Date.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate or other Person of which
(or in which) more than 50% of:
(a) the outstanding capital stock having Voting Power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have Voting Power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or
joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit F hereto, executed by each direct and indirect Domestic Subsidiary of
the Borrower, as amended, supplemented, modified, renewed or otherwise restated
from time to time.
"Swing Line Advance" means an Advance made pursuant to Section 2.1(b)
hereof.
"Swing Line Bank" means NationsBank of Texas, N.A. and any successor
thereto appointed in accordance with Section 10.1(b) hereof.
"Swing Line Facility" has the meaning specified in Section 2.1(b)
hereof.
"Swing Line Note" means the Swing Line Note of the Borrower payable to
the order of the Swing Line Bank, evidencing Swing Line Advances hereunder,
substantially in the form of Exhibit J hereto, together with any extension,
renewal or amendment thereof or substitution therefor.
"Synthetic Lease" means any synthetic lease, tax retention generating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
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<PAGE> 31
"Taxes" has the meaning specified in Section 2.14(a) hereof.
"Term Credit Agreement" means that certain Term Credit Agreement,
dated as of the Agreement Date, among the Borrower, NationsBank of Texas, N.A.,
as administrative agent, and the lenders party thereto, as amended, modified,
supplemented or restated from time to time to the extent permitted pursuant
thereto and pursuant to the Intercreditor Agreement.
"Total Debt" means, as of any date of determination, determined for
the Borrower and its Subsidiaries on a consolidated basis, to the extent that
the following would appear as a liability upon the consolidated balance sheet
of the Borrower and its Subsidiaries in accordance with GAAP: (i) indebtedness
for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) non-contingent obligations to pay the deferred
purchase price of property or services other than trade payables incurred in
the ordinary course of business, and (iv) Capitalized Lease Obligations.
"Tribunal" means any (a) state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency,
department, commission, board, bureau, or instrumentality of a governmental or
other regulatory or public body or authority or (b) private arbitration board
or panel.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Underwriting Fee Letter" means that certain letter, dated September
10, 1997, from NationsBank of Texas, N.A., and NationsBanc Montgomery
Securities, Inc., providing an underwriting fee with respect to the Commitment.
"Unused Portion" means an amount equal to the result of (a) the
Commitment minus (b) the sum of (i) the outstanding Revolving Credit Advances
plus (ii) outstanding Reimbursement Obligations.
"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
Section 1.2 Amendments and Renewals. Each definition of an
agreement in this Article 1 shall include such agreement as amended to date,
and as amended or renewed from time to time in accordance with its terms, but
only with the prior written consent of the Determining Lenders or all the
Lenders as required pursuant to Section 11.11 hereof.
Section 1.3 Construction. The terms defined in this Article 1
(except as otherwise expressly provided in this Agreement) for all purposes
shall have the meanings set forth in Section 1.1 hereof, and the singular shall
include the plural, and vice versa, unless otherwise
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specifically required by the context. All accounting terms used in this
Agreement which are not otherwise defined herein shall be construed in
accordance with GAAP on a consolidated basis for the Borrower and its
Subsidiaries, unless otherwise expressly stated herein.
ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Revolving Credit Advances. Each Lender severally agrees, upon
the terms and subject to the conditions of this Agreement, to make Revolving
Credit Advances to the Borrower from time to time in an aggregate amount not to
exceed its Specified Percentage of the Commitment less its Specified Percentage
of the aggregate amount of all (i) Reimbursement Obligations then outstanding
(assuming compliance with all conditions to drawing) and (ii) Swing Line
Advances then outstanding, for the purposes set forth in Section 5.8 hereof.
Subject to Section 2.9 hereof, Revolving Credit Advances may be repaid and then
reborrowed. Notwithstanding any provision in any Loan Document to the
contrary, in no event shall (a) the sum of the principal amount of all
outstanding (i) Revolving Credit Advances, (ii) Reimbursement Obligations and
(iii) Swing Line Advances exceed the Commitment.
(b) Swing Line Advances. The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, advances ("Swing Line Advances") to the Borrower from
time to time on any Business Day during the period from the Agreement Date to
the Maturity Date in an aggregate principal amount not to exceed at any time
outstanding the lesser of (a) $25,000,000 and (b) an amount equal to the
Commitment minus (i) the aggregate principal amount of Revolving Credit
Advances then outstanding and (ii) the aggregate amount of all Reimbursement
Obligations then outstanding (the "Swing Line Facility"). Each Swing Line
Advance shall be in an amount not less than $100,000. Within the limits of the
Swing Line Facility and subject to the terms hereof, Swing Line Advances may be
repaid and then reborrowed.
(c) Any Advance, other than a Swing Line Advance, shall, at the
option of the Borrower as provided in Section 2.2 hereof (and, in the case of
LIBOR Advances, subject to the provisions of Article 9 hereof), be made as a
Base Rate Advance or a LIBOR Advance; provided that there shall not be
outstanding, at any one time, more than eight LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances (other
than Swing Line Advances), the Borrower, through an Authorized Signatory, shall
give the Administrative Agent prior to 11:00 a.m., Dallas, Texas time, on the
date of any proposed Base Rate Advance irrevocable written notice, or
irrevocable telephonic notice followed immediately by written
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notice, in substantially the form of Exhibit G hereto (a "Notice of Borrowing")
(provided, however, that the Borrower's failure to confirm any telephonic
notice in writing shall not invalidate any notice so given), of its intention
to borrow a Base Rate Advance hereunder. Such notice of borrowing shall
specify the requested funding date, which shall be a Business Day, and the
amount of the proposed aggregate Base Rate Advances to be made by Lenders.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
LIBOR Advances shall in all cases be subject to Article 9 hereof. For LIBOR
Advances, the notice of borrowing shall specify the requested funding date,
which shall be a Business Day, the amount of the proposed aggregate LIBOR
Advances to be made by Lenders and the Interest Period selected by the
Borrower, provided that no such Interest Period shall extend past the Maturity
Date.
(c) Swing Line Advances. In the case of Swing Line Advances, the
Borrower, through an Authorized Signatory, shall give the Swing Line Bank and
the Administrative Agent prior to 12:00 noon, Dallas, Texas time, on the date
of any proposed Swing Line Advance irrevocable telephonic notice (provided,
however, (i) the Borrower shall deliver written notice at least once a week
confirming the telephonic notices given by the Borrower with respect to Swing
Line Advances during the immediately preceding week and (ii) that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given), of its intention to borrow or reborrow a Swing
Line Advance. Such notice of borrowing shall specify (i) the requested funding
date, which shall be a Business Day, (ii) the amount of the proposed Swing Line
Advance and (iii) the maturity date of the proposed Swing Line Advance (which
maturity date shall be no later than the seventh day after the requested date
of such Swing Line Advance).
(d) Continuation/Conversion. Subject to Sections 2.1 and 2.9
hereof, the Borrower shall have the option (i) to convert at any time all or
any part of the outstanding Base Rate Advances to LIBOR Advances and all or any
part of the outstanding LIBOR Advances to Base Rate Advances or (ii) upon
expiration of any Interest Period applicable to a LIBOR Advance, to continue
all or any portion of such LIBOR Advance equal to $5,000,000 and integral
multiples of $500,000 in excess of that amount as a LIBOR Advance and the
succeeding Interest Period(s) of such continued LIBOR Advance shall commence on
the last day of the Interest Period of the LIBOR Advance to be continued;
provided, however, (A) LIBOR Advances may only be converted into Base Rate
Advances on the expiration date of the Interest Period applicable thereto and
(B) notwithstanding anything in this Agreement to the contrary, no outstanding
Advance may be continued as, or converted into, a LIBOR Advance when any
Default or Event of Default has occurred and is continuing. Not later than
11:00 a.m., Dallas,
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Texas time on the date of any proposed continuation of or a conversion to a
Base Rate Advance and not later than 11:00 a.m., Dallas, Texas time at least
three Business Days prior to any proposed continuation of or conversion to a
LIBOR Advance, the Borrower, through an Authorized Signatory, shall give the
Administrative Agent irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice, in substantially the form of
Exhibit K hereto (a "Notice of Continuation/Conversion") (provided, however,
that the Borrower's failure to confirm any telephonic notice in writing shall
not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
of the Advance to be converted/continued, (iii) in the case of a conversion to,
or a continuation of, a LIBOR Advance, the requested Interest Period, and (iv)
in the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default
has occurred and is continuing. If the Borrower shall fail to give any notice
in accordance with this Section 2.2(d) prior to the expiration of any
then-relevant Interest Period with respect to any LIBOR Advance, the Borrower
shall be deemed irrevocably to have requested that such LIBOR Advance be
converted to a Base Rate Advance in the same principal amount.
(e) Minimum Amount. The aggregate amount of Base Rate Advances
(other than Swing Line Advances) to be made by the Lenders on any day shall be
in a principal amount which is at least $1,000,000 and which is an integral
multiple of $100,000; provided, however, that such amount may equal the unused
amount of the Commitment. The aggregate amount of LIBOR Advances having the
same Interest Period and to be made by the Lenders on any day shall be in a
principal amount which is at least $5,000,000 and which is an integral multiple
of $500,000.
(f) Notice and Disbursement. The Administrative Agent shall
promptly notify the Lenders of each notice (other than with respect to a Swing
Line Advance) received from the Borrower pursuant to this Section. Each Lender
shall, not later than 2:00 p.m., Dallas, Texas time, on the date of any
Advance, deliver to the Administrative Agent, at its address set forth herein,
such Lender's Specified Percentage of such Advance in immediately available
funds in accordance with the Administrative Agent's instructions. Prior to
2:30 p.m., Dallas, Texas time, on the date of any Advance hereunder, the
Administrative Agent shall, subject to satisfaction of the conditions set forth
in Article 3, disburse the amounts made available to the Administrative Agent
by the Lenders by (i) transferring such amounts by wire transfer pursuant to
the Borrower's instructions, or (ii) in the absence of such instructions,
crediting such amounts to the account of the Borrower maintained with the
Administrative Agent. All Revolving Credit Advances shall be made by each
Lender according to its Specified Percentage. Upon the request of any Lender,
the Administrative Agent shall notify such Lender of the aggregate principal
amount of Swing Line Advances outstanding at such time.
(g) The Swing Line Bank shall, not later than 2:00 p.m., Dallas,
Texas time, on the date of any Swing Line Advance, deliver to the
Administrative Agent at its address set forth herein, the amount of such Swing
Line Advance in immediately available funds in accordance with the
Administrative Agent's instructions. Prior to 2:30 p.m., Dallas, Texas time,
on the
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date of any Swing Line Advance, the Administrative Agent shall, subject to the
conditions set forth in Article 3, disburse the amount made available to the
Administrative Agent by the Swing Line Bank by (i) transferring such amounts by
wire transfer pursuant to the Borrower's instruction or (ii) in the absence of
such instructions, crediting such amounts to the account of the Borrower
maintained with the Administrative Agent. Forthwith upon demand by the Swing
Line Bank at any time, including after a Default or Event of Default, and in
any event upon the making of the direction specified by Section 8.2 to
authorize the Administrative Agent to declare the Advances due and payable
pursuant to the provisions of Section 8.2, each Lender, including the Swing
Line Bank, notwithstanding the failure of the Borrower at such time to satisfy
each condition specified in Article 3, shall make by 12:00 noon (Dallas, Texas
time) on the first Business Day following receipt by such Lender of notice from
the Swing Line Bank, a Revolving Credit Advance which is a Base Rate Advance in
an amount equal to the product of (i) the Specified Percentage of such Lender
times (ii) the aggregate outstanding principal amount of the Swing Line
Advances. The proceeds of such Revolving Credit Advances shall be applied by
the Administrative Agent to repay the outstanding Swing Line Advances.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of each Base Rate Advance from the date such
Base Rate Advance is made until such Base Rate Advance is due (whether
at maturity, by reason of acceleration, by scheduled reduction, or
otherwise) and repaid at a simple interest rate per annum equal to the
Base Rate Basis for the Base Rate Advances as in effect from time to
time. If at any time the Base Rate Basis would exceed the Highest
Lawful Rate, interest payable on the Base Rate Advances shall be
limited to the Highest Lawful Rate, but the Base Rate Basis shall not
thereafter be reduced below the Highest Lawful Rate until the total
amount of interest accrued on the Base Rate Advances equals the amount
of interest that would have accrued if the Base Rate Basis had been in
effect at all times.
(ii) Subject to Section 11.9 hereof, interest on the Base
Rate Advances shall be computed on the basis of a year of 365 or 366
days, as appropriate, for the actual number of days elapsed, and shall
be payable in arrears on each Quarterly Date and on the Maturity Date.
(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of each LIBOR Advance, from the date such
Advance is made until it is due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) and repaid, at a
rate per annum equal to the LIBOR Basis for such LIBOR Advance. The
Administrative Agent, whose determination shall be controlling in the
absence of demonstrable error, shall determine the LIBOR Basis on the
second Business Day prior
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to the applicable funding, conversion or continuation date and shall
notify the Borrower and the Lenders of such LIBOR Basis. The
Administrative Agent shall, at the request of the Borrower, furnish
such information concerning the calculation of the LIBOR Basis as the
Borrower may reasonably request.
(ii) Subject to Section 11.9 hereof, interest on each
LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Maturity Date; provided, however,
that if the Interest Period for such LIBOR Advance exceeds three
months, interest shall also be due and payable in arrears on each
three-month anniversary of the commencement of such Interest Period
during such Interest Period.
(c) On Swing Line Advances.
(i) The Borrower shall pay interest on the outstanding
principal amount of such Swing Line Advance, from the date of such
Swing Line Advance is made until it is due (whether at maturity, by
reason of acceleration or otherwise) and repaid, at a simple interest
rate per annum equal to the sum of (A) the Base Rate Basis in effect
from time to time minus (B) the Commitment Fee (specified as a
percentage) then in effect, but in no event higher than the Highest
Lawful Rate.
(ii) Subject to Section 11.9 hereof, interest on each
Swing Line Advance shall be computed on the basis of a year of 365 or
366 days, as applicable, for the actual number of days elapsed, and
shall be payable in arrears on the maturity date of each Swing Line
Advance and on the Maturity Date.
(d) Interest After an Event of Default. (i) Subject to Section
11.9 hereof, after an Event of Default (other than an Event of Default
specified in Section 8.1(f) or (g) hereof) and during any continuance thereof,
at the option of the Determining Lenders and after written notice to the
Borrower by the Administrative Agent, and (ii) after an Event of Default
specified in Section 8.1(f) or (g) hereof and during any continuance thereof,
automatically and without any action by the Administrative Agent or any Lender,
the Obligations shall bear interest at a rate per annum equal to the Default
Rate. Such interest shall be payable on the earlier of demand or the Maturity
Date, and shall accrue until the earlier of (i) waiver or cure of the
applicable Event of Default, (ii) agreement by the Determining Lenders to
rescind the charging of interest at the Default Rate, or (iii) payment in full
of the Obligations. The Lenders shall not be required to accelerate the
maturity of the Advances or to exercise any other rights or remedies under the
Loan Documents to charge interest at the Default Rate. The Lenders shall not
be required to give notice to the Borrower of the decision to charge interest
at the Default Rate under the first clause (ii) above.
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Section 2.4 Fees.
(a) Commitment Fee. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the account of the Lenders
according to their Specified Percentages, a commitment fee of 0.500% per annum
(or (i) 0.375% per annum during any period during the Subsequent Pricing Period
that the Leverage Ratio is less than 4.00 to 1 but greater than or equal to
3.50 to 1 and (ii) 0.250% per annum during any period during the Subsequent
Pricing Period that the Leverage Ratio is less than 3.50 to 1) on the daily
average Unused Portion during the period commencing on the Agreement Date and
ending on the Maturity Date. Such fee shall be (i) payable in arrears on each
Quarterly Date and on the Maturity Date, (ii) fully earned when due and,
subject to Section 11.9 hereof, nonrefundable when paid and (iii) subject to
Section 11.9 hereof, computed on the basis of a 360-day year for the actual
number of days elapsed.
(b) Other Fees. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the account of (i) the
Administrative Agent, the fees on the dates and in the amounts specified in the
letter agreement (the "Administrative Agent Fee Letter"), dated as of the
Agreement Date, between the Borrower and the Administrative Agent, and (ii)
NationsBank of Texas, N.A. and NationsBanc Montgomery Securities, Inc.
(formerly known as NationsBanc Capital Markets, Inc.) the fees specified in the
Underwriting Fee Letter on the Agreement Date.
Section 2.5 Prepayments.
(a) Voluntary Prepayments. Upon one Business Day's prior
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Agent, Base Rate Advances may be voluntarily
prepaid without premium or penalty. Upon three Business Days' prior telephonic
notice (to be promptly followed by written notice) by an Authorized Signatory
to the Administrative Agent, LIBOR Advances may be voluntarily prepaid, without
premium or penalty, but only so long as the Borrower concurrently reimburses
the Lenders in accordance with Section 2.9 hereof. Any notice of prepayment
shall be irrevocable.
(b) Mandatory Prepayment. On or before the date of any reduction
of the Commitment, the Borrower shall first, prepay applicable outstanding
Revolving Credit Advances and second, prepay Swing Line Advances in an amount
necessary to reduce the sum of outstanding Revolving Credit Advances, Swing
Line Advances and Reimbursement Obligations to an amount less than or equal to
the Commitment as so reduced. To the extent required by the immediately
preceding sentence, the Borrower shall first prepay all Base Rate Advances and
shall thereafter prepay LIBOR Advances. To the extent that any prepayment
requires that a LIBOR Advance be repaid on a date other than the last day of
its Interest Period, the Borrower shall reimburse each Lender in accordance
with Section 2.9 hereof. To the extent that outstanding Revolving Credit
Advances and Swing Line Advances exceed the Commitment after any reduction
thereof, the Borrower shall repay any such excess amount and all accrued
interest
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attributable to such excess Revolving Credit Advances and Swing Line Advances
on the date of such reduction.
(c) Payments, Generally. Any prepayment of any Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $1,000,000 and which is an integral multiple of $500,000.
Any voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $5,000,000 and which is an integral multiple of $500,000, and
to the extent that any prepayment of a LIBOR Advance is made on a date other
than the last day of its Interest Period, the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof.
Section 2.6 Reduction of Commitment.
(a) Voluntary Reduction. The Borrower shall have the right, upon
not less than 3 Business Days' notice by an Authorized Signatory to the
Administrative Agent (if telephonic, to be confirmed by telex or in writing on
or before the date of reduction or termination), which shall promptly notify
the Lenders, to terminate or reduce the Commitment. Each partial termination
shall be in an aggregate amount which is at least $5,000,000 and which is an
integral multiple of $1,000,000, and no voluntary reduction in the Commitment
shall cause any LIBOR Advance to be repaid prior to the last day of its
Interest Period unless the Borrower shall reimburse each Lender in accordance
with Section 2.9 hereof.
(b) Mandatory Reduction. On the Maturity Date, the Commitment
shall be automatically reduced to zero.
(c) General Requirements. Upon any reduction of the Commitment
pursuant to this Section, the Borrower shall immediately make a repayment of
Revolving Credit Advances and/or Swing Line Advances in accordance with Section
2.5(b) hereof. The Borrower shall reimburse each Lender in connection with any
such payment in accordance with Section 2.9 hereof to the extent applicable.
The Borrower shall not have any right to rescind any termination or reduction.
Once reduced, the Commitment may not be increased or reinstated.
Section 2.7 Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender prior to
the date of any proposed Advance (which notice shall be effective upon receipt)
that such Lender does not intend to make the proceeds of such Advance available
to the Administrative Agent, the Administrative Agent may assume that such
Lender has made such proceeds available to the Administrative Agent on such
date, and the Administrative Agent may in reliance upon such assumption (but
shall not be required to) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall be entitled
to recover such amount on demand from such Lender (or, if such Lender fails to
pay such amount forthwith upon such demand, from the Borrower) together with
interest thereon in respect of each day during the period commencing on the
date
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such amount was available to the Borrower and ending on (but excluding) the
date the Administrative Agent receives such amount from (a) the Lender, at a
per annum rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the
Federal Funds Rate, or (b) the Borrower, at the per annum rate applicable at
the time to such Advance. No Lender shall be liable for any other Lender's
failure to fund an Advance hereunder. The failure or refusal by any Lender to
make available to the Administrative Agent the proceeds of any Advance shall
not relieve any Lender from its several obligation hereunder to make its
Specified Percentage of any requested Advance available to the Administrative
Agent.
Section 2.8 Payment of Principal of Advances.
(a) Revolving Credit Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Revolving Credit Advances shall be due and payable on the Maturity Date.
(b) Swing Line Advances. To the extent not otherwise required to
be paid earlier as provided herein, the outstanding principal amount of each
Swing Line Advance shall be due and payable on its maturity date pursuant to
Section 2.2(c)(iii) hereof.
Section 2.9 Reimbursement. Whenever any Lender shall sustain or
incur any losses or reasonable out-of- pocket expenses in connection with (a)
failure by the Borrower to borrow any LIBOR Advance after having given notice
of its intention to borrow in accordance with Section 2.2 hereof (whether by
reason of the Borrower's election not to proceed or the non-fulfillment of any
of the conditions set forth in Article 3 hereof), (b) any prepayment for any
reason of any LIBOR Advance in whole or in part (including, but not limited to,
a prepayment pursuant to Section 9.3(b) hereof) on other than the last day of
an Interest Period applicable to such LIBOR Advance or (c) any prepayment of
any of its LIBOR Advances that is not made on any date specified in a notice of
prepayment given by the Borrower, the Borrower agrees to pay to any such
Lender, within 30 days after demand by such Lender, an amount sufficient to
compensate such Lender for all such losses (excluding loss of anticipated
profits) and reasonable out-of-pocket expenses, subject to Section 11.9 hereof.
A certificate as to any amounts payable to any Lender under this Section 2.9
submitted to the Borrower by such Lender shall certify that such amounts were
actually incurred by such Lender and shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount and shall be conclusive absent demonstrable error.
Section 2.10 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Advances, fees, and any other amount owed under
this Agreement or any other Loan Document shall be made not later than 12:00
noon (Dallas, Texas time) on the date specified for payment under this
Agreement to the Administrative Agent at the Administrative Agent's office, in
lawful money of the United States of America constituting immediately available
funds.
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(b) If any payment under this Agreement or any other Loan Document
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, unless, with
respect to a payment due in respect of a LIBOR Advance, such Business Day falls
in another calendar month, in which case payment shall be made on the preceding
Business Day. Any extension of time shall in such case be included in
computing interest and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all
other amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
(d) Subject to the Intercreditor Agreement, if some but less than
all amounts due from the Borrower are received by the Administrative Agent, the
Administrative Agent shall apply such amounts in the following order of
priority; (i) to the payment of the Administrative Lender's expenses incurred
on behalf of the Lenders then due and payable, if any; (ii) to the payment of
all other fees then due and payable; (iii) to the payment of interest then due
and payable, first on the Revolving Credit Advances and, second on the Swing
Line Advances; (iv) the payment of all other amounts not otherwise referred to
in this clause (d) then due and payable under the Loan Documents; and (v) to
the payment of principal then due and payable, first on the Revolving Credit
Advances and, second on the Swing Line Advances.
(e) At all times prior to the Lenders making a Revolving Credit
Advance pursuant to Section 2.2(g) hereof, the Administrative Agent shall
distribute all payments in respect of the Swing Line Advances to the Swing Line
Bank. At such time, if any, that the Lenders make a Revolving Credit Advance
pursuant to Section 2.2(g) hereof, the Administrative Agent shall distribute
all payments in respect of the Swing Line Advances to the Lenders in accordance
with the respective Specified Percentages.
Section 2.11 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 2 attached hereto.
Each Lender shall have the right at any time and from time to time to designate
a different office of itself or of any Affiliate of such Lender as such
Lender's LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to
such LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is
made by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the
purpose of complying with Applicable Law). Increased costs for expenses
resulting from a change in law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such designation or
transfer.
Section 2.12 Sharing of Payments. Subject to the Intercreditor
Agreement, if any Lender shall obtain a payment (whether voluntary or
involuntary, due to the exercise of any right of set-off, or otherwise) on
account of its Advances (other than pursuant to Sections 2.4(b), 2.14, 2.15(d),
9.3 or 9.5 hereof or in respect of Swing Line Advances) in excess of its
Specified Percentage, then such Lender shall purchase from each other Lender
such participation in the
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Advances made by such other Lender as shall be necessary to cause such
purchasing Lender to share the excess payment pro rata according to its
Specified Percentage; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section, to the
fullest extent permitted by law, may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.13 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
Section 2.14 Taxes.
(a) Any and all payments by the Borrower hereunder shall be made,
in accordance with Section 2.10 hereof, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
and withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Administrative Agent, (i) taxes imposed on, based
upon or measured by its overall net income, net worth or capital, and franchise
taxes, doing business taxes or minimum taxes imposed on it, by the jurisdiction
under the laws of which such Lender or the Administrative Agent (as the case
may be) is organized or in which it has its applicable lending office or any
political subdivision thereof; (ii) taxes imposed by reason of failure by the
Lender or the Administrative Agent to comply with the requirements of paragraph
(e) of this Section 2.14; (iii) in the case of any Lender, any taxes in the
nature of transfer, stamp, recording or documentary taxes resulting from a
transfer (other than as a result of foreclosure) by such Lender of all or any
portion of its interest in this Agreement, the Notes or any other Loan
Documents; and (iv) taxes, levies, imposts, deductions, charges, withholdings
and liabilities which are finally judicially determined by a court of competent
jurisdiction to have arisen as a result of gross negligence or wilful
misconduct of the Administrative Agent or any Lender (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by Law
to deduct or withhold any Taxes from or in respect of any sum payable hereunder
to any Lender or the Administrative Agent, to the extent not prohibited by
Applicable Law, (x) the sum payable shall be increased as may be necessary so
that after making all required deductions for Taxes (including deductions
applicable to additional sums payable under this Section 2.14) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (y) the Borrower
shall make such deductions and (z) the Borrower shall pay the full amount of
Taxes deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
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(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than those described in clauses (iii) and (iv) of the
first sentence of Section 2.14(a)) that arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any other Loan Document (hereinafter referred to as
"Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative
Agent (as the case may be) and all liabilities (including penalties, additions
to tax, interest and reasonable expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted, other than penalties, additions to tax, interest and expenses which
are finally judicially determined by a court of competent jurisdiction to have
arisen as a result of gross negligence or wilful misconduct on the part of such
Lender or the Administrative Agent. This indemnification shall be made within
30 days from the date such Lender or the Administrative Agent (as the case may
be) makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes,
the Borrower will furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof. For purposes of this
Section 2.14 the terms "United States" and "United States Person" shall have
the meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall, no later than the Agreement Date (or, in
the case of a Lender which becomes a party hereto pursuant to Section
11.6 after the Agreement Date, the date upon which such Lender becomes
a party hereto) and at such times as necessary in the reasonable
determination of the Borrower, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent:
(A) if any lending office is located in the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 1001 or
any successor form thereto ("Form 1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such lending office or lending offices under
this Agreement or any other Loan Document free from deduction or
withholding of United States federal income tax;
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(ii) if at any time such Lender changes its lending office
or lending offices or selects an additional lending office it shall,
at the same time or reasonably promptly thereafter, but only to the
extent the forms previously delivered by it hereunder are not
effective with respect to such changed or additional lending office or
lending offices, deliver to the Borrower through the Administrative
Agent, with a copy to the Administrative Agent, in replacement for the
forms previously delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States, two (2) accurate and
complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such changed or additional lending office
under this Agreement or any other Loan Document free from deduction of
withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in clause (ii) above) requiring a change in the most recent
Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent, two (2)
accurate and complete original signed copies of Form 4224 or Form
1001, in each case establishing that such Lender is on the date of
delivery thereof entitled to receive payments of principal, interest,
fees, or other amounts payable under this Agreement or any other Loan
Document free from deduction or withholding of United States federal
income tax, in replacement for the forms previously delivered by such
Lender;
(iv) it shall, promptly upon the request of the Borrower
to that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes;
(v) it shall notify the Borrower promptly after any event
(including an amendment to or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority or by ruling applicable to such
Lender of any governmental authority charged with the interpretation
or administration of any law) shall occur that results in such Lender
no longer being capable of receiving payments under this Agreement
without any deduction or withholding of United States federal income
tax; and
(vi) if such Lender is not a "bank" or other person
described in Section 881(c)(3) of the Code and cannot deliver either
Form 4224 or Form 1001, a statement that such Lender is not a "bank"
under Section 881(c)(3)(A) of the Code and
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two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such Lender.
(f) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.14 shall survive the payment in full of the
Obligations.
(g) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that (i) it
will take all reasonable actions by all usual means to maintain all exemptions,
if any, available to it from United States withholding taxes (whether available
by treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), and (ii) it will use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender; provided, however, no Lender nor the
Administrative Agent shall be obligated by reason of this Section 2.14(g) to
(a) disclose any information regarding its tax affairs or tax computations or
reorder its tax or other affairs or tax or other planning or (b) contest the
payment of any Taxes or Other Taxes. Subject to the foregoing, to the extent
the Borrower pays sums pursuant to this Section 2.14 and the Lender or the
Administrative Agent receives a refund of any or all of such sums, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that no Default or Event of Default is in existence at such
time. At such time, if any, that such Default or Event of Default is cured or
waived, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts
described in this Section 2.14 to any Lender, the Borrower may designate a
financial institution reasonably acceptable to the Administrative Agent to
replace such Lender by purchasing for cash and receiving an assignment of such
Lender's pro rata share of the Commitment and the Rights of such Lender under
the Loan Documents without recourse to or warranty by, or expense to, such
Lender, for a purchase price equal to the outstanding amounts owed to such
Lender (including such additional amounts owing to such Lender pursuant to this
Section 2.14). Upon execution of an Assignment Agreement, such other financial
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof.
Section 2.15 Letters of Credit.
(a) The Letter of Credit Facility. The Borrower may request the
Issuing Bank, on the terms and conditions hereinafter set forth, to issue, and
the Issuing Bank shall, if so requested, issue, one or more Letters of Credit
for the account of the Borrower and/or any of its Subsidiaries (provided that,
if any Letter of Credit is issued for the account of any Subsidiary, the
Borrower shall be jointly and severally liable with respect to such Letter of
Credit pursuant to the terms of the Letter of Credit Agreement (as defined
below) governing
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<PAGE> 45
such Letter of Credit) from time to time on any Business Day from the date of
the initial Advance until the Maturity Date in an aggregate maximum amount
(assuming compliance with all conditions to drawing) not to exceed, at any time
outstanding, the lesser of (i) $55,000,000 (the "Letter of Credit Facility")
and (ii) an amount equal to the Commitment minus the aggregate principal amount
of Revolving Credit Advances and Swing Line Advances then outstanding. No
Letter of Credit shall have an expiration date (including all rights of
renewal) later than the earlier of (i) ten days prior to the Maturity Date or
(ii) one year after the date of issuance thereof. Immediately upon the
issuance of each Letter of Credit (or upon satisfaction of the conditions
precedent set forth in Sections 3.1 and 3.2 hereof with respect to the Existing
Letters of Credit), the Issuing Bank shall be deemed to have sold and
transferred to each Lender, and each Lender shall be deemed to have purchased
and received from the Issuing Bank, in each case irrevocably and without any
further action by any party, an undivided interest and participation in such
Letter of Credit, each drawing thereunder and the obligations of the Borrower
under this Agreement in respect thereof in an amount equal to the product of
(x) such Lender's Specified Percentage times (y) the maximum amount available
to be drawn under such Letter of Credit (assuming compliance with all
conditions to drawing). Within the limits of the Letter of Credit Facility,
and subject to the limits referred to above, the Borrower may request the
issuance of Letters of Credit under this Section 2.15(a), repay any Revolving
Credit Advances resulting from drawings thereunder pursuant to Section 2.15(c)
hereof and request the issuance of additional Letters of Credit under this
Section 2.15(a).
(b) Request for Issuance. Each Letter of Credit shall be issued
upon notice, given not later than 1:00 p.m. (Dallas, Texas time) on the third
Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to the Issuing Bank. Each Letter of Credit shall be
issued upon notice given in accordance with the terms of any separate agreement
between the Borrower and the Issuing Bank in form and substance reasonably
satisfactory to the Borrower and the Issuing Bank providing for the issuance of
Letters of Credit pursuant to this Agreement (a "Letter of Credit Agreement"),
provided that if any terms and conditions of such Letter of Credit Agreement
are inconsistent with or more restrictive than this Agreement, this Agreement
shall control. Each such notice of issuance of a Letter of Credit by the
Borrower (a "Notice of Issuance") shall be by telephone or telecopier,
specifying therein, in the case of a Letter of Credit, the requested (i) date
of such issuance (which shall be a Business Day), (ii) maximum amount of such
Letter of Credit, (iii) expiration date of such Letter of Credit, (iv) name and
address of the beneficiary of such Letter of Credit, and (v) form of such
Letter of Credit and specifying such other information as shall be required
pursuant to the relevant Letter of Credit Agreement. If the requested terms of
such Letter of Credit are acceptable to the Issuing Bank in its reasonable
discretion, the Issuing Bank will, upon fulfillment of the applicable
conditions set forth in Article 3 hereof, make such Letter of Credit available
to the Borrower at its office referred to in Section 11.1 hereof or as
otherwise agreed with the Borrower in connection with such issuance.
(c) Drawing and Reimbursement. The payment by the Issuing Bank of
a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Revolving Credit Advance,
which shall bear interest at the Base Rate Basis,
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<PAGE> 46
in the amount of such draft (but without any requirement for compliance with
the conditions set forth in Article 3 hereof). In the event that a drawing
under any Letter of Credit is not reimbursed by the Borrower by 12:00 noon
(Dallas, Texas time) on the first Business Day after such drawing, the Issuing
Bank shall promptly notify Administrative Agent and each other Lender. Each
such Lender shall, on the first Business Day following such notification, make
a Revolving Credit Advance, which shall bear interest at the Base Rate Basis,
and shall be used to repay the applicable portion of the Issuing Bank's Advance
with respect to such Letter of Credit, in an amount equal to the amount of its
participation in such drawing for application to reimburse the Issuing Bank
(but without any requirement for compliance with the applicable conditions set
forth in Article 3 hereof) and shall make available to the Administrative Agent
for the account of the Issuing Bank, by deposit at the Administrative Agent's
office, in same day funds, the amount of such Advance. In the event that any
Lender fails to make available to the Administrative Agent for the account of
the Issuing Bank the amount of such Advance, the Issuing Bank shall be entitled
to recover such amount on demand from such Lender together with interest
thereon at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
or (ii) the Federal Funds Rate.
(d) Increased Costs. If, (i) any change or phase-in after the
Agreement Date in any Law or in the interpretation thereof by any Tribunal
charged with the administration thereof or (ii) compliance by a Lender with any
Law or any guideline or requirement from any central bank or Tribunal (whether
or not having the force of law) adopted or promulgated after the Agreement Date
(including any implementation of the Basle Accord or similar guideline or
requirement adopted, promulgated or becoming effective after the Agreement
Date) shall either (A) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit or guarantees issued
by, or assets held by, or deposits in or for the account of, the Issuing Bank
or any Lender or any corporation controlling the Issuing Bank or any Lender or
(B) impose on the Issuing Bank or any Lender or any corporation controlling the
Issuing Bank or any Lender any other condition regarding this Agreement or any
Letter of Credit, and the result of any event referred to in the preceding
clause (A) or (B) shall be to increase the cost to the Issuing Bank or any
corporation controlling the Issuing Bank of issuing or maintaining any Letter
of Credit or to any Lender or any corporation controlling such Lender of
purchasing any participation therein or making any Advance pursuant to Section
2.15(c) hereof ("Increased Letter of Credit Costs"), then, within 30 days after
demand by the Issuing Bank or such Lender, the Borrower shall, subject to
Section 11.9 hereof, pay to the Issuing Bank or such Lender, from time to time
as specified by the Issuing Bank or such Lender, additional amounts that shall
be sufficient to compensate the Issuing Bank or such Lender or any corporation
controlling such Lender for such Increased Letter of Credit Costs.
Notwithstanding the foregoing, any demand for Increased Letter of Credit Costs
shall not include any Increased Letter of Credit Costs with respect to any
period more than 180 days prior to the date that the Issuing Bank or any Lender
gives notice to the Borrower of such Increased Letter of Credit Costs unless
the effective date of the condition which results in the right to receive
Increased Letter of Credit Costs is retroactive (the "Increased Letter of
Credit Costs Retroactive Effective Date"). If any Increased Letter of Credit
Costs has an Increased Letter of Credit Retroactive Effective Date and the
Issuing Bank or any Lender demands compensation within 180 days after
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the date setting the Increased Letter of Credit Costs Effective Date (the
"Increased Letter of Credit Costs Set Date"), the Issuing Bank or such Lender,
as appropriate, shall have the right to receive such Increased Letter of Credit
Costs from the Increased Letter of Credit Retroactive Effective Date. If the
Issuing Bank or a Lender does not demand such Increased Letter of Credit Costs
within 180 days after the Increased Letter of Credit Costs Set Date, the
Issuing Bank or such Lender, as appropriate, may not receive payment of
Increased Letter of Credit Costs with respect to any period more than 180 days
prior to such demand. A certificate as to the amount of such Increased Letter
of Credit Costs, submitted to the Borrower by the Issuing Bank or such Lender,
shall certify that such Increased Letter of Credit Costs were actually incurred
by the Issuing Bank or such Lender and shall show in reasonable detail an
accounting of the amount payable and the calculation used to determine in good
faith such amount and shall be conclusive absent demonstrable error. In
determining such amount, the Issuing Bank or such Lender may use any reasonable
averaging or attribution method. Nothing in this Section 2.15(d) shall provide
the Borrower or any of its Subsidiaries the right to inspect the records, files
or books of the Issuing Bank or any Lender. If the Borrower becomes obligated
to pay additional amounts described in this Section 2.15(d) to any Lender, the
Borrower may designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and
receiving an assignment of such Lender's pro rata share of the Commitments and
the Rights of such Lender under the Loan Documents without recourse to or
warranty by, or expenses to, such Lender, for a purchase price equal to the
outstanding amounts owing to such Lender (including such additional amounts
owing to such Lender pursuant to this Section 2.15(d)). Upon execution of an
Assignment Agreement, such other financial institution shall be deemed to be a
"Lender" for all purposes of this Agreement as set forth in Section 11.6
hereof. The obligations of the Borrower under this Section 2.15(d) shall
survive termination of this Agreement. The Issuing Bank or any Lender claiming
any additional compensation under this Section 2.15(d) shall use reasonable
efforts (consistent with legal and regulatory restrictions) to reduce or
eliminate any such additional compensation which may thereafter accrue and
which efforts would not, in the reasonable judgment of the Issuing Bank or such
Lender made in good faith, be otherwise disadvantageous to the Issuing Bank or
such Lender.
(e) Obligations Absolute. The obligations of the Borrower under
this Agreement with respect to any Letter of Credit, any Letter of Credit
Agreement and any other agreement or instrument relating to any Letter of
Credit or any Revolving Credit Advance pursuant to Section 2.15(c) hereof shall
be unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of this
Agreement, any other Loan Document, any Letter of Credit Agreement,
any Letter of Credit or any other agreement or instrument relating
thereto (collectively, the "L/C Related Documents");
(ii) (A) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of
the Borrower in respect of the Letters of
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Credit or any Revolving Credit Advance pursuant to Section 2.15(c)
hereof or (B) any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary
or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing
Bank, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the L/C Related
Documents or any unrelated transaction;
(iv) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, except to the extent that any such forged,
fraudulent, invalid, insufficient, untrue or inaccurate statement was
relied upon as a result of the Issuing Bank's gross negligence or
willful misconduct;
(v) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of the Letter of Credit, except for any payment made
upon the Issuing Bank's gross negligence or willful misconduct;
(vi) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guarantee, for all or any of the Obligations of the
Borrower in respect of the Letters of Credit or any Revolving Credit
Advance pursuant to Section 2.15(c) hereof; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including, without
limitation, any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Borrower or a guarantor,
other than the Issuing's Bank gross negligence or willful misconduct.
(f) Compensation for Letters of Credit.
(i) Credit Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Lenders according to their Specified Percentages, a per annum fee
(which shall be payable quarterly in arrears on each Quarterly Date
and on the Maturity Date) equal to (A) with respect to the Standby
Letters of Credit, the product of the Applicable LIBOR Rate Margin in
effect from time to time for Revolving Credit Advances multiplied by
the average daily amount available for drawing under all outstanding
Standby Letters of Credit and (B) with respect to Commercial Letters
of Credit, the product of 50% of the Applicable LIBOR Rate Margin in
effect from time to time for Revolving Credit Advances multiplied by
the average daily amount available for drawing under all outstanding
Commercial Letters of Credit.
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Subject to Section 11.9 hereof, such fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed.
(ii) Fronting Fee. Subject to Section 11.9 hereof, the
Borrower shall pay to the Administrative Agent for the account of the
Issuing Bank a per annum fronting fee (which shall be payable
quarterly in arrears on each Quarterly Date and on the Maturity Date)
in an amount equal to the product of (A) 0.125% times (B) the average
daily amount available for drawing under all outstanding Letters of
Credit. Subject to Section 11.9 hereof, such fee shall be computed on
the basis of a 360-day year for the actual number of days elapsed.
(iii) Administrative Fee. Subject to Section 11.9 hereof,
the Borrower shall pay, with respect to each amendment, renewal or
transfer of each Letter of Credit and each drawing made thereunder,
reasonable documentary and processing charges in accordance with the
Issuing Bank's standard schedule for such charges in effect at the
time of such amendment, renewal, transfer or drawing, as the case may
be.
(g) L/C Cash Collateral Account.
(i) Upon the occurrence of an Event of Default and demand
by the Administrative Agent pursuant to Section 8.2(c) hereof (except
in the case of an Event of Default specified in Section 8.1(f) or (g)
hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower will promptly pay to
the Administrative Agent in immediately available funds an amount
equal to the maximum amount then available to be drawn under the
Letters of Credit then outstanding. Any amounts so received by the
Administrative Agent shall be deposited by the Administrative Agent in
a deposit account maintained by the Issuing Bank (the "L/C Cash
Collateral Account").
(ii) As security for the payment of all Reimbursement
Obligations and for any other Obligations, the Borrower hereby grants,
conveys, assigns, pledges, sets over and transfers to the
Administrative Agent (for the benefit of the Issuing Bank and
Lenders), and creates in the Administrative Agent's favor (for the
benefit of the Issuing Bank and Lenders) a Lien in, all money,
instruments and securities at any time held in or acquired in
connection with the L/C Cash Collateral Account, together with all
proceeds thereof. The L/C Cash Collateral Account shall be under the
sole dominion and control of the Administrative Agent and the Borrower
shall have no right to withdraw or to cause the Administrative Agent
to withdraw any funds deposited in the L/C Cash Collateral Account
during the continuance of any Event of Default. At any time and from
time to time, upon the Administrative Agent's reasonable request, the
Borrower promptly shall execute and deliver any and all such further
instruments and documents, including UCC financing statements, as may
be necessary, appropriate or desirable in the Administrative Agent's
reasonable judgment to obtain the full benefits (including perfection
and priority) of the security interest created or intended to be
created by this paragraph (ii) and of the
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rights and powers herein granted. The Borrower shall not create or
suffer to exist any Lien on any amounts or investments held in the L/C
Cash Collateral Account other than the Lien granted under this
paragraph (ii).
(iii) The Administrative Agent shall (A) during the
continuance of an Event of Default, apply any funds in the L/C Cash
Collateral Account on account of Reimbursement Obligations when the
same become due and payable, (B) after the Maturity Date, apply any
proceeds remaining in the L/C Cash Collateral Account first to pay any
unpaid Obligations then outstanding hereunder and then to refund any
remaining amount to the Borrower.
(iv) The Borrower, no more than once in any calendar
month, may direct the Administrative Agent to invest the funds held in
the L/C Cash Collateral Account (so long as the aggregate amount of
such funds exceeds any relevant minimum investment requirement) in (A)
Cash and Cash Equivalents or direct obligations of the United States
or any agency thereof, or obligations guaranteed by the United States
or any agency thereof and (B) one or more other types of investments
permitted by the Determining Lenders, in each case with such
maturities as the Borrower, with the consent of the Determining
Lenders, may specify, pending application of such funds on account of
Reimbursement Obligations or on account of other Obligations, as the
case may be. In the absence of any such direction from the Borrower,
the Administrative Agent shall invest the funds held in the L/C Cash
Collateral Account (so long as the aggregate amount of such funds
exceeds any relevant minimum investment requirement) in one or more
types of investments with the consent of the Determining Lenders with
such maturities as the Administrative Agent, with the consent of the
Determining Lenders, may determine, pending application of such funds
on account of Reimbursement Obligations or on account of other
Obligations, as the case may be. All such investments shall be made
in the Administrative Agent's name for the account of the Lenders,
subject to the ownership interest therein of the Borrower. The
Borrower recognizes that any losses or taxes with respect to such
investments shall be borne solely by the Borrower, and the Borrower
agrees to hold the Administrative Agent and the Lenders harmless from
any and all such losses and taxes, except to the extent that such
losses or taxes are finally judicially determined by a court of
competent jurisdiction to be the result of gross negligence or willful
misconduct of the Administrative Agent. During the continuance of an
Event of Default, the Administrative Agent may liquidate any
investment held in the L/C Cash Collateral Account in order to apply
the proceeds of such investment on account of the Reimbursement
Obligations as provided in Section 2.15(g)(iii) hereof (or on account
of any other Obligation then due and payable, as the case may be)
without regard to whether such investment has matured and without
liability for any penalty or other fee incurred (with respect to which
the Borrower hereby agrees to reimburse the Administrative Agent) as a
result of such application.
(v) After the establishment of the L/C Cash Collateral
Account pursuant to Section 2.15(g)(i) hereof, the Borrower shall pay
to the Administrative Agent the fees
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customarily charged by the Issuing Bank with respect to the
maintenance of accounts similar to the L/C Cash Collateral Account.
(vi) At such time as no Event of Default is in existence,
the Administrative Agent shall return any amount remaining in the L/C
Cash Collateral Account to the Borrower.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances and the
Initial Letters of Credit. The obligation of each Lender to make the initial
Advance (and participate in the Existing Letters of Credit) and the obligation
of the Issuing Bank to issue the initial Letter of Credit is subject to (i)
receipt by the Administrative Agent of the following items which are to be
delivered, in form and substance reasonably satisfactory to each Lender, with a
copy (except for the Notes and this Agreement) for each Lender, and (ii)
satisfaction of the following conditions which are to be satisfied:
(a) A loan certificate of each Obligor certifying as to the
accuracy of its representations and warranties in the Loan Documents,
certifying, in the case of any such Obligor, that no Default or Event of
Default has occurred, and including a certificate of incumbency with respect to
each Authorized Signatory, and including (i) a copy of the articles or
certificate of incorporation or other organizational documents of such Obligor,
certified to be true, complete and correct by the secretary of state of its
state of organization, (ii) a copy of a certificate of good standing and a
certificate of existence for its state of organization and, in the case of any
such Obligor, each state in which the nature of its business requires it to be
qualified to do business, (iii) a copy of such Obligor's bylaws, partnership
agreement or similar document, certified to be true, complete and correct by
its secretary or general partner, as the case may be, and (iv) a copy of
corporate or similar resolutions authorizing the execution, delivery and
performance of the Loan Documents to be executed by such Obligor;
(b) a duly executed Revolving Credit Note, payable to the order of
each Lender and in an amount for each Lender equal to its Specified Percentage
of the Commitment;
(c) UCC searches in appropriate jurisdictions where Collateral is
located;
(d) opinions of counsel to each Obligor addressed to the Lenders
and in form and substance reasonably satisfactory to the Administrative Agent
and Special Counsel, dated the Agreement Date, and covering certain of the
matters set forth in Sections 4.1(a), (b), (c), (h), (m), (n) and (p) and such
other matters incident to the transactions contemplated hereby as the
Administrative Agent or Special Counsel may reasonably request;
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(e) reimbursement for the Administrative Agent for Special
Counsel's reasonable and customary fees (on an hourly basis) and expenses
rendered through the Agreement Date;
(f) evidence that all proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent and Special Counsel; and the Administrative Agent shall
have received copies of all documents or other evidence which the
Administrative Agent or Special Counsel may reasonably request in connection
with such transactions;
(g) any fees or any expenses required to be paid pursuant to the
Administrative Agent Fee Letter and the Underwriting Fee Letter;
(h) duly executed and completed Security Agreements, dated as of
the Agreement Date, granting a first priority Lien (subject to the
Intercreditor Agreement) in all Collateral covered thereby, together with
related financing statements, stock powers, stock certificates evidencing
ownership of (i) 100% of the issued and outstanding Capital Stock of each
Domestic Subsidiary and (ii) 65% of the issued and outstanding Capital Stock of
each direct Foreign Subsidiary, and insurance certificates listing
Administrative Agent as loss payee and additional insured and otherwise in a
form required by the Collateral Documents.
(i) simultaneously with the making of the initial Advance,
executed UCC-3 Termination Statements to be filed in appropriate jurisdictions
to terminate all Liens against assets of the Borrower and its Domestic
Subsidiaries (including Fieldcrest Cannon and its Subsidiaries) other than
Permitted Liens (or written agreements from each holder of such Liens to
promptly execute such Termination Statements);
(j) all Fieldcrest Cannon Transaction Documents, which shall be in
substance and form reasonably satisfactory to the Administrative Agent and
Special Counsel;
(k) Deeds of Trust executed by the Borrower and dated as of the
Agreement Date, together with surveys, environmental reports and title
insurance policies or commitments in form and substance reasonably satisfactory
to the Administrative Agent and Special Counsel;
(l) evidence satisfactory to the Administrative Agent that (i) the
Fieldcrest Cannon Transaction shall have been consummated (or shall be
consummated simultaneously with the initial Advance hereunder) on terms
reasonably satisfactory to the Administrative Agent and Special Counsel, (ii)
the Borrower shall have received at least (A) $135,000,000 in gross proceeds
from the sale of the 1997 Senior Subordinated Notes and the Bridge Notes, (B)
$62,750,000 in Net Cash Proceeds from the issuance of the Borrower Preferred
Stock, and, (iii) after giving effect to the Fieldcrest Cannon Transaction, the
Revolver Availability shall be at least equal to the sum of (A) $40,000,000
plus (B) an amount equal to 79.42% of all conversion consideration which may be
requested by the holders of the Fieldcrest Cannon Subordinated Debentures;
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(m) a pro forma balance sheet of the Borrower and its Subsidiaries
taking into account the Fieldcrest Cannon Transaction and reflecting estimated
purchase price accounting and such other information relating to the Fieldcrest
Cannon Transaction as the Administrative Agent may reasonably require;
(n) after giving effect to the Fieldcrest Cannon Transaction,
there shall have occurred no material adverse change in the business, assets,
operations, prospects or condition (financial or otherwise) of the Borrower and
its Subsidiaries (including Fieldcrest Cannon and its Subsidiaries), taken as a
whole, since December 31, 1996;
(o) all Indebtedness of the Borrower under the Existing Credit
Agreement and all other Indebtedness by the Borrower, Fieldcrest Cannon and its
Subsidiaries not otherwise permitted pursuant to Section 7.1 hereof shall have
been (or shall be consummated simultaneously with the initial Advance
hereunder) refinanced or repaid in full and all obligations of the Borrower
under the Existing Credit Agreement or such other Indebtedness shall terminate;
(p) all conditions precedent to the Term Credit Agreement shall
have been (or shall be simultaneously with the initial Advance hereunder) be
satisfied;
(q) the duly executed and completed Intercreditor Agreement;
(r) the duly executed Swing Line Note, payable to the order of the
Swing Line Bank in the amount of the Swing Line Facility; and
(s) in form and substance reasonably satisfactory to the
Administrative Agent and Special Counsel, such other documents, instruments and
certificates as the Administrative Agent or any Lender may reasonably require
in connection with the transactions contemplated hereby.
Section 3.2 Conditions Precedent to All Advances and Letters of
Credit. The obligation of each Lender to make each Advance hereunder
(including the initial Advance) and the obligation of the Issuing Bank to issue
or extend each Letter of Credit (including the initial Letter of Credit) is
subject to fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance or issuance or extension:
(a) With respect to each Advance and each issuance or extension of
a Letter of Credit, all of the representations and warranties of the Borrower
under this Agreement, which, pursuant to Section 4.2 hereof, are made at and as
of the time of each such Advance or issuance, shall be true and correct, both
before and after giving effect to the application of the proceeds of the
Advance or Letter of Credit, except as otherwise expressly provided in said
Section 4.2 hereof.
(b) The incumbency of the Authorized Signatories shall be as
stated in the certificate of incumbency delivered in the Borrower's loan
certificate pursuant to Section 3.1(a) or as subsequently modified and
reflected in a certificate of incumbency delivered to the
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<PAGE> 54
Administrative Agent. The Lenders may, without waiving this condition,
consider it fulfilled and a representation by the Borrower made to such effect
if no written notice to the contrary, dated on or before the date of such
Advance or Letter of Credit, is received by the Administrative Agent from the
Borrower prior to the making of such Advance or issuance or extension of such
Letter of Credit;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances and Letters of Credit, after giving
effect to such proposed Advance or Letter of Credit, shall not exceed the
maximum principal amount then permitted to be outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender or the Issuing Bank from making any
Advance or issuing or extending any Letter of Credit;
(f) Except as set forth on Schedule 4 hereto, there shall be no
Litigation pending against, or, to the Borrower's knowledge, threatened against
the Borrower or any of its Subsidiaries, or in any other manner relating
directly and adversely to the Borrower or any of its Subsidiaries, or any of
their respective properties, in any court or before any arbitrator of any kind
or before or by any governmental body which could reasonably be expected to
have a Material Adverse Effect; and
(g) As of the making of such Advances or the issuance or extension
of such Letters of Credit, the Borrower shall be deemed to represent and
warrant as of such date as follows:
(i) such requested Advances or Letters of Credit are
permitted "Indebtedness" or "Debt" (as such term is defined in the
Indentures) or such other similar term howsoever defined or designated
therein;
(ii) upon the making of each requested Advance or the
issuance of each requested Letter of Credit, no Event of Default (as
defined in the Indentures) shall have occurred and be continuing at
the time of, or would occur after giving effect on a pro forma basis
to, such Advance or Letter of Credit, as applicable; and
(iii) all Advances and Reimbursement Obligations under this
Agreement are "Senior Indebtedness" (as defined in the Indentures) or
such other similar term howsoever defined or designated therein.
Notwithstanding the above, the obligation of each Lender to make a
Revolving Credit Advance pursuant to Sections 2.2(g) and 2.15(c) shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, (i) the occurrence of any Default or Event of
Default, unless the Administrative Agent or the Issuing Bank, as the case may
be, had actual knowledge of such Default or Event of Default prior to the
making of the
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<PAGE> 55
Swing Line Advance or the issuance or extension of the Letter of Credit, as the
case may be, related to such Revolving Credit Advance, (ii) the failure of the
Borrower to satisfy any condition set forth in this Section 3.2, or (iii) any
other circumstance, happening or event whatsoever, except that the conditions
precedent set forth in Sections 3.1 and 3.2 with respect to the Swing Line
Advance or the Letter of Credit for which such Revolving Credit Advance is made
pursuant to Section 2.2(g) or 2.15(c) shall have been satisfied in full at the
time of the making of such Swing Line Advance or the issuance or extension of
such Letter of Credit.
Section 3.3 Conditions Precedent to Conversions and
Continuations. The obligation of the Lenders to convert any existing Base Rate
Advance into a LIBOR Advance or to continue any existing LIBOR Advance is
subject to the condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Borrower to each of the Lenders
that no Default or Event of Default shall have occurred and be continuing or
would result from the making of such conversion or continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date,
the respective jurisdiction of organization or incorporation of the Borrower
and its Subsidiaries and the percentage ownership by the Borrower and its
Subsidiaries of any Subsidiary listed on Schedule 5 are true and correct, after
giving effect to the Fieldcrest Cannon Transaction. As of the Agreement Date
and after giving effect to the Fieldcrest Cannon Transaction, Schedule 5 is a
complete and accurate listing, showing with respect to the Borrower and each
Subsidiary of the Borrower (a) its mailing address, which is its principal
place of business, (b) the classes of its Capital Stock and the number of
amount of its Capital Stock authorized and outstanding, (c) each record and
beneficial owner of outstanding Capital Stock of each Subsidiary, and (d) all
outstanding options, rights, rights of conversion, redemption, purchase or
repurchase, rights of first refusal and similar rights relating to such Capital
Stock. All of the outstanding Capital Stock of the Borrower and its
Subsidiaries is validly issued, fully paid and non-assessable. Each of the
Borrower and its Subsidiaries is a corporation or other legal Person duly
organized, validly existing and in good standing under the laws of its state of
incorporation or organization. Each of the Borrower and its Subsidiaries has
the legal power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted, except where the
failure to have such power and authority could not reasonably be expected to
have a Material Adverse Effect. Each of the Borrower and its Subsidiaries is
authorized to do business, duly qualified and in good standing in the
jurisdiction as set forth in Schedule 8 and no qualification
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<PAGE> 56
or authorization is necessary in any other jurisdictions in which the character
of its properties or the nature of its business requires such qualification or
authorization, except where the failure to be so qualified or authorized could
not reasonably be expected to have a Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
necessary legal action to authorize it to borrow and request Letters of Credit
hereunder. Each of the Borrower and its Subsidiaries has legal power and has
taken all necessary legal action to execute, deliver and perform the Loan
Documents to which it is party in accordance with the terms thereof, and to
consummate the transactions contemplated thereby. Each Loan Document has been
duly executed and delivered by the Borrower or its Subsidiary executing it.
Each of the Loan Documents to which the Borrower or any of its Subsidiaries is
a party is a legal, valid and binding obligation of the Borrower or such
Subsidiary, as applicable, enforceable in accordance with its terms, subject,
to enforcement of remedies, to the following qualifications: (i) equitable
principles generally, and (ii) Debtor Relief Laws (insofar as any such law
relates to the bankruptcy, insolvency or similar event of the Borrower or any
such Subsidiary).
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which they are respectively a party, and
the consummation of the transactions contemplated thereby, do not and will not
(i) require any consent or approval necessary on or prior to the Agreement Date
not already obtained, except to the extent that the failure to obtain such
consent or approval could not reasonably be expected to have a Material Adverse
Effect, (ii) violate any Applicable Law, except to the extent that any
violation could not reasonably be expected to have a Material Adverse Effect,
(iii) conflict with, result in a breach of, or constitute a default under the
certificate of incorporation or by-laws or other applicable organizational
documents of the Borrower or any of its Subsidiaries, (iv) conflict with,
result in a breach of, or constitute a default under any Necessary
Authorization, indenture, agreement or other instrument, to which the Borrower
or any of its Subsidiaries is a party or by which they or their respective
properties may be bound, the effect of which could reasonably be expected to
have a Material Adverse Effect, or (v) result in or require the creation or
imposition of any Lien (other than Liens in favor of the Collateral Agent for
the benefit of (A) the Lenders to secure the Obligations hereunder and (B) the
lenders under the Term Credit Agreement to secure the Obligations (as defined
in the Term Credit Agreement) thereunder) upon or with respect to any property
now owned or hereafter acquired by the Borrower or any of its Subsidiaries.
(d) Business. The Borrower and its Subsidiaries are engaged
primarily in the business of the manufacture, marketing, sale and distribution
of a wide variety of home textile and related products as well as businesses
and activities reasonably related thereto.
(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions, except for
Necessary Authorizations, the failure of which to obtain or have in effect
could not in the aggregate reasonably be expected to result in a Material
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Adverse Effect and Necessary Authorizations that could be obtained by the
taking of ministerial action to secure the grant or transfer thereof. The
Borrower and its Subsidiaries are and will continue to be in compliance with
all provisions thereof, except to the extent that any such failure to comply
could not reasonably be expected to have a Material Adverse Effect. No
circumstance exists which could reasonably be expected to impair the utility of
the Necessary Authorization or the right to renew such Necessary Authorization
the effect of which could reasonably be expected to have a Material Adverse
Effect. No Necessary Authorization is the subject of any pending or, to the
best of the Borrower's knowledge, threatened challenge, suspension,
cancellation or revocation, the effect of which could reasonably be expected to
have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure
to so comply could not reasonably be expected to have a Material Adverse
Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have
good title to, or a valid leasehold or subleasehold interest in, all of their
material assets, except for assets disposed of to the extent permitted pursuant
to Section 7.4 or 7.5 hereof. None of their assets are subject to any Liens,
except Permitted Liens. No financing statement or other Lien filing (except
relating to Permitted Liens and other Liens for which releases and UCC-3
Termination Statements have been obtained pursuant to Section 3.1(i) hereof) is
on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries, except for Indebtedness with respect to
which the requirements of Section 3.1(i) hereof have been satisfied. The
Borrower and its Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 4 hereto, as of
the Agreement Date, there is no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body in which the amount claimed in an aggregate amount (excluding liabilities
for which credit worthy insurance companies have acknowledged coverage) exceeds
$1,000,000.
(i) Taxes. All federal, state and other tax returns of the
Borrower and its Subsidiaries required by law to be filed have been duly filed,
or extensions have been timely filed, except where the failure to so file could
not reasonably be expected to have a Material Adverse Effect or where the
obligation to so file is being diligently contested in good faith by
appropriate proceedings, and all Taxes shown to be due and payable on such
returns, have been paid, unless the same are being diligently contested in
accordance with Section 5.6 hereof. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of their Taxes are, in
the reasonable judgment of the Borrower, adequate.
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(j) Financial Statements; Material Liabilities.
(i) The Borrower has heretofore delivered to Lenders the
audited consolidated balance sheets of the Borrower and its
Subsidiaries and Fieldcrest Cannon and its Subsidiaries as at December
31, 1996, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve- month
period then ended (the "Financial Statements"). The Financial
Statements were prepared in conformity with GAAP (other than as set
forth in the respective audit reports attached thereto) and fairly
present, in all material respects, the financial position of the
Borrower and its Subsidiaries and Fieldcrest Cannon and its
Subsidiaries, respectively, as at the date thereof and the combined
results of operations and cash flows for the period covered thereby.
(ii) The projected financial statements of the Borrower
and its Subsidiaries (including Fieldcrest Cannon and its
Subsidiaries), delivered to the Lenders prior to or on the Agreement
Date are based on good faith estimates and assumptions made by the
management of the Borrower and believed to be reasonable at the time
made, it being recognized by the Lenders that such projections as to
future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may
differ from the projected results.
(iii) The financial statements of the Borrower and its
Subsidiaries delivered to the Lenders pursuant to Section 6.1 and 6.2
hereof fairly present in all material respects their respective
financial condition and their respective results of operations as of
the dates and for the periods shown, all in accordance with GAAP,
subject to normal year-end adjustments. The latest of such financial
statements reflects all material liabilities, direct and contingent,
of the Borrower and each Subsidiary of the Borrower that are required
to be disclosed in accordance with GAAP.
(k) No Adverse Change. Since December 31, 1996 (after giving
effect to the Fieldcrest Cannon Transaction), no event or circumstance has
occurred or arisen which is reasonably likely to have a Material Adverse
Effect.
(l) ERISA. Each Plan of the Borrower and its Controlled Group
(other than any Multiemployer Plan) is in compliance in all material respects
with the applicable provisions of ERISA, the Code, and any other applicable
Law, except to the extent that failure to so comply would not reasonably be
expected to have a Material Adverse Effect. With respect to each Plan (other
than any Multiemployer Plan) of the Borrower and each member of its Controlled
Group, all reports required under ERISA or any other Applicable Law to be filed
with any Tribunal, the failure of which to file could reasonably be expected to
result in liability of the Borrower or any member of its Controlled Group in
excess of $500,000, have been duly filed. All such reports are true and
correct in all material respects as of the date given. No Plan of the Borrower
or any member of its Controlled Group has been terminated under Section 4041(c)
of ERISA nor has any accumulated funding deficiency (as defined in Section
412(a) of the Code)
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been incurred (without regard to any waiver granted under Section 412 of the
Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have
a Material Adverse Effect. None of the Borrower or any member of its
Controlled Group has failed to make any contribution or pay any amount due or
owing as required under the terms of any such Plan, or by Section 412 of the
Code or Section 302 of ERISA by the due date under Section 412 of the Code and
Section 302 of ERISA, the result of which could reasonably be expected to have
a Material Adverse Effect. There has been no ERISA Event or any event
requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Plan or its related trust of the Borrower or any member of its
Controlled Group since the effective date of ERISA, the result of which could
reasonably be expected to have a Material Adverse Effect. The present value of
the benefit liabilities, as defined in Title IV of ERISA, of each Plan subject
to Title IV of ERISA (other than a Multiemployer Plan) of the Borrower and each
member of its Controlled Group does not exceed the present value of the assets
of each such Plan as of the most recent valuation date using each such Plan's
actuarial assumptions at such date by an amount which (i) could reasonably be
expected to have a Material Adverse Effect or (ii) if capitalized as
Indebtedness on the Financial Statements of the Borrower, would result in an
Event of Default under Section 7.11 hereof. There are no pending, or to the
Borrower's knowledge threatened, claims, lawsuits or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against, and neither the Borrower nor any member of its Controlled Group has
knowledge of any threatened litigation or claims against, the assets of any
Plan or its related trust or against any fiduciary of a Plan with respect to
the operation of such Plan, the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or, to the Borrower's
knowledge, any member of its Controlled Group has engaged in any prohibited
transactions, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Plan the result of which could reasonably be
expected to have a Material Adverse Effect. None of the Borrower or any member
of its Controlled Group has withdrawn from any Multiemployer Plan, nor has
incurred or reasonably expects to incur (A) any liability under Title IV of
ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B)
any withdrawal liability (and no event has occurred which with the giving of
notice under Section 4219 of ERISA would result in such liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal (within
the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C)
any liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA, the result of which could reasonably be expected
to have a Material Adverse Effect. None of the Borrower, any member of its
Controlled Group, or any organization to which the Borrower or any member of
its Controlled Group is a successor or parent corporation within the meaning of
ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA
Section 4069, the result of which could reasonably be expected to have a
Material Adverse Effect. Any Plan that is a welfare benefit plan within the
meaning of 3(1) of ERISA maintained or contributed by the Borrower or any
member of its Controlled Group and which provides for continuing benefits or
coverage for any participant or any beneficiary of any participant after such
participant's termination of employment may be terminated by the Borrower or
any member of its Controlled Group at any time without liability other than
liability that could not reasonably be expected to have a Material
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Adverse Effect. Each of Borrower and its Controlled Group which maintains a
Plan which is a welfare benefit plan within the meaning of Section 3(1) of
ERISA has complied in all material respects with the provisions of Parts 6 and
7 of subtitle B of Title I of ERISA, as amended, and the regulations
thereunder. None of the Borrower or any member of its Controlled Group
maintains or has established a multiemployer welfare benefit arrangement within
the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is
not engaged principally or as one of its important activities in the business
of extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System. No more than 25% of the assets of the Borrower and
its Subsidiaries are margin stock. None of the Borrower and its Subsidiaries
nor any agent acting on their behalf, have taken or will take any action which
might cause the Borrower, the Lenders, this Agreement or any other Loan
Document to violate any regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect. Neither the making of any Advances,
the issuance or extension of any Letters of Credit nor the application of any
proceeds thereof will violate, or be inconsistent with, the provisions
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System.
(n) Required Consents. The Borrower and its Subsidiaries are not
required to obtain any material Necessary Authorization on or prior to the
Agreement Date that has not already been obtained from, or effect any material
filing or registration that has not already been effected with, any Tribunal in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective
terms, including any borrowings hereunder, except (i) for the filing of
financing statements (and other similar notices) and other Collateral Documents
containing a description of the Collateral with certain Tribunals, including
the United States Patent and Trademark Office, (ii) where the failure to so
obtain such Necessary Authorization could not reasonably be expected to have a
Material Adverse Effect and (iii) where such Necessary Authorization could be
obtained by the taking of a ministerial action to secure the grant or transfer
thereof.
(o) Absence of Default. The Borrower and its Subsidiaries are in
compliance in all material respects with all of the provisions of their
certificate of incorporation, by-laws and other organizational documents, and
no event has occurred or failed to occur, which has not been remedied or
waived, the occurrence or non-occurrence of which constitutes, or which with
the passage of time or giving of notice or both would constitute, (i) an Event
of Default or (ii) a default by the Borrower or any of its Subsidiaries under
any indenture, agreement or other instrument, or any judgment, decree or order
to which the Borrower or any of its Subsidiaries or by which they or any of
their respective properties is bound, the result of which with respect to any
default set forth in clause (ii) could reasonably be expected to have a
Material Adverse Effect.
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<PAGE> 61
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such act or requires any consent, approval, or
authorization of, or registration with, the Securities and Exchange Commission
or any other Tribunal pursuant to any provisions of such act.
(q) Environmental Matters. The Borrower does not have any
knowledge that any hazardous substance has been placed (i) on any real property
fee title to which is now owned by the Borrower or any of its Subsidiaries or
(ii) by Borrower or any of its Subsidiaries on any real property leased by the
Borrower or any of its Subsidiaries, in either case in a manner which does not
comply with Applicable Environmental Laws, except to the extent that the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect. The Borrower and its Subsidiaries are not in violation of or
subject to any existing, pending or, to the best of the Borrower's knowledge,
threatened investigation or inquiry by any Tribunal or to any remedial
obligations under any Applicable Environmental Laws, the effect of which could
reasonably be expected to have a Material Adverse Effect. The Borrower and its
Subsidiaries have not failed to obtain any permits, licenses or similar
authorizations required to be obtained by reason of any Applicable
Environmental laws with respect to any real property owned or leased by the
Borrower or any of its Subsidiaries, except to the extent that the failure to
so obtain could not reasonably be expected to have a Material Adverse Effect.
The Borrower has no current actual knowledge that any hazardous substances have
been disposed of or otherwise released (i) on or to the real property fee title
to which is owned by the Borrower or any of its Subsidiaries or (ii) by
Borrower or any of its Subsidiaries on or to any real property leased by
Borrower or any of its Subsidiaries, all within the meaning of the Applicable
Environmental Laws, the effect of which could reasonably be expected to have a
Material Adverse Effect.
(r) Certain Fees. Except for fees and expenses incurred in
connection with the Fieldcrest Cannon Transaction, no broker's, finder's or
other fee or commission will be payable by the Borrower (other than under the
Underwriting Fee Letter and as set forth in Section 2.4 hereof) with respect to
the making of the Commitment or the Advances hereunder.
(s) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the
right to use all patents, trademarks, service marks, trade names, copyrights,
and other rights, free from Liens (except Permitted Liens), that are necessary
for the operation of their business as presently conducted and as proposed to
be conducted, except to the extent that the failure to so obtain, apply,
license or obtain the right to use could not reasonably be expected to have a
Material Adverse Effect. Nothing has come to the current actual knowledge of
the Borrower or any of its Subsidiaries to the effect that (i) any process,
method, part or other material presently contemplated to be employed by the
Borrower or any of its Subsidiaries infringes any valid and enforceable patent,
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trademark, service mark, trade name, copyright, license or other right owned by
any other Person, or (ii) there is pending or overtly threatened any claim or
litigation against or affecting the Borrower or any of its Subsidiaries
contesting its right to sell or use any such process, method, part or other
material, which could reasonably be expected to have a Material Adverse Effect.
(t) Disclosure. All information, reports, financial statements,
exhibits and schedules furnished in writing by the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender in connection with this
Agreement or the other Loan Documents is, and all other such written
information hereafter furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender will be, true and
accurate in all material respects (or, in the case of projections based on
reasonable estimates and assumptions) on the date as of which such information
is dated or certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading at such time in light of the
circumstances under which such information was provided. There is no fact
known to the Borrower and not known to the public generally that could
reasonably be expected to have a Material Adverse Effect, which has not been
set forth in this Agreement or in the documents, certificates and statements
furnished to the Lenders by or on behalf of the Borrower hereof in connection
with the transactions contemplated hereby or thereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries
on a consolidated basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 9, neither
the Borrower nor any of its Subsidiaries is a party to a collective bargaining
agreement or similar agreement, and the Borrower and each Subsidiary is in
compliance in all material respects with all Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
other laws related to the employment of its employees, except where the failure
to comply could not reasonably be expected to result in a Material Adverse
Effect, and there are no arrears in the payment of wages, withholding or social
security taxes, unemployment insurance premiums or other similar obligations of
the Borrower or any of its Subsidiaries or for which the Borrower or any such
Subsidiary may be responsible other than in the ordinary course of business,
except for such unpaid or unwithheld arrears which could not reasonably be
expected to result in a Material Adverse Effect. There is no strike, work
stoppage or labor dispute with any union or group of employees pending or
overtly threatened involving Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(w) Common Enterprise. The Borrower and its Subsidiaries are
engaged in the businesses set forth in Section 4.1(d) hereof. These operations
require financing on a basis such that the credit supplied can be made
available from time to time to the Borrower and various of its Subsidiaries, as
required for the continued successful operation of the Borrower and its
Subsidiaries as a whole. The Borrower and its Subsidiaries expect to derive
benefit (and the boards of directors of the Borrower and its Subsidiaries have
determined that the Borrower and its Subsidiaries may reasonably be expected to
derive benefit), directly or indirectly, from the
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credit extended by the Lenders hereunder, both in their separate capacities and
as members of the group of companies, since the successful operation and
condition of the Borrower and its Subsidiaries is dependent on the continued
successful performance of the functions of the group as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance and the date of issuance or extension of each
Letter of Credit, and each shall be true and correct in all material respects
when made, except to the extent (a) previously fulfilled in accordance with the
terms hereof, (b) previously waived in writing by the Determining Lenders with
respect to any particular factual circumstance or permitted by the terms of
this Agreement or (c) such representations and warranties specifically relate
to an earlier date, in which case such representations and warranties shall
have been true and correct in all material respects on and as of such date.
All such representations and warranties shall survive, and not be waived by,
the execution hereof by any Lender, any investigation or inquiry by any Lender,
or by the making of any Advance or the issuance or extension of any Letter of
Credit under this Agreement.
ARTICLE 5
General Covenants
Prior to the Release Date:
Section 5.1 Preservation of Existence and Similar Matters. The
Borrower shall, and shall cause each of its Subsidiaries to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss
of which could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The
Borrower and its Subsidiaries shall (a) engage primarily in the businesses set
forth in Section 4.1(d) hereof, and (b) comply in all respects with the
requirements of all Applicable Law, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.
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Section 5.3 Maintenance of Properties. Subject to Sections 7.4
and 7.5 hereof, the Borrower shall, and shall cause each of its Subsidiaries
to, maintain or cause to be maintained all its properties (whether owned or
held under lease) in adequate operating condition and repair for purposes of
their current use with due regard to the age thereof, taken as a whole, subject
to ordinary wear and tear, and from time to time make or cause to be made all
appropriate (in the reasonable judgment of the Borrower) repairs, renewals,
replacements, additions, betterments and improvements thereto in accordance
with past practice, except where the failure to so maintain, repair, renew,
replace or improve could not reasonably be expected to have a Material Adverse
Effect.
Section 5.4 Accounting Methods and Financial Records. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain a system
of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made
and all transactions reflected in accordance with GAAP, and keep accurate and
complete records of its respective assets.
Section 5.5 Insurance. The Borrower shall, and shall cause each
of its Subsidiaries to, maintain insurance from responsible companies in such
amounts and against such risks as shall be customary and usual in the industry
for companies of similar size and capability. Each insurance policy shall (a)
provide for at least 30 days' prior notice to the Administrative Agent of any
proposed termination or cancellation of such policy, whether on account of
default or otherwise and (b) otherwise contain the requirements for insurance
set forth in the Collateral Documents.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and
shall cause each of its Subsidiaries to, pay and discharge all material taxes
to which they are subject prior to the date on which penalties attach thereto,
and all lawful material claims for labor, materials and supplies which, if
unpaid, might by Law become a Lien upon any of its properties; except that no
such tax or claim need be paid which is being diligently contested in good
faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the appropriate books, but only so long as any Lien related
thereto is a Permitted Lien. The Borrower shall, and shall cause each of its
Subsidiaries to, timely file all information returns (or extensions of such
filing deadlines) required by federal, state or local tax authorities, except
where the failure to so file could not reasonably be expected to have a
Material Adverse Effect or where the obligation to so file is being diligently
contested in good faith by appropriate proceedings.
Section 5.7 Visits and Inspections. The Borrower shall, and
shall cause each of its Subsidiaries to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the Administrative Agent or
any Lender shall reasonably deem advisable, (b) review, inspect and make
extracts from and copies of the Borrower's and each such Subsidiary's books and
records, and (c) discuss with the Borrower's and each such Subsidiary's
directors, officers, employees and auditors its business,
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assets, liabilities, financial positions, results of operations and business
prospects, provided that such representatives of the Administrative Agent or
any Lender shall keep confidential all information obtained pursuant to this
Section 5.7 to the extent required by Section 11.13. The Borrower shall pay
the reasonable out-of-pocket expenses related to inspections and reviews
performed (a) at any time by the Administrative Agent, and (b) after the
occurrence and during the continuance of an Event of Default, by each Lender.
Except after the occurrence and during the continuance of an Event of Default,
all such visits and inspections shall be conducted during normal business
hours. Following the occurrence and during the continuance of an Event of
Default, such visits and inspections shall be conducted at any time requested
by the Administrative Agent or any Lender without any requirement for
reasonable notice.
Section 5.8 Use of Proceeds. The proceeds of the Advances and
the Letters of Credit shall be used by the Borrower to (a) to consummate the
Fieldcrest Cannon Transaction and pay certain outstanding Indebtedness of the
Borrower and Fieldcrest Cannon, (b) pay certain fees and expenses related to
the Fieldcrest Cannon Transaction and this Agreement, and (c) finance the
ongoing working capital and general corporate requirements of the Borrower and
its Subsidiaries.
SECTION 5.9 INDEMNITY.
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE
AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS,
DIRECTORS, EMPLOYEES, TRUSTEES, AGENTS, ATTORNEYS AND CONSULTANTS (INCLUDING,
WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR
ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF
THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, CLAIMS, REASONABLE COSTS, REASONABLE OUT-OF-POCKET EXPENSES AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY
THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES
(WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL, WHETHER BASED ON ANY FEDERAL,
STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITY, OR ON
CONTRACT, TORT OR OTHERWISE, AND WHETHER ARISING FROM OR CONNECTED WITH THE
PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER OR ANY
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SUBSIDIARY OF THE BORROWER OR THEIR RESPECTIVE PREDECESSORS IN INTEREST, OR THE
PAST, PRESENT OR FUTURE ENVIRONMENTAL CONDITION OF PROPERTY OF THE BORROWER OR
ANY SUBSIDIARY OF THE BORROWER), RELATING TO OR ARISING OUT OF THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT,
EVENT OR TRANSACTION RELATING THERETO, INCLUDING IN CONNECTION WITH, OR AS A
RESULT, IN WHOLE OR IN PART, OF ANY ORDINARY OR MERE NEGLIGENCE OF
ADMINISTRATIVE AGENT OR ANY LENDER (OTHER THAN THOSE MATTERS RAISED EXCLUSIVELY
BY A PARTICIPANT AGAINST THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT OR ANY
LENDER AND NOT THE BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE
ADVANCES OR LETTERS OF CREDIT HEREUNDER, OR IN CONNECTION WITH ANY
INVESTIGATION OF ANY POTENTIAL MATTER COVERED HEREBY, BUT EXCLUDING (i) ANY
CLAIM OR LIABILITY THAT ARISES AS THE RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNITEE, AS FINALLY JUDICIALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION, (ii) ANY CLAIM OR LIABILITY THAT ARISES AS THE DIRECT
RESULT OF THE OPERATION OF THE PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF
THE BORROWER BY THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT OR ANY OF THE
LENDERS AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY TRANSFER IN LIEU
OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT RELATE TO ANY
CONDITION EXISTING ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF
FORECLOSURE), AND (iii) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR
BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, EXCEPT FOR THE MATTERS REFERRED TO CLAUSES (i), (ii) OR (iii)
ABOVE, "INDEMNIFIED MATTERS", AND THE MATTERS REFERRED TO IN CLAUSES (i), (ii)
OR (iii) ABOVE, COLLECTIVELY, "EXCLUDED MATTERS"). TO THE EXTENT THAT ANY
INDEMNIFIED MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE
THE SAME LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION
DETERMINES THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH
REPRESENTATION.
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON
REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND
OTHER ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY
INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER; PROVIDED THAT SUCH INDEMNITEE SHALL PROVIDE ADEQUATE DOCUMENTATION OF
SUCH EXPENSES; PROVIDED, FURTHER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER
FOR SUCH AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO
THE EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION WAS AN EXCLUDED MATTER. THE REIMBURSEMENT AND INDEMNITY OBLIGATIONS
UNDER THIS SECTION 5.9 SHALL BE IN ADDITION TO ANY
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LIABILITY WHICH THE BORROWER MAY OTHERWISE HAVE, SHALL EXTEND UPON THE SAME
TERMS AND CONDITIONS TO EACH INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO
THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF
THE BORROWER, THE ADMINISTRATIVE AGENT, THE LENDERS AND ALL OTHER INDEMNITEES.
THIS SECTION SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE
OBLIGATIONS AND SHALL CONTINUE WITH RESPECT TO ANY LENDER THAT MAY ASSIGN ALL
OF ITS RIGHTS AND OBLIGATIONS UNDER THE LOAN DOCUMENTS.
Section 5.10 Environmental Law Compliance. The use which the
Borrower or any of its Subsidiaries make of any real property which is owned or
leased by it will not result in the disposal or other release of any hazardous
substance or solid waste on or to such real property which is in violation of
Applicable Environmental Laws, the effect of which could reasonably be expected
to have a Material Adverse Effect. As used herein, the terms "hazardous
substance" and "release" as used in this Section shall have the meanings
specified in CERCLA (as defined in the definition of Applicable Environmental
Laws), and the terms "solid waste" and "disposal" shall have the meanings
specified in RCRA (as defined in the definition of Applicable Environmental
Laws); provided, however, that if CERCLA or RCRA is amended so as to broaden or
lessen the meaning of any term defined thereby, such broader or lesser meaning
shall apply subsequent to the effective date of such amendment; and provided
further, to the extent that any other law applicable to the Borrower, any
Subsidiary or any of their properties establishes a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader or lesser
than that specified in either CERCLA or RCRA, such broader or lesser meaning
shall apply.
Section 5.11 Further Assurances. At any time or from time to time
upon reasonable request by the Administrative Agent, the Borrower or any of its
Subsidiaries shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees to (a) update and deliver to the Administrative
Agent Schedule 5 hereto (with respect to the identities, jurisdictions of
organization and ownership of the Borrower's Subsidiaries) at the time of
delivery of the financial statements set forth in Sections 6.1 and 6.2 hereof
if the information provided therein is not complete and correct, (b) update and
deliver to the Collateral Agent Schedule 2 to the Security Agreements promptly
upon discovery if the information provided therein is not complete and correct,
and (c) execute and deliver to the Collateral Agent deeds of trust or
mortgages, as appropriate, in substantially the form of Exhibit H-1 and H-2
hereto with respect to any real property hereafter acquired by the Borrower or
any Subsidiary, as applicable, together with surveys and environmental reports
in form reasonably satisfactory to the Administrative Agent and title insurance
thereon in form and amount reasonably satisfactory to the Administrative Agent,
and such board resolutions, officer's certificates, corporate and other
documents and opinions of counsel as the Administrative Agent
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shall reasonably request with respect thereto; provided this Section 5.11(c)
shall not apply to any leasehold interests unless requested by the Determining
Lenders or any leasehold interest for sales or office space only. The Borrower
shall use its reasonable best efforts to obtain Landlord's Agreements and
Landlord's Waivers with respect to such real property of the Borrower and its
Domestic Subsidiaries as the Administrative Agent shall reasonably require.
Section 5.12 Subsidiaries. At any time that any Person becomes a
Domestic Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of
the Obligations and Collateral Documents granting a first priority Lien
(subject to the Intercreditor Agreement) in all unencumbered assets of such
Subsidiary required by the Determining Lenders to be pledged, except, to the
extent applicable, for Permitted Liens, to secure the Obligations, (b) 100% of
such Subsidiary's Capital Stock shall be pledged to secure the Obligations and
(c) the Lenders shall receive such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request in connection with the actions described in
clauses (a) and (b) above. At any time that any Person becomes a direct
Foreign Subsidiary, (a) 65% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (b) the Lenders shall receive such board
resolutions, officers' certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the action described in the immediately preceding clause (a) above. All
Foreign Subsidiaries shall be direct Subsidiaries of the Borrower or of a
Domestic Subsidiary.
ARTICLE 6
Information Covenants
Prior to the Release Date, the Borrower shall furnish or cause to be
furnished to each Lender:
Section 6.1 Quarterly Financial Statements and Information.
Within 45 after the end of each Fiscal Quarter of each Fiscal Year (other than
the end of a Fiscal Quarter which coincides with the end of a Fiscal Year), the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such fiscal quarter and the related consolidated statements of earnings for
such fiscal quarter and for the elapsed portion of the year ended with the last
day of such fiscal quarter, and consolidated statements of cash flow for the
elapsed portion of the year ended with the last day of such fiscal quarter, all
of which shall be certified by a Responsible Officer, to, in his or her opinion
acting solely in his or her capacity as an officer of the Borrower, present
fairly in all material respects, in accordance with GAAP (except for the
absence of footnotes), the financial position and results of operations of the
Borrower and its Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
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Section 6.2 Annual Financial Statements and Information;
Certificate of No Default.
(a) Within 120 days after the end of each Fiscal Year, a copy of
(i) the consolidated balance sheets of the Borrower and its Subsidiaries, as of
the end of the current and prior Fiscal Years and (ii) the consolidated
statements of earnings and consolidated statements of changes in shareholders'
equity and consolidated statements of cash flow as of and through the end of
such Fiscal Year, all of which are prepared in accordance with GAAP, and
certified by independent certified public accountants reasonably acceptable to
the Administrative Agent (provided, however, any big six public accounting firm
shall be acceptable to the Administrative Agent), whose opinion shall be in
scope and substance in accordance with generally accepted auditing standards
and shall be unqualified as to scope of audit and going concern.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants stating to
the effect that during their audit of such financial statements nothing has
come to their attention that would result in a Default or Event of Default
under this Agreement, recognizing, however, that the scope and purpose of their
audit was not to determine compliance with the terms of this Agreement or
whether a Default or Event of Default has otherwise occurred.
Section 6.3 Compliance Certificate. At the time financial
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, the
Compliance Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, copies of (i) all
material final reports or letters submitted to the Borrower or any of its
Subsidiaries by accountants in connection with any annual, interim or special
audit, including without limitation any final report prepared in connection
with the annual audit referred to in Section 6.2 hereof, and any other comment
letter submitted to management in connection with any such audit, (ii) each
regular, periodic or other report and any registration statement (other than
statements on Form S-8) or prospectus (or material written communication in
respect of any thereof) filed by the Borrower or any of its Subsidiaries with
any securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iii) all press releases concerning material financial
aspects of the Borrower or any of its Subsidiaries;
(b) Promptly upon the Borrower becoming aware that (i) the
holder(s) of any note(s) or other evidence of indebtedness or other security of
the Borrower or any of its Subsidiaries in excess of $1,000,000 in the
aggregate has given notice or taken any action with respect to a breach,
failure to perform, claimed default or event of default thereunder or (ii) any
event, circumstance or condition which could reasonably be expected to be
classified as a Material Adverse Effect, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
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(c) Promptly upon the Borrower becoming aware that any party to
any Capitalized Lease Obligations in excess of $1,000,000 or Operating Lease in
which the annual rentals thereunder exceed $150,000 has given notice or taken
any action with respect to a breach, failure to perform, claimed default or
event of default thereunder, a written notice specifying the details thereof
(or the nature of any claimed default or event of default) and what action is
being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt by the Borrower thereof, information
with respect to and copies of any notices received from any Tribunal relating
to any order, ruling, law, information or policy that relates to a breach of or
noncompliance with any Law, and could reasonably be expected to result in the
payment of money by the Borrower or any of its Subsidiaries of the Borrower in
an amount of $1,000,000 or more in the aggregate or otherwise have a Material
Adverse Effect, or result in the loss or suspension of any Necessary
Authorization where such loss could reasonably be expected to have a Material
Adverse Effect; and
(e) From time to time and promptly upon each request, such
material data, certificates, reports, statements, documents or further
information regarding the assets, business, liabilities, financial position,
projections, results of operations or business prospects of the Borrower and
its Subsidiaries, as the Administrative Agent or any Lender may reasonably
request.
Section 6.5 Notice of Litigation, Default and Other Matters.
Prompt notice of the following events after the Borrower has knowledge or
notice thereof:
(a) The commencement of all Litigation and investigations by or
before any Tribunal, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $1,000,000 (after deducting the amount with respect to which creditworthy
insurance companies have acknowledged coverage), against or in any other way
relating directly to the Borrower, any of its Subsidiaries or any of their
respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which
the Borrower has current actual knowledge which constitutes a Default, a
written notice specifying the nature and period of existence thereof and what
action is being taken or is proposed to be taken with respect thereto.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the
Borrower has current actual knowledge that any ERISA Event described in clause
(a) of the definition of ERISA Event or any event described in Section 4063(a)
of ERISA with respect to any Plan of the Borrower or any member of its
Controlled Group has occurred, and (ii) within 10 Business Days after the
Borrower or any member of its Controlled Group has current actual knowledge
that any other ERISA Event with respect to any Plan of the Borrower or any
member of its Controlled Group
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has occurred or a request for a minimum funding waiver under Section 412 of the
Code has been made with respect to any Plan of the Borrower or any member of
its Controlled Group, a written notice describing such event and describing
what action is being taken or is proposed to be taken with respect thereto,
together with a copy of any notice of such event that is given to the PBGC;
(b) Promptly and in any event within ten Business Days after
receipt thereof by the Borrower, copies of each notice received by the Borrower
or any member of its Controlled Group from the PBGC of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing
thereof by the Borrower or any member of its Controlled Group with the United
States Department of Labor or the Internal Revenue Service, copies of each
annual report (including Schedule B thereto, if applicable) with respect to
each Plan subject to Title IV of ERISA of which Borrower or any member of its
Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after
receipt thereof by the Borrower, a copy of any correspondence the Borrower or
any member of its Controlled Group receives from the Plan Sponsor (as defined
by Section 4001(a)(10) of ERISA) of any Plan concerning potential withdrawal
liability pursuant to Section 4219 or 4202 of ERISA, and a statement from the
chief financial officer of the Borrower or such member of its Controlled Group
setting forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the
benefits provided under any existing Plan which is not a Multiemployer Plan, or
the establishment of any new Plans, or the commencement of contributions to any
Plan to which the Borrower or any member of its Controlled Group was not
previously contributing, which could reasonably be expected in any such case to
result in an additional material liability to the Borrower;
(f) Notification within five Business Days after the Borrower
knows that the Borrower or any such member of its Controlled Group has filed or
intends to file a notice of intent to terminate any Plan under a distress
termination within the meaning of Section 4041(c) of ERISA and a copy of such
notice; and
(g) Within five Business Days after receipt by the Borrower of
written notice of commencement thereof, notice of all actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any member of its Controlled Group with respect to any Plan, except those
which, in the aggregate, if adversely determined could not reasonably be
expected to have a Material Adverse Effect.
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ARTICLE 7
Negative Covenants
Prior to the Release Date:
Section 7.1 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, or
suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the
ordinary course of business;
(c) Indebtedness of the Borrower and its Domestic Subsidiaries,
including in respect of Capitalized Lease Obligations, incurred to purchase, or
to finance the purchase of, assets which constitute property, plant and
equipment, not to exceed, together with Indebtedness permitted pursuant to
clause (o) of this Section 7.1, $35,000,000 in aggregate principal amount
outstanding;
(d) Institutional Debt of the Borrower; provided that (i) the Net
Cash Proceeds of such Institutional Debt are applied in accordance with Section
2.5(e) of the Term Credit Agreement to the extent required therein and (ii) the
scheduled principal payments of all Indebtedness of the Borrower and its
Subsidiaries immediately after the issuance thereof is not greater in amount
during any year in which the Obligations are scheduled to be outstanding or
earlier in amortization than immediately preceding the issuance thereof.
(e) Hedging obligations under Hedge Agreements entered into with
any Person that is a Lender or an Affiliate of a Lender at the time of entering
into such Hedge Agreement;
(f) Indebtedness existing on the Agreement Date which is described
on Schedule 7 hereto, including renewals, replacements and refinancings (but no
increases) thereof;
(g) Indebtedness in respect of endorsement of negotiable
instruments in the ordinary course of business;
(h) Indebtedness assumed in connection with Acquisitions permitted
under Section 7.6 (excluding the Fieldcrest Cannon Transaction) not to exceed,
$20,000,000 in aggregate principal amount outstanding;
(i) Indebtedness owing to the Borrower or any of its Subsidiaries
by the Borrower or any of its Subsidiaries, which Indebtedness is subordinated
to the Obligations and evidenced by an entry on the financial records of the
Borrower and any such Subsidiary;
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(j) Guaranties by Subsidiaries of the Borrower of Indebtedness of
the Borrower or other Subsidiaries of the Borrower and Guaranties by the
Borrower of Indebtedness of Subsidiaries of the Borrower, in each case to the
extent such underlying Indebtedness is permitted hereunder;
(k) Indebtedness in respect of the 1997 Senior Subordinated Notes;
(l) Indebtedness in respect of the Term Credit Agreement;
(m) Indebtedness consisting of performance bonds or surety or
appeal bonds provided by the Borrower or any of its Subsidiaries in the
ordinary course of business and which do not secure other Indebtedness;
(n) Indebtedness in respect of the Borrower Preferred Stock; and
(o) Other Indebtedness of the Borrower and its Domestic
Subsidiaries not to exceed, together with Indebtedness permitted pursuant to
clause (c) of this Section 7.1, $35,000,000 in aggregate principal amount
outstanding;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
(c), (d), (h), (j), and (o) above may be incurred if, immediately before or
after giving effect to the incurrence thereof, any Event of Default shall have
occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit
any Subsidiary of Borrower to, create, assume, incur, permit or suffer to
exist, directly or indirectly, any Lien on any of its assets, whether now owned
or hereafter acquired, except Permitted Liens. The Borrower shall not, and
shall not permit any Subsidiary to, agree with any other Person that it shall
not create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets other than in respect of Indebtedness permitted by Sections 7.1(c) and
(h) hereof, provided that such agreement relates only to the assets purchased
or acquired.
Section 7.3 Investments. The Borrower shall not, and shall not
permit any Subsidiary of Borrower to, make any Investment, except that the
Borrower and any Subsidiary of the Borrower may purchase or otherwise acquire
and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of
business and are payable in a manner consistent with past practices;
(c) Investments in existence on the Agreement Date which are
described on Schedule 6 hereto;
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<PAGE> 74
(d) Investments which are Acquisitions permitted pursuant to
Section 7.6 hereof;
(e) Investments in the form of Hedge Agreements permitted by
Section 7.1(e) hereof;
(f) Investments in (i) Domestic Subsidiaries of the Borrower (A)
which have executed a Subsidiary Guaranty and Collateral Documents granting a
first priority Lien in all unencumbered assets of such Subsidiary required by
the Determining Lenders to be pledged, to secure the Obligations, (B) 100% of
whose Capital Stock shall be pledged to secure the Obligations and (C) which
have delivered to the Lenders such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request, (ii) Foreign Subsidiaries of the Borrower 65%
of whose Capital Stock shall be pledged to secure the Obligations and (iii) the
Borrower;
(g) Investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 7.5 hereof not to exceed
$25,000,000 in aggregate amount outstanding at any time;
(h) Investments arising from transactions by the Borrower or any
of its Subsidiaries with customers or suppliers in the ordinary course of
business, including endorsements of negotiable instruments, debt obligations
and other investments received in connection with the bankruptcy or
reorganization of customers and suppliers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers;
(i) Loans or advances to directors, officers and employees of the
Borrower or any of its Subsidiaries that do not exceed $5,000,000 in aggregate
amount outstanding at any time; and
(j) Other Investments not to exceed $25,000,000 in aggregate
amount outstanding at any time;
provided, however, that no Investment otherwise permitted by clauses (d), (g),
(i) and (j) above shall be permitted to be made if, immediately before or after
giving effect thereto, any Event of Default shall have occurred and be
continuing.
Section 7.4 Liquidation, Merger. The Borrower shall not, and
shall not permit any Subsidiary of Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower
which is an Obligor, (ii) a Subsidiary of the Borrower which is not an Obligor
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower,
and (iii) a Subsidiary of the Borrower may dissolve if substantially all of its
assets have been conveyed pursuant to Section 7.5(e) hereof; or
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<PAGE> 75
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, (ii) with respect to a merger or consolidation involving
a Subsidiary of the Borrower which is an Obligor and not the Borrower, such
Subsidiary shall be the surviving corporation, or such merger or consolidation
shall be a part of an Acquisition permitted by Section 7.6 hereof or part of a
disposition permitted by Section 7.5 hereof, (iii) such transaction shall not
be utilized to circumvent compliance with any term or provision herein and (iv)
no Default or Event of Default shall then be in existence or occur as a result
of such transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, sell, transfer or otherwise dispose of,
any of its assets except (a) inventory in the ordinary course of business, (b)
obsolete or worn-out assets, (c) asset sales in which the Net Cash Proceeds
from the disposition thereof (to the extent not applied pursuant to clause (f)
immediately following) are reinvested, within 270 days after such disposition,
in productive tangible assets used in the business of the Borrower and its
Subsidiaries, and provided that the aggregate amount of Net Cash Proceeds
outstanding and pending reinvestment pursuant to this clause (c) shall not
exceed $5,000,000 at any time, (d) assets (i) obtained as a result of mergers,
consolidations and Acquisitions permitted under this Agreement and (ii) that
are unnecessary to the business operations of the Borrower and its
Subsidiaries, including those assets acquired in the Fieldcrest Cannon
Transaction and set forth on Schedule 10 hereto, (e) sales and dispositions (i)
from any of the Borrower's Domestic Subsidiaries to the Borrower or any of its
Domestic Subsidiaries or any of the Borrower's Foreign Subsidiaries of which at
least 65% of whose Capital Stock has been pledged to secure the Obligations and
(ii) from any of its Foreign Subsidiaries to the Borrower or any of its
Subsidiaries, and (f) asset sales the Net Cash Proceeds of which are applied in
accordance with Section 2.5(b) of the Term Credit Agreement.
Section 7.6 Acquisitions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Acquisitions; provided, however, if
(a) immediately prior to and after giving effect to the proposed Acquisition
there shall not exist a Default or Event of Default and (b) immediately after
giving effect to the proposed transaction the Revolver Availability shall be no
less than $40,000,000, the Borrower or any of its Subsidiaries may make
Acquisitions so long as (i) such Acquisition shall not be opposed by the board
of the directors of the Person being acquired, (ii) the Lenders shall have
received written notice thereof at least 15 Business Days prior to the date of
such Acquisition, (iii) the Administrative Agent shall have received at least
10 Business Days prior to the date of such Acquisition a Compliance Certificate
setting forth the covenant calculations both immediately prior to and after
giving effect to the proposed Acquisition, (iv) the assets, property or
business acquired shall be in the business described in Section 4.1(d) hereof
and the Administrative Agent for the benefit of the Lenders shall have a first
priority Lien (subject to the Intercreditor Agreement) in substantially all of
such assets (or, if less than substantially all of such assets, such assets
required by the Determining Lenders to be pledged), except for Permitted Liens,
(v) if such Acquisition results in a Domestic Subsidiary, (A) such Subsidiary
shall execute a Subsidiary Guaranty of the Obligations and Collateral Documents
granting a first priority Lien (subject to the Intercreditor Agreement) in
substantially all of such assets (or, if less than substantially all of such
assets, all assets required by the
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Determining Lenders to be pledged), except for Permitted Liens to secure the
Obligations, (B) 100% of such Subsidiary's Capital Stock shall be pledged to
secure the Obligations and (C) the Administrative Agent on behalf of the
Lenders shall have received such board resolutions, officer's certificates and
opinions of counsel as the Administrative Agent shall reasonably request in
connection with the actions described in clauses (A) and (B) above, and (vi) if
such Acquisition results in a direct Foreign Subsidiary, (A) 65% of such
Subsidiary's Capital Stock shall be pledged to secure the Obligations and (B)
the Administrative Agent on behalf of the Lenders shall have received such
board resolutions, officer's certificates and opinions of counsel as the
Administrative Agent shall reasonably request in connection with clause (A)
immediately preceding.
Section 7.7 Capital Expenditures. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make or commit to make any Capital
Expenditures after the Agreement Date in an aggregate amount in excess of an
amount equal to the sum of (a) $175,000,000 plus (b) 3.25% of cumulative net
revenues of the Borrower and its Subsidiaries from and after the Agreement
Date.
Section 7.8 Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly declare,
pay or make any Restricted Payments except (a) Dividends payable by a
Subsidiary to the Borrower or another Subsidiary that is an Obligor or to a
Foreign Subsidiary of the Borrower of which at least 65% of its Capital Stock
has been pledged to secure the Obligations, (b) Dividends payable by the
Borrower the aggregate amount of which during any Fiscal Year do not exceed
$10,000,000, (c) cash paid in respect of the redemption of the Fieldcrest
Cannon Subordinated Debentures, (d) purchases, redemptions, retirements or
acquisitions of Indebtedness in respect of the 11-1/4% Senior Subordinated
Debentures Due 2004 of Fieldcrest Cannon, (e) the refinancing of the Bridge
Notes and (f) purchases, redemptions, retirements or acquisitions of the
Borrower Preferred Stock, provided that the consideration therefor consists
solely of Net Cash Proceeds from the issuance of Capital Stock of the Borrower;
provided, however, the Borrower shall not pay or make any Restricted Payments
permitted by this Section 7.8 unless there shall exist no Default or Event of
Default prior to or after giving effect to any such proposed Restricted
Payment.
Section 7.9 Affiliate Transactions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, at any time engage in any
transaction with an Affiliate (other than the Borrower or any of its
Subsidiaries) on terms materially less advantageous to the Borrower or such
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate. The Borrower shall not, and shall not permit any of its
Subsidiaries to, in any event incur or suffer to exist any Indebtedness or
Guaranty in favor of any Affiliate, unless such Affiliate shall subordinate the
payment and performance thereof to the Obligations on terms, conditions and
documentation satisfactory to the Determining Lenders.
Section 7.10 Compliance with ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, or permit
any member of its Controlled Group to directly or indirectly, (a) terminate any
Plan so as likely to result in liability to the Borrower
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or any member of its Controlled Group taken as a whole which could reasonably
be expected to have a Material Adverse Effect, (b) permit to exist any ERISA
Event, or any other event or condition with respect to a Plan which could
reasonably be expected to have a Material Adverse Effect, (c) make a complete
or partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan which could reasonably be expected to have a Material
Adverse Effect on the Borrower or any member of its Controlled Group taken as a
whole, or (d) enter into any new Plan or modify any existing Plan so as to
increase its obligations thereunder which could reasonably be expected to have
a Material Adverse Effect.
Section 7.11 Maximum Leverage Ratio. At the end of each Fiscal
Quarter occurring during the periods indicated below, the Borrower shall not
permit the Leverage Ratio to be greater than the ratio set forth below opposite
the period in which such Fiscal Quarter occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the last Fiscal Quarter of Fiscal Year 1997 to but not 5.75 to 1
including the last Fiscal Quarter of Fiscal Year 1998
From and including the last Fiscal Quarter of Fiscal Year 1998 to but not 5.25 to 1
including the last Fiscal Quarter of Fiscal Year 1999
From and including the last Fiscal Quarter of Fiscal Year 1999 to but not 4.75 to 1
including the last Fiscal Quarter of Fiscal Year 2000
From and including the last Fiscal Quarter of Fiscal Year 2000 and thereafter 4.25 to 1
</TABLE>
Section 7.12 Minimum Fixed Charge Coverage Ratio. At the end of
each Fiscal Quarter occurring during this Agreement commencing with the first
Fiscal Quarter of Fiscal Year 1998, the Borrower shall not permit the Fixed
Charge Coverage Ratio to be less than 1.10 to 1.
Section 7.13 Minimum Net Worth. The Borrower shall not permit the
Net Worth at any time to be less than the sum of (a) the amounts set forth
opposite the respective periods below, plus (b) an amount equal to the net
worth of any Person that, on or after the Agreement Date becomes a Subsidiary
of the Borrower or any of its Subsidiaries or is merged into or consolidated
with the Borrower or any of its Subsidiaries or substantially all of the assets
of which are acquired by the Borrower or any of its Subsidiaries to the extent
that the purchase price therefore is paid in Capital Stock of the Borrower or
any of its Subsidiaries, plus (c) an amount equal to 100% of any increase in
Net Worth pursuant to offerings of Capital Stock of the Borrower or any of its
Subsidiaries or pursuant to the conversion or exchange of any convertible
subordinated debt or redeemable preferred stock into Capital Stock of the
Borrower or any of its Subsidiaries (excluding in both (b) and (c) above any
such increase as a result of the Fieldcrest Cannon Transaction):
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<PAGE> 78
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From the Agreement Date to but not including the last Fiscal Quarter of $250,000,000
Fiscal Year 1998
From and including the last Fiscal Quarter of Fiscal Year of 1998 to but $260,000,000
not including the last Fiscal Quarter of Fiscal Year 1999
From and including the last Fiscal Quarter of Fiscal Year 1999 to but not $280,000,000
including the last Fiscal Quarter of Fiscal Year 2000
From and including the last Fiscal Quarter of Fiscal Year 2000 to but not $300,000,000
including the last Fiscal Quarter of Fiscal Year 2001
From and including the last Fiscal Quarter of Fiscal Year 2001 to but not $320,000,000
including the last Fiscal Quarter of Fiscal Year 2002
From and including the last Fiscal Quarter of Fiscal Year 2002 and $340,000,000
thereafter
</TABLE>
Section 7.14 Sale or Discount of Receivables. The Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, any notes or
accounts receivable.
Section 7.15 Business. Neither the Borrower nor any Subsidiary of
the Borrower shall conduct any business other than the business described in
Section 4.1(d) hereof.
Section 7.16 Fiscal Year. Neither the Borrower nor any of its
Subsidiaries shall change its Fiscal Year.
Section 7.17 Amendment of Organizational Documents. The Borrower
shall not, and shall not permit any Subsidiary of the Borrower to, amend its
articles of incorporation, bylaws or other applicable organizational documents
in any manner that could reasonably be expected to result in a Material Adverse
Effect.
Section 7.18 Amendments and Waivers of Institutional Debt. The
Borrower shall not, and shall not permit any Subsidiary to, change or amend (or
take any action or fail to take any action the result of which is an effective
amendment or change) or accept any waiver or consent with respect to, any
document, instrument or agreement relating to any Institutional Debt that would
result in (a) an increase in the principal, interest, overdue interest, fees or
other amounts payable under the Institutional Debt, (b) an acceleration in any
date fixed for payment or prepayment of principal, interest, fees or other
amounts payable under the Institutional Debt
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(including, without limitation, as a result of any redemption), (c) a reduction
in any percentage of holders of the Institutional Debt required under the terms
of the Institutional Debt to take (or refrain from taking) any action under the
Institutional Debt, (d) a change in the definition of "Change of Control" or
"Change in Control" or similar event or circumstance, however defined or
designated, as provided in the Institutional Debt which would result in such
definition being more restrictive than such definition in this Agreement, (e) a
change in any of the subordination provisions of the Institutional Debt, (f) a
change in any covenant, term or provision in the Institutional Debt which would
result in such term or provision being more restrictive than the terms of this
Agreement and the other Loan Documents or (g) a change in any term or provision
of the Institutional Debt that could have, in any material respect, an adverse
effect on the interest of the Lenders.
Section 7.19 Foreign Subsidiaries. Notwithstanding anything in
this Agreement to the contrary, the Borrower shall not, and shall not permit
any Subsidiary to, create or acquire any Foreign Subsidiary on or after the
Agreement Date.
ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under any Loan Document
shall prove to have been incorrect or misleading in any material respect when
made;
(b) The Borrower shall fail to pay any (i) principal under any
Note when due; or (ii) interest under any Note or any fees payable hereunder or
any other costs, fees, expenses or other amounts payable hereunder or under any
other Loan Document within the earlier of (A) three Business Days after the
date due or (B) one Business Day after written notice thereof from the
Administrative Agent;
(c) The Borrower or any Subsidiary shall default in the
performance or observance of any agreement or covenant contained in Article 7
hereof;
(d) Any Obligor or any Foreign Subsidiary shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured within a period of thirty days after the earlier of
notice from the Administrative Agent thereof or actual notice thereof by a
Responsible Officer of any Obligor or such Foreign Subsidiary;
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(e) Any Obligor or any Foreign Subsidiary shall default in the
performance or observance of any agreement or covenant in any of the Loan
Documents (other than this Agreement) and such default shall not be cured
within a period of thirty days after the earlier of notice from the
Administrative Agent thereof or actual notice thereof by a Responsible Officer
of any Obligor or such Foreign Subsidiary;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of any Obligor or any Foreign Subsidiary (other
than any Foreign Subsidiary whose aggregate book value of assets does not
exceed $1,000,000), or a substantial part of the property or the assets of such
Obligor or such Foreign Subsidiary, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other applicable Federal, state
or foreign bankruptcy law or other similar law, (ii) the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of any Obligor or any such Foreign Subsidiary, or of any substantial
part of their respective properties, or (iii) the winding- up or liquidation of
the affairs of any Obligor or any such Foreign Subsidiary, and any such
proceeding or petition shall continue unstayed and in effect for a period of 60
consecutive days;
(g) Any Obligor or any Foreign Subsidiary shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal,
state or foreign bankruptcy law or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or
any Foreign Subsidiary or of substantially all of its properties, (iii) file an
answer admitting the material allegations filed against it in any such
proceeding, (iv) make a general assignment for the benefit of creditors, (v)
become unable, admit in writing its inability, or fail generally, to pay its
debts as they become due, or (vi) any Obligor or any Foreign Subsidiary shall
take any corporate action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against any Obligor or any Foreign Subsidiary for the payment of money which
exceeds $200,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Obligor or
any Foreign Subsidiary which, together with all other such property of the
Obligors and the Foreign Subsidiaries subject to other such process, exceeds in
value $200,000 in the aggregate, and if such judgment or award is not insured
or, within 45 days after the entry, issue or levy thereof, such judgment,
warrant or process shall not have been paid or discharged or stayed pending
appeal, or if, after the expiration of any such stay, such judgment, warrant or
process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other
party-in-interest or disqualified person (other than any Lender) shall engage
in transactions which in the aggregate would reasonably be expected to result
in a direct or indirect liability to the Borrower or any member of its
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<PAGE> 81
Controlled Group under Section 409 or 502 of ERISA or Section 4975 of the Code;
(ii) the Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, or
request a funding waiver from the Internal Revenue Service for contributions;
(iii) the Borrower or any member of its Controlled Group shall incur any
withdrawal liability as a result of a complete or partial withdrawal within the
meaning of Section 4203 or 4205 of ERISA, or any other liability with respect
to a Plan, unless the amount of such liability has been funded within the Plan
or pursuant to one or more insurance contracts; (iv) the Borrower or any member
of its Controlled Group shall fail to make a required contribution by the due
date under Section 412 of the Code or Section 302 of ERISA which would result
in the imposition of a lien under Section 412 of the Code or Section 302 of
ERISA; (v) the Borrower, any member of its Controlled Group or any Plan sponsor
shall notify the PBGC of an intent to terminate, or the PBGC shall institute
proceedings to terminate, or the PBGC shall institute proceedings to terminate,
any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall occur with
respect to a Plan subject to Title IV of ERISA, and within 15 days after the
reporting of such Reportable Event to the Administrative Agent, the
Administrative Agent shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of competent jurisdiction to administer any Plan or the assets thereof;
or (viii) any ERISA Event with respect to a Plan subject to Title IV of ERISA
shall have occurred, and 30 days thereafter (A) such ERISA Event, other than
such event described in clause (f) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
that the events listed in subsections (i) - (viii) above shall constitute
Events of Default only if the maximum aggregate liability which the Borrower or
any member of its Controlled Group has a reasonable likelihood of incurring
under the applicable provisions of ERISA resulting from an event or events (A)
could reasonably be expected to have a Material Adverse Effect or (B) if
capitalized as Indebtedness on the Financial Statements of the Borrower, would
result in an Event of Default under Section 7.11 hereof.
(j) Any Obligor or any Foreign Subsidiary shall fail to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any Indebtedness in excess
of $5,000,000 beyond any grace period provided with respect thereto, or any
other event or condition shall exist under any agreement or instrument under
which such Indebtedness is created or evidenced beyond any applicable grace
period, if the effect of such event or condition is to permit or cause the
holder of such Indebtedness (or a trustee on behalf of any such holder) to (i)
cause such Indebtedness to become due or prepaid prior to its date of maturity
or (ii) require the any Obligor or any Foreign Subsidiary to purchase, prepay
or redeem such Indebtedness;
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(k) Except as a result of transactions permitted by this
Agreement, any real property lease where the Borrower or any Subsidiary of the
Borrower is the lessee shall terminate or cease to be effective, and
termination or cessation thereof, together with all other real property leases,
if any, which have been terminated or cease to be effective, could reasonably
be expected to have a Material Adverse Effect; provided, however, that
termination or cessation of a real property lease shall not constitute an Event
of Default if another real property lease reasonably satisfactory to the
Administrative Agent is contemporaneously substituted therefor;
(l) Any provision of any Loan Document shall for any reason cease
to be valid and binding on or enforceable against any party to it (other than
the Administrative Agent, the Collateral Agent, or any Lender) in any material
respect other than in accordance with its terms or as the appropriate parties
under Section 11.11 hereof may otherwise agree in writing, and other than as a
result of an action or inaction by the Administrative Agent, the Collateral
Agent, any Lender or any representative thereof, or any such party (other than
the Administrative Agent, the Collateral Agent, or any Lender) shall so assert
in writing;
(m) Any Collateral Document shall for any reason cease to create a
valid and perfected first priority Lien (subject to the Intercreditor
Agreement) in any Collateral subject thereto, other than as (i) expressly
provided or permitted in such Collateral Document or in this Agreement, or (ii)
a result of an action or inaction by the Administrative Agent, the Collateral
Agent, any Lender or any representative thereof;
(n) A Change of Control shall occur;
(o) An Event of Default (as defined in the Term Credit Agreement)
shall occur; or
(p) Total assets owned by all Foreign Subsidiaries shall exceed 3%
of the aggregate amount of assets owned by the Borrower and its Subsidiaries.
Section 8.2 Remedies. If an Event of Default shall have occurred
and shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent may at its election (provided
that the Administrative Agent has not previously received notice to the
contrary from the Determining Lenders), and shall upon the direction of the
Determining Lenders, but subject to the Intercreditor Agreement, terminate the
Commitment and/or by written notice to the Borrower declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived, except
for notices expressly set forth in the Loan Documents.
(b) Upon the occurrence of an Event of Default specified in
Section 8.1(f) or (g) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith
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become due and payable and the Commitment shall forthwith terminate, all
without any action by the Administrative Agent, any Lender or any holders of
the Notes and without presentment, demand, protest or other notice of any kind,
all of which are expressly waived, anything in the Loan Documents to the
contrary notwithstanding.
(c) If any Letter of Credit shall be then outstanding, the
Administrative Agent may at its election, and shall upon the direction of the
Determining Lenders, make demand upon the Borrower to, and forthwith upon such
demand (but in the case of an Event of Default specified in Section 8.1(f) or
(g) hereof, without any demand or taking of any other action by the
Administrative Agent or any Lender), the Borrower shall, pay to the
Administrative Agent in same day funds at the office of the Administrative
Agent for deposit in the L/C Cash Collateral Account, an amount equal to the
maximum amount available to be drawn under the Letters of Credit then
outstanding.
(d) Subject to the Intercreditor Agreement, the Administrative
Agent and the Lenders may exercise all of the Rights granted to them under the
Loan Documents or under Applicable Law.
(e) The Rights of the Administrative Agent and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with
respect to any proposed LIBOR Advance for any Interest Period, (i) any Lender
determines that deposits in dollars (in the applicable amount) are not being
offered to that Lender in the relevant market for such Interest Period or (ii)
the Determining Lenders determine that the LIBOR Rate for such proposed LIBOR
Advance does not adequately and fairly reflect the cost to such Lender of
making and maintaining such proposed LIBOR Advance for such Interest Period,
such Lender or Determining Lenders, as the case may be, shall forthwith give
prompt notice thereof to the Borrower, whereupon until such Lender or
Determining Lenders, as the case may be, notify the Borrower that the
circumstances giving rise to such situation no longer exist, the obligation of
such Lender to make LIBOR Advances shall be suspended; provided, however, such
Lender or the Determining Lenders, as the case may be, shall promptly notify
the Borrower if the circumstances giving rise to such situation no longer
exist.
Section 9.2 Illegality. If after the Agreement Date any change
or phase-in of applicable law, rule or regulation, or adoption thereof, or any
change in any interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its LIBOR Lending
Office) with any request or directive (whether or not having the force of law)
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of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for such Lender (or its LIBOR Lending Office) to make,
maintain or fund its LIBOR Advances, such Lender shall promptly so notify the
Borrower and the Administrative Agent. Before giving any notice to the
Borrower pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the reasonable judgment
of the Lender, be disadvantageous to the Lender. Upon receipt of such notice,
notwithstanding anything contained in Article 2 hereof, the Borrower shall
repay in full the then outstanding principal amount of each LIBOR Advance owing
to the notifying Lender, together with accrued interest thereon and any
reimbursement required under Section 2.9 hereof, on either (a) the last day of
the Interest Period applicable to such Advance, if the Lender may lawfully
continue to maintain and fund such Advance to such day, or (b) immediately, if
the Lender may not lawfully continue to fund and maintain such Advance to such
day or if the Borrower so elects. Concurrently with repaying each affected
LIBOR Advance owing to such Lender if the Borrower does not terminate this
Agreement, notwithstanding anything contained in Article 2 hereof, the Borrower
may, without any requirement to satisfy the conditions precedent set forth in
Section 3.1, 3.2 or 3.3, borrow a Base Rate Advance from such Lender, and such
Lender shall make such Base Rate Advance, in an amount such that the
outstanding principal amount of the Advances owing to such Lender shall equal
the outstanding principal amount of the Advances owing immediately prior to
such repayment.
Section 9.3 Increased Costs.
(a) If after the Agreement Date any change, phase-in or adoption
of any law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or
compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office)
to any Tax (net of any tax benefit engendered thereby) with respect to
its LIBOR Advances or its obligation to make such Advances, or shall
change the basis of taxation of payments to a Lender (or to its LIBOR
Lending Office) of the principal of or interest on its LIBOR Advances
or in respect of any other amounts due under this Agreement, as the
case may be, or its obligation to make such Advances (except for
changes in (A) the rate of tax on the overall net income, net worth or
capital of the Lender and franchise taxes, doing business taxes or
minimum taxes imposed upon such Lender, (B) withholding taxes of any
Tribunal other than the United States of America or any state thereof
and (C) taxes referred to in clauses (ii), (iii) and (iv) of Section
2.13 hereof); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account
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of, or credit extended by, a Lender's LIBOR Lending Office or shall
impose on the Lender (or its LIBOR Lending Office) or on the London
interbank market any other condition affecting its LIBOR Advances or
its obligation to make such Advances (but excluding any reserves or
deposits that are included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum received or receivable by a Lender (or its LIBOR
Lending Office) with respect thereto, by an amount deemed by a Lender to be
material ("Increased Advance Costs"), then, within 30 days after demand by a
Lender, the Borrower agrees to pay to such Lender such additional amount as
will compensate such Lender for such Increased Advance Costs, subject to
Section 11.9 hereof; provided, however, that the Borrower shall not be required
to comply with this Section 9.3 to the extent the Borrower has complied with
Section 2.13 hereof with respect to Taxes described in Section 9.3(a)(i)
hereof. The affected Lender will as soon as practicable notify the Borrower of
any event of which it has knowledge, occurring after the date hereof, which
will entitle such Lender to compensation pursuant to this Section and will
designate a different LIBOR Lending Office or other lending office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable judgment of the affected Lender made in good
faith, be disadvantageous to such Lender. Notwithstanding the foregoing, any
Lender's demand for Increased Advance Costs shall not include any Increased
Advance Costs with respect to any period more than 180 days prior to the date
that such Lender gives notice to the Borrower of such Increased Advance Costs
unless the effective date of the condition which results in the right to
receive Increased Advance Costs is retroactive (the "Increased Advance Costs
Retroactive Effective Date"). If any Increased Advance Costs has an Increased
Advance Costs Retroactive Effective Date and any Lender demands compensation
within 180 days after the date setting the Increased Advance Costs Retroactive
Date Effective Date (the "Increased Advance Costs Set Date"), such Lender shall
have the right to receive such Increased Advance Costs from the Increased
Advance Retroactive Effective Date. If a Lender does not demand such Increased
Advance Costs within 180 days after the Increased Advance Costs Set Date, such
Lender may not receive payment of Increased Advance Costs with respect to any
period more than 180 days prior to such demand.
(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder
shall certify that such amounts or costs were actually incurred by such Lender
and shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be
controlling absent demonstrable error. In determining such amount, a Lender
may use any reasonable averaging and attribution methods. Nothing in this
Section 9.3 shall provide the Borrower or any of its Subsidiaries the right to
inspect the records, files or books of any Lender. If a Lender demands
compensation under this Section, the Borrower may at any time, upon at least
five Business Days' prior notice to the Lender, after reimbursement to the
Lender by the Borrower in accordance with this Section of all costs incurred,
prepay in full the then outstanding LIBOR Advances of the Lender, together with
accrued interest thereon to the date of prepayment, along with any
reimbursement required under Section 2.9 hereof. Concurrently
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with prepaying such LIBOR Advances, the Borrower may, without any requirement
to satisfy the conditions precedent set forth in Section 3.1, 3.2 or 3.3,
borrow a Base Rate Advance from the Lender, and the Lender shall make such Base
Rate Advance, in an amount such that the outstanding principal amount of the
Advances owing to such Lender shall equal the outstanding principal amount of
the Advances owing immediately prior to such prepayment.
Section 9.4 Effect On Base Rate Advances. If notice has been
given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a
Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be
repaid or prepaid, then, unless and until the Lender notifies the Borrower that
the circumstances giving rise to such repayment no longer apply, all Advances
which would otherwise be made by such Lender as LIBOR Advances shall be made
instead as Base Rate Advances.
Section 9.5 Capital Adequacy. If (a) the phase-in or the
introduction of or any change in or in the interpretation of any law, rule or
regulation after the Agreement Date or (b) compliance by a Lender with any Law
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) adopted, promulgated or
phased-in after the Agreement Date (any of such events in clauses (a) and (b)
herein being referred to as a "Regulatory Modification") affects or would
affect the amount of capital required or expected to be maintained by a Lender
or any corporation controlling such Lender, and such Lender determines that the
amount of such capital is increased by or based upon the existence of such
Lender's commitment or Advances hereunder and other commitments or advances of
such Lender of this type, then, within 20 days after demand by such Lender,
subject to Section 11.9, the Borrower shall immediately pay to such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender with respect to such circumstances (collectively,
"Additional Costs"), to the extent that such Lender reasonably determines in
good faith such increase in capital to be allocable to the existence of such
Lender's commitments hereunder to the extent not compensated for in the Base
Rate Basis or in the LIBOR Rate Basis or in amounts paid by the Borrower
pursuant to Section 9.3 hereof. Notwithstanding the foregoing, any Lender's
demand for Additional Costs shall not include any Additional Costs with respect
to any period more than 180 days prior to the date that such Lender gives
notice to the Borrower of such Additional Costs unless the effective date of
the Regulatory Modification which results in the right to receive Additional
Costs is retroactive (the "Regulatory Modification Retroactive Effective
Date"). If any Regulatory Modification has a Regulatory Modification
Retroactive Effective Date and any Lender demands compensation within 180 days
after the date setting the Regulatory Modification Retroactive Effective Date
(the "Regulatory Modification Set Date"), such Lender shall have the right to
receive such Additional Costs from the Regulatory Modification Retroactive
Effective Date. If a Lender does not demand such Additional Costs within 180
days after the Regulatory Modification Set Date, such Lender may not receive
payment of Additional Costs with respect to any period more than 180 days prior
to such demand. A certificate as to such amounts submitted to the Borrower by
a Lender hereunder shall, in the absence of demonstrable error, be controlling
and binding for all purposes. A certificate as to any additional amounts
payable to any Lender under this Section 9.5 submitted to the Borrower by such
Lender shall certify that such amounts were
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actually incurred by such Lender or corporation controlling such Lender and
shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be
controlling absent demonstrable error. In determining such amount, such Lender
or a corporation controlling such Lender may use any reasonable averaging and
attribution methods. Notwithstanding the foregoing, nothing in this Section
9.5 shall provide the Borrower or any Subsidiary of the Borrower the right to
inspect the records, files or books of any Lender or any corporation
controlling such Lender.
Section 9.6 Replacement Lender. If the Borrower becomes
obligated to pay additional amounts to any Lender described in Section 9.2, 9.3
or 9.5, the Borrower may (a) reduce the Commitment in the full amount of such
Lender's Specified Percentage of the Commitment and repay such Lender in full
(including all amounts owed to such Lender under Section 9.2, 9.3 or 9.5
hereof) or (b) designate a financial institution reasonably acceptable to the
Administrative Agent to replace such Lender by purchasing for cash and
receiving an assignment of such Lender's pro rata share of such Lender's
obligations under the Loan Documents and the Rights of such Lender under the
Loan Documents without recourse to or warranty by, or expense to, such Lender,
for a purchase price equal to the outstanding amounts owing to such Lender
(including such additional amounts owing to such Lender pursuant to Section 9.3
or 9.5). Upon execution of an Assignment Agreement, such other financial
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof. If any Lender is acquired by or merges
with any other Person (including any other Lender) and (i) such Lender is not
the surviving Person and (ii) there exists no Default or Event of Default
hereunder, the Borrower may replace such Lender in whole with another Eligible
Assignee reasonably acceptable to the Administrative Agent pursuant to an
Assignment Agreement within thirty days following the date of consummation of
any such acquisition or merger. If the Commitment is reduced by the Borrower
pursuant to Section 9.6(a), the Borrower and the Lenders agree that the
Specified Percentage of each Lender will be automatically adjusted.
Section 9.7 Replacement by the Borrower of a Lender.
(a) Acquired Lender. If any lender is acquired by or merges with
any other Person (including any other Lender) and (i) such lender is not the
surviving Person, and (ii) there exists no Default or Event of Default
hereunder, the Borrower may replace such Lender in whole with another Eligible
Assignee reasonably acceptable to the Administrative Agent pursuant to an
Assignment Agreement within thirty days following the date of consummation of
any such acquisition or merger.
(b) Certain Circumstances. If (i) there exists no Default or
Event of Default on any such date and no Default or Event of Default shall be
caused by the action permitted below and (ii) any Lender refuses to consent to
any amendment, waiver or consent to any provision hereof or in any Loan
Documents in accordance with the terms of Section 11.11 hereof (other than an
amendment to increase the Commitment of such Lender), but to which each other
Lender has previously agreed, then, the Borrower may, within 90 days after the
date of such consent,
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amendment or waiver, replace such Lender in whole with another Eligible
Assignee, pursuant to an Assignment Agreement.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Agent shall have received such requests, the Administrative Agent may take such
administrative action, or refrain from taking such administrative action, as it
may deem advisable and in the best interests of the Lenders, and (ii) the
Administrative Agent shall not be required to take any action that exposes the
Administrative Agent to personal liability or that is contrary to any Loan
Document or Applicable Law; to arrange the means whereby the proceeds of the
Advances of the Lenders are to be made available to the Borrower; to distribute
promptly to each Lender information, requests and documents received from the
Borrower, and each payment (in like funds received) with respect to any of such
Lender's Advances, or the ratable amount of fees or other amounts; and to
deliver to the Borrower requests, demands, approvals and consents received from
the Lenders. The Administrative Agent agrees to promptly distribute to each
Lender, at such Lender's address set forth below information, requests,
documents and payments received from the Borrower. The Administrative Agent
shall have no trustee or other fiduciary relationship in respect of any Lender
by reason of this Agreement or any other Loan Document. The Administrative
Agent shall have no duties or responsibilities except those expressly set forth
in this Agreement. The duties of the Administrative Agent are mechanical and
administrative in nature.
(b) Replacement of Administrative Agent. Should the
Administrative Agent or any successor Administrative Agent ever cease to be a
Lender hereunder, or should the Administrative Agent or any successor
Administrative Agent ever resign as Administrative Agent, or should the
Administrative Agent or any successor Administrative Agent ever be removed with
cause or without cause by the action of the Determining Lenders (other than the
Administrative Agent), then the Lender appointed by the other Lenders (provided
that no Event of Default shall have occurred and be continuing, with the
consent of the Borrower, which consent shall not be unreasonably withheld)
shall forthwith become the Administrative Agent, and the Borrower and the
Lenders shall execute such documents as any Lender may reasonably request to
reflect such change at no cost to the Borrower. If the Administrative Agent
also then serves in the capacity of the Swing Line Bank or the Issuing Bank,
such resignation or removal shall constitute resignation or removal of the
Swing Line Bank and the Issuing Bank and the
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successor Administrative Agent shall serve in the capacity of the Swing Line
Bank and the Issuing Bank. Any resignation or removal of the Administrative
Agent or any successor Administrative Agent shall become effective upon the
appointment by the Lenders of a successor Administrative Agent from among the
other Lenders; provided, however, if no successor Administrative Agent shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Administrative Agent's giving of notice of resignation or
the Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders and, provided that no Event
of Default shall have occurred and be continuing, with the consent of the
Borrower, which consent shall not be unreasonably withheld, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the Laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents, provided that if the retiring
or removed Administrative Agent is unable to appoint a successor Administrative
Agent, the Administrative Agent shall, after the expiration of a 60 day period
from the date of notice, be relieved of all obligations as Administrative Agent
hereunder. Notwithstanding any Administrative Agent's resignation or removal
hereunder, the provisions of this Article shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on
its Specified Percentage, of any reasonable expenses paid by the Administrative
Agent directly and solely in connection with any of the Loan Documents (other
than expenses for which the Administrative Agent has received compensation in
the form of the fees set forth in the Administrative Agent Fee Letter) if the
Administrative Agent does not receive reimbursement therefor from other sources
within 60 days after the date incurred. Any amount so paid by the Lenders to
the Administrative Agent shall be returned by the Administrative Agent pro rata
to each paying Lender to the extent later paid by the Borrower or any other
Person on the Borrower's behalf to the Administrative Agent.
(d) Delegation of Duties. The Administrative Agent may execute
any of its duties hereunder by or through officers, directors, employees,
attorneys or agents, and shall be entitled to (and shall be protected in
relying upon) advice of counsel concerning all matters pertaining to its duties
hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent
and its officers, directors, employees, attorneys and agents shall be entitled
to rely and shall be fully protected in relying on any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or
teletype message, statement, order, or other document or conversation
reasonably believed by it or them in good faith to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of
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counsel selected by the Administrative Agent. The Administrative Agent may, in
its reasonable judgment, deem and treat the payee of any Note as the owner
thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or willful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent
shall not be compelled to do any act hereunder or to take any action towards
the execution or enforcement of the powers hereby created or to prosecute or
defend any suit in respect hereof, unless indemnified to its reasonable
satisfaction against loss, cost, liability and expense. The Administrative
Agent shall not be responsible in any manner to any Lender for the
effectiveness, enforceability, genuineness, validity or due execution of any of
the Loan Documents, or for any representation, warranty, document, certificate,
report or statement made herein or furnished in connection with any Loan
Documents, or be under any obligation to any Lender to ascertain or to inquire
as to the performance or observation of any of the terms, covenants or
conditions of any Loan Documents on the part of the Borrower or any other
Obligor. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA
ACCORDING TO ITS SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, REASONABLE EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE
ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN ANY WAY WITH RESPECT TO ANY LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THE
LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE AGENT),
EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY THE
ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN THIS SECTION 10.1(f) SHALL
SURVIVE TERMINATION OF THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder,
the Advances made by it and the Notes issued to it, the Administrative Agent
shall have the same rights as a Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent or any Lender may accept
deposits
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from, act as trustee under indentures of, and generally engage in any kind of
business with, the Borrower and any of its Affiliates, and any Person who may
do business with or own securities of the Borrower or any of its Affiliates,
all as if the Administrative Agent were not the Administrative Agent hereunder
and without any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based upon the financial statements referred to in
Sections 4.1(j), 6.1, and 6.2 hereof, and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents. Each
Lender also acknowledges that its decision to fund the initial Advances shall
constitute evidence to the Administrative Agent that such Lender has deemed all
of the conditions set forth in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders and, with
respect to Section 10.1(b), the Borrower; consequently, no such other Person
shall be entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of the Administrative Agent or any Lender to comply
with such provisions.
ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement
shall be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answerback received), or three days
after deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one day after being entrusted to a reputable
commercial overnight delivery service, addressed to the party to which such
notice is directed at its address determined as provided in this Section. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
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(i) If to the Borrower, at:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Chief Financial Officer
Telephone: (214) 333-3225
Telecopier: (214) 330-6016
(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
901 Main Street, 13th Floor
Dallas, Texas 75202-3714
Attn: Marie T. Lancaster
Telephone: (214) 508-2158
Telecopier: (214) 508-2515
(iii) If to a Lender, at its address shown below its name
on the signature pages hereof, or if applicable, set
forth in its Assignment Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, of the Administrative Agent in connection with the
transactions contemplated in this Agreement and the other Loan Documents and
the preparation, negotiation, execution and delivery of any waiver, amendment
or consent by the Administrative Agent relating to this Agreement or the other
Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys'
fees of the Administrative Agent and each Lender incurred for enforcement,
collection, restructuring, refinancing and "work-out", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall
include without limitation reasonable fees and expenses of consultants, counsel
for the Administrative Agent and any Lender.
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Section 11.3 Waivers. The rights and remedies of the Lenders
under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Administrative Agent or any Lender in exercising any
right shall operate as a waiver of such right. The Lenders expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any funding of a request for an Advance. In the event that any
Lender decides to fund an Advance at a time when the Borrower is not in strict
compliance with the terms of this Agreement, such decision by such Lender shall
not be deemed to constitute an undertaking by the Lender to fund any further
requests for Advances or preclude the Lenders from exercising any rights
available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the Lenders shall not constitute a modification of this
Agreement, except to the extent expressly provided in such waiver or
indulgence, or constitute a course of dealing by the Lenders at variance with
the terms of the Agreement such as to require further notice by the Lenders of
the Lenders' intent to require strict adherence to the terms of the Agreement
in the future. Any such actions shall not in any way affect the ability of the
Administrative Agent or the Lenders, in their discretion, to exercise any
rights available to them under this Agreement or under any other agreement,
whether or not the Administrative Agent or any of the Lenders are a party
thereto, relating to the Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding.
Any mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall be controlling,
absent demonstrable error.
Section 11.5 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and during the continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee of any Note,
subject to the Intercreditor Agreement, is hereby authorized by the Borrower at
any time or from time to time, without notice to the Borrower or any other
Person, any such notice being hereby expressly waived, to set-off, appropriate
and apply any deposits (general or special (except trust and escrow accounts),
time or demand, including without limitation Indebtedness evidenced by
certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or holder to or for
the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by Section 8.2 hereof (but after each set-off such Lender
shall promptly notify the Administrative Agent and the Borrower). Any sums
obtained by any Lender or by any assignee or subsequent holder of any Note
shall, subject to the Intercreditor Agreement, be subject to pro rata
treatment of all Obligations and other liabilities hereunder in accordance with
each Specified Percentage.
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Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation
in its interest in this Agreement, its Notes or its Advances, except as
hereinafter set forth.
(c) Each Lender may sell participations to one or more banks or
other entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances or Reimbursement Obligations owing to it and the Note
or Notes held by it) (the "Participations"); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation, its
Specified Percentage of the Commitment) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder of
any such Note for all purposes of this Agreement, (iv) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (v) no Participant under any such
Participation shall have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by the Borrower
therefrom, except to the extent that such amendment, waiver or consent would
(A) reduce or postpone any date fixed for payment of principal of, or interest
on, the Notes or any fees or other amounts payable hereunder (B) increase the
commitment of any Participant or (C) release any Collateral or security for the
Obligations, except pursuant to the Loan Documents, in each case to the extent
subject to such Participation, and (vi) no Participation shall be in an amount
less than $5,000,000. The Lenders may, subject to Section 11.14 hereof,
provide copies of all financial information received from the Borrower to such
Participants.
(d) Each Lender may assign to one or more Eligible Assignees its
rights and obligations under this Agreement and the other Loan Documents;
provided, however, that (i) each such assignment shall be subject to the prior
written consent of the Administrative Agent and Borrower, which consents shall
not be unreasonably withheld (provided, however, notwithstanding anything
herein to the contrary, no consent of the (A) Borrower is required for any
assignment (x) during any time that an Event of Default has occurred and is
continuing, (y) to an Affiliate of a Lender and (z) to another Lender hereunder
and (B) Administrative Agent is required for any assignment (y) to an Affiliate
of a Lender and (z) to another Lender hereunder), (ii) no such assignment
(including any simultaneous assignment pursuant to the Term Credit Agreement)
shall be in an amount less than $5,000,000, unless the commitment (including
any commitment under the Amended and Restated Credit Agreement) of a Lender is
less than $5,000,000, in which case such assignment may be in the aggregate
amount of such Lender's Specified Percentage of the Commitment, (iii) the
applicable Lender, Administrative Agent, the Borrower and Eligible Assignee
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance Agreement (an "Assignment Agreement") in substantially the form of
Exhibit E hereto, together with the Notes subject to such assignment and (iv)
the Eligible
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<PAGE> 95
Assignee executing the Assignment, shall deliver to the Administrative Agent a
processing fee of $3,500 (less any processing fee paid in respect of a
simultaneous assignment under the Term Credit Agreement). Upon such execution,
delivery and acceptance from and after the effective date specified in each
Assignment, which effective date shall be at least three Business Days after
the execution thereof and the recordation of the information therein in the
Register pursuant to Section 11.6(j) hereof, (A) the Eligible Assignee
thereunder shall be party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment, have the rights
and obligations of a Lender hereunder and (B) the applicable Lender shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such assignment, relinquish such rights and be released from such
obligations under this Agreement; provided, however, the indemnity provided
such Lender in Section 5.9 hereof shall survive such assignment.
(e) Notwithstanding anything in clause (d) above to the contrary,
(i) any Lender may assign and pledge all or any portion of its Advances and
Notes to any Federal Reserve Bank as collateral security pursuant to Regulation
A of F.R.S. Board and any Operating Circular issued by such Federal Reserve
Bank and (ii) any Lender that is a fund may at any time assign or pledge all or
any portion of its rights under this Agreement to secure such Lender's
indebtedness; provided, however, that no such assignment under this clause (e)
shall release the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a
Lender and an Eligible Assignee, and any Note or Notes subject to such
assignment, the Borrower shall, subject to the Borrower's rights under Section
11.6(d), within five Business Days after its receipt of such Assignment
Agreement execute and deliver to the Administrative Agent in exchange for the
surrendered Notes new Notes to the order of such Eligible Assignee in an amount
equal to the portion of the Advances and the Specified Percentage of the
Commitment assigned to it pursuant to such Assignment Agreement and new Notes
to the order of the assignor Lender in an amount equal to the portion of the
Advances and the Specified Percentage of the Commitment retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment Agreement and shall otherwise be in
substantially the form of Exhibit A hereto.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the Eligible Assignee or Participant or proposed Eligible
Assignee or participant, any information relating to the Borrower furnished to
such Lender by or on behalf of the Borrower, provided such Person agrees in
writing to handle such information in accordance with the standards set forth
in Section 11.14 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted
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<PAGE> 96
hereunder and thereunder any benefit or any legal or equitable right, remedy or
other claim under this Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Eligible Assignee or Participant (nor the assigning or participating Lender)
shall be entitled to receive (whether individually or collectively) any greater
payment under Section 2.14 or Section 9.3 or Section 9.5 than such assigning or
participating Lender or any other Lender would have been entitled to receive
with respect to the interest assigned or participated to such Eligible Assignee
or Participant.
(j) The Administrative Agent shall maintain at its address
referred to in Section 11.1 a copy of each Assignment Agreement delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders, any U.S. taxpayer identification number,
the Specified Percentages of the Lenders (the "Ownership Information"), whether
such Lender is an original Lender or the assignee of another Lender pursuant to
an Assignment Agreement and the effective date and the amount of each
Assignment Agreement delivered to and accepted by it and the parties thereto.
Any transfer of an ownership interest in any Advance, including any right to
principal or interest payable with respect to such Advance, shall be subject to
and conditioned upon the due recordation of such transfer and the Ownership
Information with respect to the transferee in the Register and such transfer
shall be effective only upon such recordation (and not prior thereto), which
recordation the Administrative Agent agrees to make. The entries in the
Register shall be controlling and binding for all purposes, absent demonstrable
error, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for
all purposes hereof. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Severability. Any provision of this Agreement or any
other Loan Document which is for any reason prohibited or found or held invalid
or unenforceable by any court or governmental agency shall be ineffective to
the extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to charge, receive, collect or
apply, as interest on the Obligations, any amount in excess of the Highest
Lawful Rate. If any Lender or participant ever receives, collects or applies,
as interest, any such excess, such amount which would be excessive interest
shall be deemed a partial
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<PAGE> 97
repayment of principal and treated hereunder as such; and if principal is paid
in full, any remaining excess shall be paid to the Borrower. In determining
whether or not the interest paid or payable, under any specific contingency,
exceeds the Highest Lawful Rate, the Borrower and the Lenders shall, to the
maximum extent permitted under Applicable Law, (a) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effect thereof, and (c) amortize,
prorate, allocate and spread in equal parts, the total amount of interest
throughout the entire contemplated term of the Obligations so that the interest
rate is uniform throughout the entire term of the Obligations; provided,
however, that if the Obligations are paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Highest Lawful Rate, the Lenders
shall refund to the Borrower the amount of such excess or credit the amount of
such excess against the total principal amount of the Obligations owing, and,
in such event, the Lenders shall not be subject to any penalties provided by
any laws for contracting for, charging or receiving interest in excess of the
Highest Lawful Rate. This Section shall control every other provision of all
agreements pertaining to the transactions contemplated by or contained in the
Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. Subject to the Intercreditor
Agreement, the provisions of this Agreement may not be amended, modified or
waived except by the written agreement of the Borrower and the Determining
Lenders; provided, however, that no such amendment, modification or waiver
shall be made (a) without the consent of all Lenders, if it would (i) increase
the amount of the Commitment, (ii) change the Specified Percentage or
commitment of any Lender, or (iii) extend or postpone the date of maturity of,
extend the due date for any payment of principal or interest on, reduce the
amount of any installment of principal or interest on, or reduce the rate of
interest on, any Advance, the Reimbursement Obligations or other amount owing
under any Loan Documents to which such Lender is entitled or (iv) release any
guaranty of the Obligations or all or substantially all of the Collateral
(except, in any case, pursuant to this Agreement or the other Loan Documents),
or (v) reduce the fees payable hereunder to which such Lender is entitled, or
(vi) revise this Section 11.11, or (vii) waive or extend the date for payment
or prepayment of any principal, interest or fees hereunder or (vii) amend the
definition of "Determining Lenders" or "Specified Percentage", (b) without the
consent of the Administrative Agent, if it, would alter the rights, duties or
obligations of the Administrative Agent; (c) without the consent of the Issuing
Bank, if it would alter the rights, duties or obligations of the Issuing Bank;
or (d) without the consent of the Swing Line Bank, if it would alter the
rights, duties or obligations of the Swing Line Bank. Neither this Agreement
nor any term hereof may be amended orally, nor may any provision hereof be
waived orally but only by an instrument in writing signed by the Administrative
Agent and, in the case of an amendment, by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
of its Subsidiaries shall be deemed to be permitted to take any action or fail
to take any action which is permitted
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<PAGE> 98
as an exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
Section 11.13 No Liability of Issuing Bank. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. Neither the
Issuing Bank nor any Lender nor any of their respective officers or directors
shall be liable or responsible for: (a) the use that may be made of any Letter
of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents should prove
to be in any or all respects invalid, insufficient, fraudulent or forged; (c)
payment by the Issuing Bank against presentation of documents that do not
comply with the terms of a Letter of Credit, including failure of any documents
to bear any reference or adequate reference to the Letter of Credit; or (d) any
other circumstances whatsoever in making or failing to make payment under any
Letter of Credit, except that the Borrower shall have a claim against the
Issuing Bank, and the Issuing Bank shall be liable to the Borrower, to the
extent of any direct, but not consequential, damages suffered by the Borrower
that a court of competent jurisdiction finally judicially determines were
caused by (i) the Issuing Bank's willful misconduct or gross negligence or (ii)
the Issuing Bank's willful failure to make lawful payment under a Letter of
Credit after the presentation to it of a draft and certificates strictly
complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, the Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
Section 11.14 Confidentiality. Each Lender and the Administrative
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers, employees and representatives) to use reasonable efforts to keep
confidential, in accordance with customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking or
investment practices, any non-public information supplied to it by the Borrower
or any of its Affiliates pursuant to this Agreement, provided that nothing
herein shall limit the disclosure of any such information (a) to the extent
required by statute, rule, regulation or judicial process, (b) to counsel for
any Lender or the Administrative Agent, (c) to bank or other examiners,
regulatory bodies, auditors or accountants of any Lender, (d) to the
Administrative Agent or any other Lender or any Affiliate thereof, (e) in
connection with any Litigation relating to the transactions contemplated by the
Loan Documents to which any one or more of Lenders is a party, (f) to the
extent necessary in connection with the exercise of any Right under this
Agreement or any other Loan Document, or (g) to any Eligible Assignee or
Participant (or prospective Eligible Assignee or Participant) or to any direct
or indirect contractual counterparties in swap agreements or to the
professional advisors of such swap counterparties so long as such Eligible
Assignee or Participant (or prospective Eligible Assignee or Participant) or
direct or indirect contractual counterparties in swap agreements or such swap
counterparties' professional advisors agrees to handle such information in
accordance with the provisions of this Section 11.14.
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<PAGE> 99
Section 11.15 Amendment, Restatement, Extension, Renewal and
Increase. This Agreement is a renewal, extension, amendment, increase and
restatement of the Existing Credit Agreement, and is not (i) a novation of the
"Obligations" (as defined in the Existing Credit Agreement) or (ii) a
satisfaction and discharge of such Obligations replaced by a new credit
facility. All terms and provisions of this Agreement supersede in their
entirety the Existing Credit Agreement. All Liens covering the Collateral, or
any part thereof, executed in connection with the Existing Credit Agreement
shall remain valid, binding and enforceable Liens against the Persons which
granted such Liens.
SECTION 11.16 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE
UNITED STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS COUNTY,
TEXAS, AND THE BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER
PARTY EVER LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN
DOCUMENTS, JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT
EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AGREES THAT THE STATE AND
FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER
PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS PROPERTY TO THE JURISDICTION OF
ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING OR JUDGMENT
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 11.17 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE
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<PAGE> 100
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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<PAGE> 101
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date first
set forth above.
BORROWER: PILLOWTEX CORPORATION
By: /s/ J. MARK KIRKPATRICK
----------------------------------
J. Mark Kirkpatrick
Vice President & Treasurer
<PAGE> 102
ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A., as
Administrative Agent
By: /s/ SUZANNE B. SMITH
----------------------------------
Suzanne B. Smith
Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A., as a
Lender, Swing Line Bank and Issuing Bank
By: /s/ SUZANNE B. SMITH
----------------------------------
Suzanne B. Smith
Vice President
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Suzanne B. Smith
<PAGE> 103
BANK OF AMERICA NT&SA
By: /s/ JAMES E. FLORCZAK
----------------------------------
Name: JAMES E. FLORCZAK
--------------------------------
Title: MANAGING DIRECTOR
-------------------------------
231 South LaSalle Street, 9Q
Chicago, Illinois 60697
Attn:
-----------------------------
<PAGE> 104
THE BANK OF NOVA SCOTIA
ATLANTA AGENCY
By: /s/ F.C.H. ASHBY
-------------------------------------
Name: F.C.H. ASHBY
--------------------------------
Title: SENIOR MANAGER LOAN OPERATIONS
-------------------------------
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attn: F.C.H. Ashby
<PAGE> 105
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ JENNY GILPIN
----------------------------------
Jenny Gilpin
Vice President
One First National Plaza, Suite 0324
Chicago, Illinois 60670
Attn: Jenny Gilpin
<PAGE> 106
COMERICA BANK
By: /s/ KIM A. UHLEMANN
----------------------------------
Name: KIM A. UHLEMANN
-----------------------------
Title: VICE PRESIDENT
----------------------------
4100 Spring Valley Road, Suite 900
Dallas, Texas 75244
Attn: Kim A. Uhlemann
<PAGE> 107
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROBERT IVOSEVICH
----------------------------------
Name: ROBERT IVOSEVICH
-----------------------------
Title: SENIOR VICE PRESIDENT
----------------------------
2200 Ross Avenue, Suite 4400W
Dallas, Texas 75201
Attn: Robert Smith
<PAGE> 108
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By: /s/ MARY HO HOCH
----------------------------------
Name: MARY JO HOCH
-----------------------------
Title: VICE PRESIDENT
----------------------------
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Mary Jo Hoch
<PAGE> 109
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ CHRIS W. HOLDER
----------------------------------
Name: CHRIS W. HOLDER
-----------------------------
Title: VICE PRESIDENT
----------------------------
2001 Ross Avenue, LB 118
Dallas, Texas 75201
Attn: John Mearns
<PAGE> 110
BANK ONE, TEXAS, N.A.
By: /s/ SCOTT RHEA
----------------------------------
Name: SCOTT RHEA
-----------------------------
Title: VICE PRESIDENT
----------------------------
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: Scott Rhea
<PAGE> 111
BANKBOSTON, N.A.
By: /s/ RANDALL A. PARRISH
----------------------------------
Name: RANDALL A. PARRISH
-----------------------------
Title: VICE PRESIDENT
----------------------------
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Randall Parrish
<PAGE> 112
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ JOHN SYKES /s/ THOMAS J. SCIFO
---------------------------------------
Name: JOHN SYKES THOMAS J. SCIFO
----------------------------------
Title: AVP AVP
---------------------------------
590 Madison Avenue
New York, New York 10022-2540
Attn: Thomas J. Scifo
<PAGE> 113
FIRST UNION NATIONAL BANK
By: /s/ EDWARD H. ROSS
----------------------------------
Name: EDWARD H. ROSS
-----------------------------
Title: VICE PRESIDENT
----------------------------
301 South College Street, 5th Floor
Charlotte, North Carolina 28288-0745
Attn: Brent Cummings
<PAGE> 114
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ROGER M. BURNS
----------------------------------
Name: ROGER M. BURNS
-----------------------------
Title: DULY AUTHORIZED SIGNATORY
----------------------------
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attn: Roger Burns
<PAGE> 115
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ W. PIETER C. KODDE
----------------------------------
Name: W. PIETER C. KODDE
-----------------------------
Title: VICE PRESIDENT
----------------------------
By: /s/ DANA W. HEMENWAY
----------------------------------
Name: DANA W. HEMENWAY
-----------------------------
Title: VICE PRESIDENT
----------------------------
245 Park Avenue
New York, New York 10167
Attn: Corporate Services Department
with a copy to:
Rabobank Nederland
One Galleria Tower
13355 Noel Road, Lock Box 69
Dallas, Texas 75240
Attn: David Streeter
<PAGE> 116
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ DAVID C. OLDANI
----------------------------------
Name: DAVID C. OLDANI
-----------------------------
Title: ASSISTANT TREASURER
----------------------------
By: /s/ CHRISTOPHER J. SPELTZ
----------------------------------
Name: CHRISTOPHER J. SPELTZ
-----------------------------
Title: V.P. AND MANAGER
----------------------------
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attn: Dave Oldani
<PAGE> 117
THE BANK OF NEW YORK
By: /s/ RONALD R. REEDY
----------------------------------
Name: RONALD R. REEDY
-----------------------------
Title: VICE PRESIDENT
----------------------------
One Wall Street, 22nd Floor
New York, New York 10286
Attn: Ronald R. Reedy
<PAGE> 118
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By: /s/ MARCUS EDWARD
----------------------------------
Name: MARCUS EDWARD
-----------------------------
Title: VICE PRESIDENT
----------------------------
By: /s/ SEAN MOUNIER
----------------------------------
Name: SEAN MOUNIER
-----------------------------
Title: FIRST VICE PRESIDENT
----------------------------
520 Madison Avenue, 37th Floor
New York, New York 10022
Attn: Anthony Rock
<PAGE> 119
CREDITANSTALT BANKVEREIN
By: /s/ ROBERT M. BIRINGER
----------------------------------
Name: ROBERT M. BIRINGER
-----------------------------
Title: EXECUTIVE V.P.
----------------------------
By: /s/ JOHN G. TAYLOR
----------------------------------
Name: JOHN G. TAYLOR
-----------------------------
Title: SENIOR ASSOCIATE
----------------------------
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attn: John Taylor
<PAGE> 120
FLEET BANK, N.A.
By: /s/ DAVID R. DUBINSKY
----------------------------------
David R. Dubinsky
Senior Vice President
1185 Avenue of the Americas, 2nd Floor
New York, New York 10036-6710
Attn: David R. Dubinsky
<PAGE> 121
THE FUJI BANK, LTD. - HOUSTON AGENCY
By: /s/ PHILIP C. LAUINGER III
----------------------------------
Name: PHILIP C. LAUINGER III
-----------------------------
Title: VICE PRESIDENT & MANAGER
----------------------------
1221 McKinney, Suite 4100
Houston, Texas 77010
Attn: Jay Fort
<PAGE> 122
NATIONAL BANK OF CANADA
By: /s/ LARRY L. SEARS
----------------------------------
Name: LARRY L. SEARS
-----------------------------
Title: GROUP VICE PRESIDENT
----------------------------
By: /s/ JOHN T. DIXON
----------------------------------
Name: JOHN T. DIXON
-----------------------------
Title: VICE PRESIDENT
----------------------------
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attn: William Handley
<PAGE> 123
NATIONAL CITY BANK OF KENTUCKY
By: /s/ DON R. PULLEN
----------------------------------
Don R. Pullen
Vice President
101 South Fifth Street
Southern Banking
Louisville, Kentucky 40202
Attn: Don R. Pullen
<PAGE> 124
EXHIBIT A
REVOLVING CREDIT NOTE
Dallas, Texas $___________ December 19, 1997
PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), for value
received, promises to pay to the order of __________________________________
("Lender") or its registered assigns, at the principal office of NationsBank of
Texas, N.A., in lawful money of the United States of America, the principal sum
of _________________________________________________________ ($_____________),
or such lesser sum as shall be due and payable from time to time hereunder, as
hereinafter provided. All capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Revolving
Credit Advances under this Revolving Credit Note (this "Note") from time to
time outstanding shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Revolving Credit
Advances under an Amended and Restated Credit Agreement, dated as of December
19, 1997, among the Borrower, NationsBank of Texas, N.A., as Administrative
Agent, and the lenders parties thereto (as amended, restated, supplemented,
renewed, extended or otherwise modified from time to time, "Credit Agreement"),
to which reference is made for a statement of the rights and obligations of the
Lender and the duties and obligations of the Borrower in relation thereto; but
neither this reference to the Credit Agreement nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the Borrower to
pay the principal sum of and interest on this Note when due.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF AMERICA. THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE
AND THE OTHER LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR
<PAGE> 125
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
PILLOWTEX CORPORATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
- 2 -
<PAGE> 126
EXHIBIT B
================================================================================
SECURITY AGREEMENT
Between
-----------------------------------
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
as Collateral Agent
December 19, 1997
================================================================================
<PAGE> 127
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE 1
Grant
-----
Section 1.1 Assignment and Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------------------------
Section 1.2 Description of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
Section 1.3 Debtor Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
Section 1.4 Delivery of Security and Instrument Collateral . . . . . . . . . . . . . . . . . . . . . . 6
----------------------------------------------
ARTICLE 2
Representations and Warranties
------------------------------
Section 2.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------------------
ARTICLE 3
Covenants
---------
Section 3.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
Section 3.2 Equipment, Fixtures and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------------
Section 3.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------
Section 3.4 Place of Perfection; Records; Collection of Receivables, Chattel
-----------------------------------------------------------------
Paper and Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------
Section 3.5 Transfers and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------
Section 3.6 Rights to Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------
Section 3.7 Right of the Collateral Agent to Notify Issuers . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------------------------
Section 3.8 The Collateral Agent Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------------------------
ARTICLE 4
Rights and Powers of the Collateral Agent
-----------------------------------------
Section 4.1 The Collateral Agent May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------------
Section 4.2 The Collateral Agent's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------------
Section 4.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------
Section 4.4 Further Approvals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------------
SECTION 4.5 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------
</TABLE>
<PAGE> 128
<TABLE>
<S> <C> <C>
ARTICLE 5
Miscellaneous
-------------
Section 5.1 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------
Section 5.2 Modifications; Amendments; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------
Section 5.3 Continuing Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------------------
SECTION 5.4 GOVERNING LAW; TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
Section 5.5 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
Section 5.6 The Collateral Agent's Right to Use Agents . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------------------------
Section 5.7 Waivers of Rights Inhibiting Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------------------------
Section 5.8 Notices and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------
(a) Manner of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
(b) Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------
Section 5.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------
Section 5.10 Loan Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
Section 5.11 Consent to Jurisdiction; Waiver of Immunities . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------------------
Section 5.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
Section 5.13 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
Section 5.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
[SECTION 5.15 NO NOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
Section 5.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------
</TABLE>
- ii -
<PAGE> 129
<TABLE>
<CAPTION>
SCHEDULES:
<S> <C>
Schedule 1 - Equipment, and Inventory Locations
Schedule 2 - Trade Names
Schedule 3 - Restricted Accounts
Schedule 4 - Rolling Stock
</TABLE>
- iii -
<PAGE> 130
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of December 19, 1997,
made between _____________________________ , a _______ corporation (the
"Debtor"), and NationsBank of Texas, N.A., a national banking association, in
its capacity as collateral agent (the "Collateral Agent") for itself, each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below)) a party to the
Amended and Restated Credit Agreement described below (the "Revolving
Lenders"), NationsBank of Texas, N.A., in its capacity as administrative agent
under the Amended and Restated Credit Agreement (the "Revolving Agent"), each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below)) a party to the
Term Credit Agreement described below (the "Term Lenders"), and NationsBank of
Texas, N.A., in its capacity as administrative agent under the Term Credit
Agreement (the "Term Agent") (each singularly, a "Secured Party", and
collectively, the "Secured Parties").
BACKGROUND
(1) [The Debtor] ["Pillowtex Corporation, a Texas corporation (the
"Borrower")], the Revolving Agent and the Revolving Lenders entered into that
certain Amended and Restated Credit Agreement, dated as of December 19, 1997
(as amended, modified, supplemented or restated from time to time, the "Amended
and Restated Credit Agreement").
(2) [The Debtor] [the Borrower], the Term Agent and the Term
Lenders entered into that certain Term Credit Agreement, dated as of December
19, 1997 (as amended, modified, supplemented or restated from time to time, the
"Term Credit Agreement"). The Amended and Restated Credit Agreement and the
Term Credit Agreement are herein, collectively, the "Credit Agreements."
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in each of the Credit Agreements.
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Debtor
securing the payment of the obligations set forth in Section 1.2 hereof,
subject only to Permitted Liens.
(4) It is a condition precedent to the obligation of the Revolving
Lenders and the Term Lenders, as appropriate, to make the Advances, and issue,
or participate in the issuance of, Letters of Credit under the Credit
Agreements that the Debtor shall have executed and delivered to the Collateral
Agent this Agreement.
<PAGE> 131
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in order to induce the Secured Parties, as
appropriate, to make the Advances and issue, or participate in the issuance of,
Letters of Credit under the Credit Agreements, the Debtor hereby agrees with
the Collateral Agent for its benefit and the ratable benefit of the other
Secured Parties, as hereinafter set forth.
ARTICLE 1
Grant
Section 1.1 Assignment and Grant of Security. The Debtor hereby
assigns, pledges, hypothecates and transfers to the Collateral Agent, for its
benefit and the ratable benefit of the other Secured Parties, and hereby grants
to the Collateral Agent, for its benefit and the ratable benefit of the other
Secured Parties, a security interest in, the entire right, title and interest
of the Debtor, in and to the following assets of the Debtor, whether now owned
or hereafter acquired ("Collateral"):
(a) all writings which evidence both a monetary obligation and a
security interest in or a lease of specific goods ("Chattel Paper");
(b) all documents, warehouse receipts, bills of lading, including,
without limitation, documents of title (as defined in the UCC) or other
receipts covering, evidencing or representing collateral ("Documents");
(c) all equipment (as defined in the UCC), and (whether or not
included in such definition) all vehicles, tractors, trailers, rolling stock,
machinery, chattels, tools, parts, furniture, furnishings, and supplies, of
every nature, wherever located, all additions, accessories and improvements
thereto and substitutions therefor and all accessories, parts and equipment
which may be attached to or which are necessary for the operation and use of
such personal property, whether or not the same shall be deemed to be affixed
to real property, together with all accessions thereto, and all rights under or
arising out of present or future contracts relating to the foregoing,
excluding, however, any such Equipment or other property which is financed with
Indebtedness permitted to be incurred pursuant to Section 7.1(c) or 7.1(h) of
the Credit Agreements ("Equipment");
(d) all fixtures and articles of personal property now or
hereafter attached to or used in or about any building or buildings now erected
or hereafter to be erected on any real property now or hereafter owned or
leased by the Debtor (the "Property"), which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes
for which they were or are to be erected; all materials to be delivered to the
Property and used or
- 2 -
<PAGE> 132
to be used in connection with the construction of any building to be
constructed on the Property, including, but not limited to, all masonry,
siding, roof shingles, flooring, doors, windows, tile, shutters, stoves, ovens,
awnings, screens, cabinets, shades, blinds, carpets, draperies, furniture,
furnishings, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, cooking, laundry and incinerating equipment and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
as are ever used or furnished in operating such buildings or the activities
conducted therein, and all building materials and equipment now or hereafter
delivered to the Property and intended to be installed thereon ("Fixtures");
(e) all general intangibles (as defined in the UCC), and (whether
or not included in such definition) all contract rights; all trade secrets,
inventions, processes, production methods, proprietary information and
know-how; and all licenses or other agreements granted to Debtor with respect
to any of the foregoing; all information, advertising lists, customer lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, recorded knowledge, surveys, engineering reports, test reports,
manuals, materials standards, processing standards, performance standards,
telephone numbers and telephone listings, catalogs, books, records, computer
and automatic machinery software and programs, and the like pertaining to
operations by or the business of the Debtor; all field accounting information
and all media in which or on which any of the information or knowledge or data
or records may be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records or data; all
licenses, consents, permits, variances, certifications and approvals of all
Tribunals now or hereafter held by Debtor pertaining to operations or business
now or hereafter conducted; all rights to receive return of deposits and trust
payments; all rights to payment under letters of credit and similar agreements;
and all causes of action, rights, claims and warranties now or hereafter owned
or acquired by Debtor ("General Intangibles");
(f) all instruments and letters of credit (each as defined in the
UCC, and (whether or not included in such definitions) all promissory notes,
drafts, bills of exchange and trade acceptances ("Instruments");
(g) all inventory in all of its forms, wherever located, now or
hereafter existing, including, but not limited to, (i) all raw materials and
work in process therefor, finished goods thereof, and materials used or
consumed in the manufacture or production thereof, (ii) goods in which Debtor
has an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which the Debtor has an interest or
right as consignee but only to the extent of the Debtor's interest therein),
and (iii) goods which are returned to or repossessed by the Debtor, and all
accessions thereto and products thereof and documents therefor (any and all
such inventory, accessions, products and documents being the "Inventory");
(h) all accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles, tax refunds (including,
without limitation, all federal and state income tax refunds and benefits of
net operating loss carry forwards) and other obligations of any kind owing to
the Debtor, now or hereafter existing, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services, and
all rights now or
- 3 -
<PAGE> 133
hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, deposit accounts, general intangibles or
obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, deposit accounts, general intangibles and obligations
being the "Receivables");
(i) all agreements with each manufacturer, vendor, sales agent,
sales representative and each other Person pursuant to which the Debtor
receives, maintains, sells, leases or otherwise disposes of Inventory,
including all agreements permitting the use of each such Person's name, logo,
trademarks, tradenames and advertising ("Vendor Agreements");
(j) all right, title and interest of the Debtor in, to and under
each contract and other agreement relating to the lease, sale or other
disposition of Collateral;
(k) all rights, claims and benefits of the Debtor against any
Person arising out of, relating to or in connection with Collateral purchased
by the Debtor, including, without limitation, any such rights, claims or
benefits against any Person storing or transporting such Collateral;
(l) the balance of every deposit account of the Debtor under
control of the Collateral Agent and each other Secured Party and any other
claim of Debtor against the Collateral Agent and each other Secured Party, now
or hereafter existing, liquidated or unliquidated, and all money, instruments,
securities, documents, chattel paper, credits, claims, demands, income, and any
other property, rights and interests of the Debtor which at any time shall come
into the possession or custody or under the control of the Collateral Agent or
any other Secured Party or any of its agents, affiliates or correspondents, for
any purpose, and the proceeds of any thereof (the Collateral Agent and each
other Secured Party shall be deemed to have possession of any of the Collateral
in transit to or set apart for it or any of its agents, affiliates or
correspondents).
(m) 100% of the issued and outstanding Capital Stock of each
Domestic Subsidiary of Debtor, together with all Dividends, cash, proceeds,
profits, instruments, distributions and other property from time to time
distributed in respect thereof, and any subscription rights or warrants to
acquire any interest in such Subsidiary;
(n) 65% of the issued and outstanding Capital Stock of each direct
Foreign Subsidiary of Debtor, together with all Dividends, cash, proceeds,
profits, instruments, distributions and other property from time to time
distributed in respect thereof and any subscription rights or warrants to
acquire any interest in such Subsidiary;
(o) all Fieldcrest Cannon Transaction Documents;
(p) all insurance policies and bonds and claims and payments under
any Collateral;
- 4 -
<PAGE> 134
(q) all property similar to the above hereafter acquired by
Debtor; and
(r) all accessions to, substitutions for and replacements,
proceeds and products of any and all of the foregoing Collateral (including,
without limitation, proceeds which constitute property of the types described
in this Section 1.1) and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral and (ii)
cash.
Notwithstanding anything herein to the contrary, the Lien granted
herein shall not (a) cover or be effective with respect to any assets which are
subject to Liens set forth on Schedule 3 of the Credit Agreements and Liens
resulting from the refinancing of the related Indebtedness (provided, however,
if at any time such amounts are released from such Liens then the Lien granted
herein shall automatically cover such assets without any action being taken by
the Debtor, the Collateral Agent or any other Person), (b) cover or be
effective with respect to any contracts of the Debtor which contain a provision
that they may not be assigned without the consent of the other party thereto if
the Lien granted herein is deemed to be an assignment in violation of such
assignment provision[, and] (c) cover or be effective with respect to any
Inventory, Equipment or Accounts which are identified as Inventory, General
Intangibles, Equipment or Accounts of the Bigelow Packing Division of
Fieldcrest Cannon, Inc., provided that the aggregate sales price of such
Inventory, General Intangibles, Equipment and Accounts is not in excess of
$1,700,000[, and (d) cover or be effective with respect to the publicly traded
Capital Stock of Fieldcrest Cannon, Inc. that is being purchased by Debtor
pursuant to the Fieldcrest Cannon Transaction (which Capital Stock shall be
cancelled and reissued with Debtor as the registered owner thereof, which
reissued Capital Stock shall be pledged and subject to the Lien granted herein
in favor of the Collateral Agent].
Section 1.2 Description of Obligations. This Agreement creates
an enforceable security interest in the Collateral, subject only to Permitted
Liens, to secure the payment and performance of any and all obligations now or
hereafter existing of the Debtor and each other Obligor under the Credit
Agreements and the other Loan Documents, including any extensions,
modifications, substitutions, amendments and renewals thereof, whether for
principal, interest, fees, premium, expenses, reimbursement obligations,
indemnification or otherwise (all such obligations of the Debtor and each other
Obligor being the "Obligations"). Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Obligations and would be owed by the Debtor and each other Obligor
to the Collateral Agent or any other Secured Party under any Loan Document, but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding under any Debtor Relief
Law involving the Debtor, any other Obligor or any other Person (including all
such amounts which would become due or would be secured but for the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of Debtor, any other Obligor or any other
Person under any Debtor Relief Law). [NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN ANY ACTION OR PROCEEDING INVOLVING ANY STATE CORPORATE LAW, OR ANY
STATE OR FEDERAL BANKRUPTCY, INSOLVENCY,
- 5 -
<PAGE> 135
REORGANIZATION OR OTHER LAW AFFECTING THE RIGHTS OF CREDITORS GENERALLY IF THE
LIENS GRANTED BY THE DEBTOR HEREIN SHALL BE HELD VOID, INVALID OR
UNENFORCEABLE, OR SUBORDINATED TO THE LIENS OR CLAIMS OF ANY OTHER CREDITORS,
ON ACCOUNT OF THE AMOUNT OF THE OBLIGATIONS SECURED BY SUCH LIENS, THEN, THE
AMOUNT OF THE OBLIGATIONS SECURED BY SUCH LIENS SHALL, WITHOUT ANY ACTION BY
THE DEBTOR, THE COLLATERAL AGENT, ANY OTHER SECURED PARTY OR ANY OTHER PERSONS,
BE AUTOMATICALLY LIMITED AND REDUCED TO THE HIGHEST AMOUNT THAT IS VALID AND
ENFORCEABLE AND NOT SUBORDINATED TO THE CLAIMS OF OTHER CREDITORS AS DETERMINED
IN SUCH ACTION OR PROCEEDING.]
Section 1.3 Debtor Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release the Debtor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) neither the Collateral Agent nor any other
Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
the Collateral Agent or any other Secured Party be obligated to perform any of
the obligations or duties of the Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 1.4 Delivery of Security and Instrument Collateral. All
certificates or instruments representing or evidencing the Collateral shall be
delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form
and substance reasonably satisfactory to the Collateral Agent. The Collateral
Agent shall have the right, as provided in Section 3.6, and during the
continuance, of an Event of Default, but without any requirement for prior
written notice to the Debtor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of such Collateral. In
addition, the Collateral Agent shall have the right at any time during the
continuance of an Event of Default to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations. Except as provided in Section 3.8(d), the
Debtor maintains the voting rights in the Securities Collateral (as defined
below) which was granted in the Securities Collateral pursuant to Section
1.1(m) and (n).
ARTICLE 2
Representations and Warranties
Section 2.1 Representations and Warranties. The Debtor
represents and warrants to the Collateral Agent and each other Secured Party,
with respect to itself and the Collateral, as follows:
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<PAGE> 136
(a) All of the Equipment, Fixtures and Inventory pledged by the
Debtor hereunder are located at the places specified on Schedule 1 hereto (as
supplemented from time to time by the Debtor by written notice to the
Collateral Agent as permitted herein) or in transit to a place specified on
Schedule 1 hereto (as supplemented from time to time by Debtor by written
notice to Collateral Agent as permitted herein) or in transit for sale to a
third-party purchaser that upon such sale will become the obligor under a
Receivable or promptly pay for such Equipment, Fixtures and Inventory. The
chief place of business and chief executive office of the Debtor and the office
where the Debtor keeps all of its records concerning the Receivables, are
located at the place specified on Schedule 1 hereto. Schedule 1 is a complete
and correct list of, as to any leased property on which any Collateral is
located, the description of such property sufficient for recording and the name
of the record owner of such property. All promissory notes or other
instruments evidencing the Receivables (excluding checks[ and notes evidencing
loans to employees not to exceed $250,000 in aggregate amount]) have been
delivered and pledged to the Collateral Agent duly endorsed and accompanied by
such duly executed instruments of transfer or assignment as are necessary for
such pledge, to be held as pledged collateral. All Equipment owned by the
Debtor consisting of vehicles, tractors, trailers and other rolling stock with
a net book value of $20,000 or more are identified on Schedule 4.
(b) The Debtor is the legal and beneficial owner of the Collateral
pledged by it free and clear of any Lien, except for (i) the security interest
created by this Agreement, (ii) Permitted Liens and (iii) Liens in connection
with Indebtedness with respect to which the requirements of Section 3.1(i) of
each of the Credit Agreements have been satisfied. No effective financing
statement or other similar document used to perfect and preserve a security
interest under the laws of any jurisdiction covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed (i) in favor of the Collateral Agent relating to this Agreement, (ii) in
respect of Permitted Liens, and (iii) in connection with Indebtedness with
respect to which the requirements of Section 3.1(i) of each of the Credit
Agreements have been satisfied. As of the date hereof, the Debtor has the
trade names set forth on Schedule 2 (and no others). The Debtor (including any
corporate or partnership predecessor) has not existed or operated under any
name other than as stated on Schedule 2 since the date three years preceding
the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant
hereto, together with the filing of financing statements containing the
description of the Collateral in the jurisdictions set forth on Schedule 1,
which will be made immediately following the date of closing, creates a valid
and perfected first priority security interest in the Collateral in which a
security interest can be perfected by filing a UCC financing statement,
securing the payment of the Obligations; provided that additional actions may
be required with respect to the perfection of proceeds of the Collateral; and
further provided that the Collateral Agent retains physical possession of any
Collateral, the possession of which is required for perfection.
(d) No material Necessary Authorization is required (i) for the
pledge by the Debtor of the Collateral pledged by it hereunder, for the grant
by the Debtor of the security interest granted hereby or for the execution,
delivery or performance of this Agreement by the Debtor,
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(ii) for the perfection or maintenance of the pledge, assignment and security
interest created hereby (including the first priority nature (subject to
Permitted Liens) of such pledge, assignment and security interest as provided
herein) (except for the filing of financing and continuation statements under
the UCC, fixture filings and filings with the United States Patent and
Trademark Office) or (iii) for the exercise by the Collateral Agent of the
rights provided for in this Agreement (except for consents of landlords
pursuant to the Landlords' Waivers and as otherwise required by law, including
pursuant to Section 4.4 of this Agreement), except, in each case, for such
Necessary Authorizations that already have been obtained by the Debtor and
except, in each case, where the failure to so obtain such Necessary
Authorizations could not reasonably be expected to have a Material Adverse
Effect.
(e) None of the Collateral described in Sections 1.1(m) and 1.1(n)
("Securities Collateral") is subject to any unpaid capital call or dispute, any
buy-sell, voting trust, transfer restriction, preferential right to purchase or
similar agreement or any option, warrant, put or call or similar agreement.
All of the Securities Collateral are duly authorized, validly issued and
non-assessable and were not issued in violation of the Rights of any Person.
ARTICLE 3
Covenants
Section 3.1 Further Assurances. (a) The Debtor agrees that where
any agreement existing as of the date hereof or hereafter to which Debtor is a
party contains any restriction that could reasonably be expected to prohibit
Debtor from granting any security interest under this Agreement, the Debtor
will use its reasonable best efforts to obtain the necessary consent to or
waiver of such restriction from any Person so as to enable the Debtor to
effectively grant to the Collateral Agent such security interest under this
Agreement.
(b) The Debtor agrees that from time to time, at the expense of
the Debtor, the Debtor will promptly execute and deliver all further
instruments and documents (including supplements to all schedules), and take
all further action, that may be necessary, and that the Collateral Agent may
reasonably request, in order to perfect and protect any pledge, assignment or
security interest granted or purported to be granted hereby, and the priority
thereof, or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, upon reasonable written request by the Collateral
Agent, the Debtor will: (i) during the continuation of an Event of Default,
mark conspicuously each Chattel Paper included in Receivables, and, at the
request of the Collateral Agent, each of its records pertaining to the
Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1997 (AS THE SAME HAS
BEEN AND MAY
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HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY DEBTOR IN FAVOR OF
NATIONSBANK OF TEXAS, N.A., AS COLLATERAL AGENT FOR THE BENEFIT OF THE
SECURED PARTIES NAMED THEREIN.
or such other legend, in form and substance reasonably satisfactory to and as
specified by the Collateral Agent, indicating that such Chattel Paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument, deliver and pledge to the Collateral Agent hereunder such note and
instrument duly indorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance reasonably satisfactory to
the Collateral Agent; (iii) if any Collateral shall be evidenced by Chattel
Paper, during the continuance of an Event of Default, deliver to the Collateral
Agent such Chattel Paper duly endorsed and accompanied by duly executed
instrument of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; and (iv) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(c) In addition to such other information as shall be specifically
provided for herein, the Debtor will furnish to the Collateral Agent from time
to time during the continuance of an Event of Default statements and schedules
further identifying and describing the Collateral and such other lists,
documents, reports, and product, service and sales documents in connection with
the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail. Subject to the confidentiality provisions of the Credit
Agreements, in connection with its enforcement of the security interest, the
Collateral Agent may use such information or transfer it to any assignee
permitted hereunder for such assignee's use.
(d) The Debtor hereby authorizes the Collateral Agent to file one
or more continuation statements and during the continuance of an Event of
Default, financing statements, relating to all or any part of the Collateral
without the signature of the Debtor where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
Section 3.2 Equipment, Fixtures and Inventory.
(a) The Debtor shall not keep the Equipment, Fixtures and
Inventory pledged by it hereunder (other than Inventory sold in the ordinary
course of business) in any location other than the places specified in Schedule
1 unless no later than 15 days prior to removal from any such location the
Debtor has delivered to the Collateral Agent a financing statement for such
Equipment, Fixtures and Inventory kept by the Debtor at such other location or
such other documentation in the opinion of the Collateral Agent which is
reasonably necessary to properly perfect or maintain the perfection of the
security interest granted herein in such Collateral.
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(b) Except as permitted under the Credit Agreements, the Debtor
shall cause the Equipment and Fixtures pledged by it hereunder that are
necessary for the Debtor's business to be maintained and preserved in adequate
operating condition and repair for purposes of their current use with due
regard to the age thereof, taken as a whole, subject to ordinary wear and tear
and shall from time to time make or cause to be made all appropriate (in the
reasonable judgment of Debtor) all repairs, replacements, and other
improvements thereto in accordance with past practice, except where the failure
to so repair, replace or improve could not reasonably be expected to have a
Material Adverse Effect. The Debtor shall promptly furnish to the Collateral
Agent a statement respecting any loss or damage which singly or in the
aggregate equals or exceeds $1,000,000 for any fiscal year to any of the
Equipment pledged by it hereunder. The Debtor shall promptly furnish to the
Collateral Agent a statement respecting any loss or damage which singly or in
the aggregate equals or exceeds $1,000,000 for any fiscal year to any of the
Inventory pledged by it hereunder.
Section 3.3 Insurance. The Debtor shall, at its own expense,
maintain insurance with respect to the Collateral in accordance with the terms
set forth in Section 5.5 of the Credit Agreement. The Debtor further covenants
and agrees to keep the Collateral which is Inventory, Equipment, Fixtures and
other tangible personal property insured in such amounts, against such risks
and with such insurers as is consistent with customary and usual in the
industry for companies of similar size and capability, provided that none of
such insurance shall be in amounts less than the greater of (a) the replacement
value and (b) the original cost of the covered property (less any deduction
standard in the industry for such type of property), subject in the case of any
property damage insurance to normal and customary rights granted in the
ordinary course of business to (i) any landlord (with respect to the property
covered by any lease), (ii) in the case of any equipment financing, to any
equipment lessor or lender (with respect to the equipment covered thereby), or
(iii) mortgagees of any real property. All such policies of insurance shall
show the Collateral Agent as loss payee, as its interests may appear, and shall
provide for at least thirty days' prior written notice of cancellation or
change of coverage to the Collateral Agent. The Debtor shall promptly furnish
to the Collateral Agent evidence of such insurance in form and content
reasonably satisfactory to the Collateral Agent. If the Debtor fails to
maintain the insurance it is required to maintain with respect to the
Collateral in accordance with this Section 3.3, upon written notice to the
Debtor, the Collateral Agent may at its own option obtain insurance in such
Collateral, any premium thereby paid by the Collateral Agent to become part of
the Obligations, bear interest prior to the existence of an Event of Default,
at the then applicable Base Rate Basis, and during the existence of an Event of
Default, at the Default Rate. In the event the Collateral Agent maintains such
substitute insurance, the additional premium for such insurance shall be due on
demand and payable by the Debtor to the Collateral Agent in accordance with any
notice delivered to the Debtor by the Collateral Agent. Subject to Section 7.5
of the Credit Agreements, proceeds of insurance shall be applied as follows:
first, to reimburse the Collateral Agent for all reasonable costs and expenses,
if any, including reasonable attorneys' fees, incurred in connection with the
collection of such proceeds; second, if an Event of Default has not occurred
and is continuing or the amount of proceeds in respect of any one loss or
damage does not exceed $5,000,000, the proceeds shall be reinvested in
productive, tangible assets used in the business of the Debtor,
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<PAGE> 140
and the Debtor shall provide the Collateral Agent with evidence reasonably
satisfactory to the Collateral Agent of such use; and third, if an Event of
Default has occurred and is continuing or the proceeds in respect of any one
loss or damage is equal to or greater than $5,000,000, the proceeds shall, at
the Collateral Agent's direction, be used to repair or replace the Collateral
or applied to the Obligations as provided in the Intercreditor Agreement.
Section 3.4 Place of Perfection; Records; Collection of
Receivables, Chattel Paper and Instruments.
(a) The Debtor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all Chattel Paper and Instruments, at the
location therefor specified in Section 2.1(a), in each case which may be
changed upon written notice to the Collateral Agent at least 30 days prior to
such change. The Debtor will hold and preserve such records and Chattel Paper
and Instruments and will permit representatives of the Collateral Agent at any
time during normal business hours and after reasonable notice to inspect and
make abstracts from and copies of such records and Chattel Paper and
Instruments.
(b) Except as otherwise provided in this Section 3.4(b), the
Debtor shall continue to collect, at its own expense, all amounts due or to
become due the Debtor under the Receivables, Chattel Paper and Instruments. In
connection with such collections, the Debtor may take (and, during the
continuance of an Event of Default at the Collateral Agent's direction, shall
take) such action as the Debtor or, during the continuance of an Event of
Default, the Collateral Agent, may deem reasonably necessary to enforce
collection of the Receivables, Chattel Paper and Instruments; provided,
however, that the Collateral Agent shall have the right (during the continuance
of an Event of Default) to notify the account debtors or obligors under any
Receivables, Chattel Paper and Instruments of the assignment of such
Receivables, Chattel Paper and Instruments to the Collateral Agent and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to the Debtor thereunder directly to the Collateral Agent and,
upon such notification at the expense of the Debtor, to enforce collection of
any such Receivables, Chattel Paper and Instruments, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Debtor might have done or as the Collateral Agent deems
reasonably necessary. During the continuance of an Event of Default, all
amounts and proceeds (including Instruments) received by the Debtor in respect
of the Receivables, Chattel Paper and Instruments shall be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of the Debtor and, after receipt of written notice from the
Collateral Agent, shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary indorsement) to be applied as
provided in the Intercreditor Agreement. During the continuation of an Event
of Default, the Debtor shall not adjust, settle or compromise the amount or
payment of any Receivable, Chattel Paper or Instrument, release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon, in each case, other than those made in the ordinary course of
business. To the extent that the Collateral Agent has notified any account
debtor or obligor under any Receivables, Chattel Paper or Instrument of an
Event of Default and such Event of Default is
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cured or otherwise waived, the Collateral Agent shall promptly notify such
account holder or obligor of such fact.
Section 3.5 Transfers and Other Liens. The Debtor shall not (a)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except as permitted
under the Credit Agreements, or (b) create or permit to exist any Lien upon any
of the Collateral, except Permitted Liens.
Section 3.6 Rights to Dividends and Distributions. With respect
to any Securities Collateral, the Collateral Agent shall have authority during
the continuance of an Event of Default, either to have the same registered in
the Collateral Agent's name or in the name of a nominee, and, with or without
such registration, upon such notification to demand of the issuer thereof, and
to receive and receipt for, any and all Dividends (including any stock or
similar Dividend) payable in respect thereof, whether they be ordinary or
extraordinary. If the Debtor shall become entitled to receive or shall receive
any interest in or certificate (including, without limitation, any interest in
or certificate representing a Dividend in connection with any reclassification,
increase, or reduction of capital, or issued in connection with any
reorganization), or any option or rights arising from or relating to any of the
Collateral that is evidenced by a certificate or other instrument or security,
whether as an addition to, in substitution of, as a conversion of, or in
exchange for any of the Collateral, or otherwise, the Debtor agrees to accept
the same as the Collateral Agent's agent and to hold the same in trust on
behalf of and for the benefit of the Collateral Agent, and, after receipt of
written notice from the Collateral Agent, to deliver the same immediately to
the Collateral Agent in the exact form received, with appropriate undated stock
or similar powers, duly executed in blank, to be held by the Collateral Agent,
subject to the terms hereof, as Collateral. Unless an Event of Default is in
existence, the Debtor shall be entitled to receive all cash Dividends paid in
respect of any of the Collateral (subject to the restrictions of any other Loan
Document). During the continuance of an Event of Default, the Collateral Agent
shall be entitled to all Dividends, and to any sums paid upon or in respect of
any Collateral, and to any additional securities issued in respect of the
Securities Collateral, upon the liquidation, dissolution, or reorganization of
the issuer thereof, all of which shall be paid to the Collateral Agent to be
held by it as additional collateral security for the Obligations and
application to the Obligations as provided in the Intercreditor Agreement. All
Dividends paid or distributed in respect of the Collateral which are received
by the Debtor in violation of this Agreement shall, until paid or delivered to
the Collateral Agent, be held by the Debtor in trust on behalf of and for the
benefit of the Collateral Agent as additional Collateral for the Obligations.
Section 3.7 Right of the Collateral Agent to Notify Issuers. At
any time during the continuance of an Event of Default, the Collateral Agent
may notify issuers of the Securities Collateral to make payments of all
Dividends directly to the Collateral Agent and the Collateral Agent may take
control of all proceeds of any Securities Collateral. Until the Collateral
Agent elects to exercise such rights, during the continuance of an Event of
Default, the Debtor, as agent of the Collateral Agent, shall collect and
segregate all Dividends and other amounts paid or distributed with respect to
the Securities Collateral. To the extent that the Collateral Agent
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has notified any issuer of Securities Collateral of an Event of Default and
such Event of Default is cured or otherwise waived, the Collateral Agent shall
promptly notify such issuer of such fact.
Section 3.8 The Collateral Agent Appointed Attorney-in-Fact. The
Debtor hereby irrevocably appoints the Collateral Agent the Debtor's
attorney-in-fact (exercisable during the continuance of an Event of Default),
with full authority in the place and stead of the Debtor and in the name of the
Debtor or otherwise to take any action and to execute any instrument (in
accordance with this Agreement, including without limitation, Section 4.2
hereof) which the Collateral Agent may deem reasonably necessary to accomplish
the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent in accordance with Section 3.3,
(b) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other
Instruments, documents and Chattel Paper in connection with clauses (a) or (b)
above, and
(d) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem reasonably necessary for the
collection of any of the Collateral or otherwise to enforce compliance with the
terms and conditions of any Collateral or the rights of the Collateral Agent
with respect to any of the Collateral. THE DEBTOR HEREBY IRREVOCABLY GRANTS TO
THE COLLATERAL AGENT THE DEBTOR'S PROXY (EXERCISABLE DURING THE CONTINUANCE OF
AN EVENT OF DEFAULT) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS THE
COLLATERAL AGENT THE DEBTOR'S ATTORNEY-IN-FACT (EXERCISABLE DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) TO PERFORM ALL
OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT. THE PROXY AND EACH POWER OF
ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR
TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
This appointment as attorney-in-fact and this proxy shall terminate
upon the termination of this Agreement pursuant to Section 5.3 hereof.
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ARTICLE 4
Rights and Powers of the Collateral Agent
Section 4.1 The Collateral Agent May Perform. If the Debtor
fails to perform any agreement contained herein, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the reasonable
expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Debtor under Section 4.5.
Section 4.2 The Collateral Agent's Duties. The powers conferred
on the Collateral Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the duty to exercise reasonable care in respect of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent has or is deemed to have knowledge of such matters, or as
to the taking of any necessary steps to preserve rights against prior parties.
The Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords property it holds as collateral generally. Except as provided in this
Section 4.2 and except to the extent of any gross negligence or willful
misconduct of the Collateral Agent or the other Secured Parties, the Collateral
Agent shall not have any duty or liability to protect or preserve any
Collateral or to preserve rights pertaining thereto. Nothing contained in this
Agreement shall be construed as requiring or obligating the Collateral Agent,
and the Collateral Agent shall not be required or obligated, to (i) present or
file any claim or notice or take any action, with respect to any Collateral or
in connection therewith or (ii) notify the Debtor of any decline in the value
of any Collateral.
Section 4.3 Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Texas at
that time (the "UCC") (whether or not the UCC applies to the affected
Collateral), and also may (i) require the Debtor to, and the Debtor hereby
agrees that it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral which is capable of being
assembled as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent which is
reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Collateral or any portion thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may reasonably deem commercially reasonable. The
Debtor agrees that, to the extent notice of sale shall be required by law, ten
days' written notice to the Debtor of the time and
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place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification, provided that ten days' written
notice does not violate any Applicable Law. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.
(b) All cash proceeds received by the Collateral Agent upon any
sale of, collection of, or other realization upon, all or any part of the
Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and
expenses incurred in connection with the sale of, collection of or
other realization upon Collateral, including reasonable attorneys'
fees and disbursements;
Second: To the payment of the Obligations as provided in the
Intercreditor Agreement and in such order and in such manner as
provided in the Intercreditor Agreement (with the Debtor remaining
liable for any deficiency); and
Third: To the extent of the balance (if any) of such proceeds, to the
payment to the Debtor or other Person legally entitled thereto.
(c) All payments received by the Debtor under or in connection
with any Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Debtor and, after
receipt of written notice from the Collateral Agent, shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
(d) Because of the Securities Act of 1933, as amended ("Securities
Act"), and other laws, including without limitation state "blue sky" laws, or
contractual restrictions or agreements, there may be legal restrictions or
limitations affecting the Collateral Agent in any attempts to dispose of the
Collateral and the enforcement of its rights hereunder. For these reasons, the
Collateral Agent is hereby authorized by the Debtor, but not obligated, during
the continuance of any Event of Default, to sell or otherwise dispose of any of
the Collateral at private sale, subject to an investment letter, or in any
other manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law. The Debtor clearly understands that
the Collateral Agent may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Collateral than would otherwise be obtainable if same were
registered and sold in the open market. No sale so made in good faith by the
Collateral Agent shall be deemed to be not "commercially reasonable" because so
made. The Debtor agrees that in the event the Collateral Agent shall, during
the continuance of an Event of Default, sell the Collateral or any portion
thereof at any private sale or sales, the Collateral Agent shall have the right
to rely upon the advice and opinion of appraisers and other Persons, which
appraisers and other Persons are acceptable to
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the Collateral Agent, as to the best price reasonably obtainable upon such a
private sale thereof. In the absence of actual fraud, such reliance shall be
conclusive evidence that the Collateral Agent handled such matter in a
commercially reasonable manner under Applicable Law.
(e) If the Collateral Agent shall determine to exercise its right
to sell any or all of the Collateral, and if in the opinion of counsel for the
Collateral Agent it is necessary, or if in the opinion of the Collateral Agent
it is advisable, to have the Collateral or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Debtor will, to the
fullest extent it has the capability to do so, cause the issuers of the
Collateral contemplated to be sold to execute and deliver, and cause the
directors and officers of each thereof to execute and deliver, all at the
Debtor's reasonable expense, all such instruments and documents, and to do or
cause to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register the Collateral or that
portion thereof to be sold, under the provisions of the Securities Act and to
cause the registration statement relating thereto to become effective and to
remain effective for such period as the Collateral Agent may deem reasonably
necessary to facilitate the sale or other disposition of such Collateral from
the date of the first public offering of the Collateral or that portion thereof
to be sold, and to make all amendments thereto and/or to the related prospectus
which, in the opinion of the Collateral Agent, are reasonably necessary, all in
conformity with the requirements of the Securities Act. The Debtor shall use
its reasonable best efforts to cause each issuer of Collateral to comply with
the provisions of the securities or "blue sky" laws of any jurisdiction which
the Collateral Agent shall designate and to cause each issuer to make available
to its security holders, as soon as practicable, an earnings statement which
will satisfy the provisions of the Securities Act and applicable "blue sky"
laws.
(f) (i) The Debtor will maintain the accounts listed as
restricted and blocked accounts on Schedule 3 (the "Restricted
Accounts") with the Collateral Agent, in the name of the Debtor, but
such Restricted Accounts shall be under the sole control and dominion
of the Collateral Agent.
(ii) It shall be a term and condition of each Restricted
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to such Restricted Account, that no amount
(including interest and other proceeds of the cash and other property
in the Restricted Account) shall be paid or released to or for the
account of, or withdrawn by or for the account of, the Debtor or any
other Person from such Restricted Account.
(iii) After the occurrence and continuance of an Event of
Default, the Debtor will promptly instruct each account debtor in
respect of Receivables arising from any sale of Inventory in the
ordinary course of business to make payment to the Restricted
Accounts.
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The Debtor understands and acknowledges that the Collateral Agent may and
permits the Collateral Agent to remove amounts from the Restricted Accounts
from time to time and use the amounts to reduce the Obligations.
Section 4.4 Further Approvals Required.
(a) In connection with the exercise by the Collateral Agent of its
rights hereunder that effects the disposition of or use of any Collateral, it
may be necessary to obtain the prior consent or approval of Tribunals and other
Persons to a transfer or assignment of Collateral.
(b) The Debtor hereby agrees, during the continuance of an Event
of Default, to execute, deliver, and file, and hereby appoints the Collateral
Agent as its attorney-in-fact, during the continuance of an Event of Default,
to execute, deliver, and file on the Debtor's behalf and in the Debtor's name,
all applications, certificates, filings, instruments, and other documents
(including without limitation any application for an assignment or transfer of
control or ownership) that may be necessary, in the Collateral Agent's
reasonably opinion, to obtain such consents, waivers, or approvals. Upon
request by the Collateral Agent, the Debtor further agrees to use its
reasonable best efforts to obtain the foregoing consents, waivers, and
approvals. The Debtor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 4.4 and that such
failure would not be adequately compensable in damages, and therefore agrees
that this Section 4.4 may be specifically enforced. This appointment as
attorney-in-fact shall terminate upon the termination of this Agreement
pursuant to Section 5.3 hereof.
SECTION 4.5 INDEMNITY AND EXPENSES. (a) THE DEBTOR AGREES TO
INDEMNIFY THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY FROM AND AGAINST
ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE ATTORNEYS'
FEES) ARISING OR RESULTING FROM THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION,
ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES OR
LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF THE COLLATERAL AGENT OR ANY OTHER
SECURED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM THE
COLLATERAL AGENT'S OR ANY OTHER SECURED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, BUT EXCLUDING (i) ANY CLAIM OR LIABILITY THAT ARISES AS A DIRECT
RESULT OF THE OPERATION OF ANY COLLATERAL BY THE COLLATERAL AGENT OR ANY OF THE
OTHER SECURED PARTIES AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING ON OR WITH RESPECT TO SUCH COLLATERAL PRIOR TO
FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), (ii) MATTERS RAISED
EXCLUSIVELY BY A PARTICIPANT AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED
PARTY, AND
- 17 -
<PAGE> 147
(iii) MATTERS RAISED BY ONE LENDER AGAINST A LENDER OR BY ANY SHAREHOLDERS OF A
LENDER AGAINST A LENDER OR ITS MANAGEMENT.
(b) The Debtor will upon demand pay to the Collateral Agent the
amount of any and all reasonable out-of- pocket expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder or (iv) the failure by the Debtor to perform or observe any of the
provisions hereof.
ARTICLE 5
Miscellaneous
Section 5.1 Cumulative Rights. All rights of the Collateral
Agent and each other Secured Party under the Loan Documents are cumulative of
each other and of every other right which the Collateral Agent and each other
Secured Party may otherwise have at law or in equity or under any other
contract or other writing for the enforcement of the security interest herein
or the collection of the Obligations. The exercise of one or more rights shall
not prejudice or impair the concurrent or subsequent exercise of other rights.
Section 5.2 Modifications; Amendments; Etc. No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
the Debtor here from, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent (and the Debtor, in case of
amendment), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 5.3 Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the latest of the Release Dates set forth in the
Credit Agreements, (b) be binding upon the Debtor, its successors and assigns,
and (c) inure to the benefit of, and be enforceable by, the Collateral Agent
and its successors, transferee and assigns as permitted by the Intercreditor
Agreement. Upon any such termination, the Collateral Agent will, at the
Debtor's expense, execute and deliver to Debtor such documents as the Debtor
shall reasonably request to evidence such termination. The Debtor agrees that
to the extent that the Collateral Agent or any other Secured Party receives any
payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or is required to be repaid to a trustee, receiver, or any other party under
any Debtor Relief Law, common law or equitable cause, then to the extent of
such payment or benefit, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such
payment or benefit had not been made and, further, any such repayment by the
Collateral Agent or any other Secured Party, to the extent that the Collateral
Agent or any other Secured Party did not
- 18 -
<PAGE> 148
directly receive a corresponding cash payment, shall be added to and be
additional Obligations payable upon demand by the Collateral Agent or any other
Secured Party and secured hereby, and, if the lien and security interest hereof
shall have been released, such lien and security interest shall be reinstated
with the same effect and priority as on the date of execution hereof all as if
no release of such lien or security interest had ever occurred, to the extent
not prohibited by Applicable Law.
SECTION 5.4 GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF TEXAS.
SECTION 5.5 WAIVER OF JURY TRIAL. THE COLLATERAL AGENT AND THE
DEBTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ALL
RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 5.6 The Collateral Agent's Right to Use Agents. The
Collateral Agent may exercise its rights under this Agreement through an agent
or other designee.
Section 5.7 Waivers of Rights Inhibiting Enforcement. To the
extent not prohibited by Applicable Law, the Debtor waives all rights of
redemption, appraisal, valuation or to the marshalling of assets.
Section 5.8 Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications
provided for hereunder shall be in writing (except in those cases where giving
notice by telephone is expressly permitted) and shall be deemed to have been
given on the date personally delivered or sent by telecopy (answer back
received), or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, addressed to
the party to which such notice is directed at its address determined as
provided in this Section 5.8.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or delivered at
the following respective addresses and telecopier and telephone numbers and to
the attention of the following individuals or departments:
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<PAGE> 149
(i) if to the Debtor, to it at:
[c/o] Pillowtex Corporation
411 Mint Way
Dallas, Texas 75237
Telephone No.: (214) 333-3225
Telecopier No.: (214) 330-6016
Attention: Chief Financial Officer
(ii) if to the Collateral Agent, to it at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0280
Telecopier No.: (214) 508-0980
Attention: Suzanne Smith
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify by giving 10 days' written notice to the other
specifically captioned "Notice of Change of Address".
Section 5.9 Successors and Assigns. All of the provisions of
this Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 5.10 Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 5.11 Consent to Jurisdiction; Waiver of Immunities.
(a) The Debtor and the Collateral Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or Texas
State courts sitting in Dallas, Texas in any action or proceeding arising out
of or relating to this Agreement, and the Debtor and the Collateral Agent each
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
- 20 -
<PAGE> 150
(b) Nothing in this section shall limit the right of the Debtor,
the Collateral Agent or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 5.12 Severability. Any provision of this Agreement which
is for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 5.13 Obligations Not Affected. To the fullest extent
permitted by Applicable Law, the obligations of the Debtor under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(a) any amendment or modification or addition or supplement to any
other Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Collateral Agent
or any other Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the Collateral or
any part thereof provided pursuant to, this Agreement or any other Loan
Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor, any other
Obligor or any other Person, whether or not the Debtor shall have notice or
knowledge of any of the foregoing.
Section 5.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
[SECTION 5.15 NO NOVATION. THE EXECUTION, DELIVERY AND
EFFECTIVENESS OF THIS AGREEMENT SHALL NOT DISCHARGE OR RELEASE ANY LIEN OR
PRIORITY OF ANY SECURITY AGREEMENT, PLEDGE AGREEMENT OR OTHER INSTRUMENT
SECURING THE DEBTOR'S OBLIGATIONS FOR THE PAYMENT OF MONEY OUTSTANDING UNDER
THE EXISTING CREDIT AGREEMENT. NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS
A SUBSTITUTION, NOVATION, SATISFACTION OR DISCHARGE OF ANY COLLATERAL DOCUMENTS
(AS DEFINED IN THE EXISTING CREDIT AGREEMENT) OR THE LIENS GRANTED HEREBY, ALL
OF WHICH SHALL CONTINUE AND REMAIN IN FULL FORCE AND EFFECT, EXCEPT AS MODIFIED
HEREBY, OR BY INSTRUMENT EXECUTED CONCURRENTLY HEREWITH. THIS AGREEMENT
AMENDS, MODIFIES AND
- 21 -
<PAGE> 151
RESTATES THAT CERTAIN RESTATED SECURITY AGREEMENT, DATED AS OF NOVEMBER 12,
1996, AMONG DEBTOR, CERTAIN OTHER AFFILIATES OF DEBTOR, AND NATIONSBANK OF
TEXAS, N.A.]
SECTION 5.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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<PAGE> 152
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
DEBTOR:
[DEBTOR]
By:
-------------------------------------
Name: J. Mark Kirkpatrick
Title: Vice President and Treasurer
COLLATERAL AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------------
Name: Suzanne B. Smith
Title: Vice President
- 23 -
<PAGE> 153
Schedule 1
Equipment and Inventory Locations
Chief Place of Business, Chief Executive Office and
Location of Books and Records
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 154
Schedule 2
Trade Names
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 155
Schedule 3
Restricted Accounts
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 156
Schedule 4
Rolling Stock
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 157
EXHIBIT C
================================================================================
INTELLECTUAL PROPERTY SECURITY AGREEMENT AND ASSIGNMENT
Between
-------------------------------------------
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
Collateral Agent
December 19, 1997
================================================================================
<PAGE> 158
TABLE OF CONTENTS
<TABLE>
Page
----
<S> <C> <C>
ARTICLE 1
Grant of Security Interest
--------------------------
Section 1.1 Assignment and Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------------------------------------
Section 1.2 Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
------------------------
Section 1.3 Validity and Priority of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------------------------------
Section 1.4 Maintenance of Status of Security Interest, Collateral and Rights . . . . . . . . . . . . . 3
-----------------------------------------------------------------
(a) Required Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
---------------
(b) Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
------------------------
(c) Authorized Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------------
(d) Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-------------
Section 1.5 Debtor Remains Obligated; the Collateral Agent and Secured Parties Not Obligated . . . . . 4
--------------------------------------------------------------------------------
Section 1.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
-----------
ARTICLE 2
Representations and Warranties
------------------------------
Section 2.1 Authorization; Enforceability; Required Consents; Absence of Conflicts . . . . . . . . . . 4
----------------------------------------------------------------------
Section 2.2 Rights of the Debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------
Section 2.3 Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
----------
Section 2.4 Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
-------------
Section 2.5 Other Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------
ARTICLE 3
Covenants
---------
Section 3.1 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------
Section 3.2 Preservation of Existence and Preservation of Enforceability . . . . . . . . . . . . . . . 6
------------------------------------------------------------
Section 3.3 No Disposition of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
----------------------------
Section 3.4 Additional Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
-------------------
ARTICLE 4
Event of Default
----------------
Section 4.1 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
-----------------------
</TABLE>
<PAGE> 159
<TABLE>
<S> <C> <C>
Section 4.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
--------
SECTION 4.3 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------
ARTICLE 5
Interpretation
--------------
Section 5.1 Definitional Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------
(a) Certain Terms Defined by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------------
(b) Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-------------------
(c) Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------
Section 5.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-----------------
ARTICLE 6
Miscellaneous
-------------
Section 6.1 Expenses of the Debtor's Agreements and Duties . . . . . . . . . . . . . . . . . . . . . . 12
----------------------------------------------
Section 6.2 Collateral Agent's Right to Perform on the Debtor's Behalf . . . . . . . . . . . . . . . . 12
----------------------------------------------------------
Section 6.3 Collateral Agent's Right to Use Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------
Section 6.4 Limitation of the Collateral Agent's Obligations With Respect to Collateral . . . . . . . 13
---------------------------------------------------------------------------
Section 6.5 Rights of the Collateral Agent under UCC and Applicable Law . . . . . . . . . . . . . . . . 13
-----------------------------------------------------------
Section 6.6 Waivers of Rights Inhibiting Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------------------
Section 6.7 Notices and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
----------------------
(a) Manner of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------
(b) Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
---------
Section 6.8 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
------------------------------
Section 6.9 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------------
SECTION 6.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------
SECTION 6.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
--------------------
Section 6.12 Consent to Jurisdiction; Waiver of Immunities . . . . . . . . . . . . . . . . . . . . . . . 15
---------------------------------------------
Section 6.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
------------
Section 6.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------
Section 6.15 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------------
Section 6.16 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
--------------
Section 6.17 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------
SECTION 6.18 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
----------------
</TABLE>
- ii -
<PAGE> 160
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of December 19,
1997, between ____________________________, a _______ corporation (the
"Debtor"), and NationsBank of Texas, N.A., a national banking association, in
its capacity as collateral agent (the "Collateral Agent"), for itself, each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below) a party to the
Amended and Restated Credit Agreement described below (the "Revolving
Lenders"), NationsBank of Texas, N.A., in its capacity as administrative agent
under the Amended and Restated Credit Agreement (the "Revolving Agent"), each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below) a party to the Term
Credit Agreement described below (the "Term Lenders"), and NationsBank of
Texas, N.A., in its capacity as administrative agent under the Term Credit
Agreement (the "Term ) (singularly, a "Secured Party" and collectively,
"Secured Parties").
RECITALS
(1) [The Debtor] [Pillowtex Corporation, a Texas corporation (the
"Borrower")], the Revolving Agent and the Revolving Lenders entered into that
certain Amended and Restated Credit Agreement, dated as of December 19, 1997
(as amended, modified, supplemented or restated from time to time, the "Amended
and Restated Credit Agreement").
(2) [The Debtor] [the Borrower], the Term Agent and the Term
Lenders entered into that certain Term Credit Agreement, dated as of December
19, 1997 (as amended, modified, supplemented or restated from time to time, the
"Term Credit Agreement"). The Amended and Restated Credit Agreement and the
Term Credit Agreement are herein, collectively, the "Credit Agreements."
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in each of the Credit Agreements or in Section 5.1.
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Debtor
securing the payment of the obligations set forth in Section 1.2 hereof,
subject to only Permitted Liens.
(4) It is a condition precedent to the obligation of the Revolving
Lenders and the Term Lenders, as appropriate, to make the Advances, and issue,
or participate in the issuance of Letters of Credit under the Credit Agreements
that the Debtor shall have executed and delivered to the Collateral Agent this
Agreement.
<PAGE> 161
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in order to induce Secured Parties, as appropriate,
to, among other things, make the Advances and issue, or participate in the
issuance of, Letters of Credit under the Credit Agreements, the Debtor hereby
agrees with the Collateral Agent for its benefit and the ratable benefit of the
other Secured Parties, as hereinafter set forth.
ARTICLE 1
Grant of Security Interest
Section 1.1 Assignment and Grant of Security Interest. The
Debtor hereby assigns to, and pledges and grants to the Collateral Agent, for
its benefit and the ratable benefit of the other Secured Parties, a security
interest in, the entire right, title and interest of the Debtor, in and to the
Collateral.
Section 1.2 Security for Obligations. This Agreement creates an
enforceable security interest in the Collateral, subject only to Permitted
Liens, as provided herein, securing the payment and performance of any and all
obligations now or hereafter existing of the Debtor and each other Obligor
under the Credit Agreements and the other Loan Documents, including any
extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, expenses, indemnification or otherwise)
(all such obligations of the Debtor and each other Obligor being the
"Obligations"). Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by the Debtor and each other Obligor to the
Collateral Agent or any other Secured Party under any Loan Document, but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding under any Debtor Relief Law
involving the Debtor and any other Obligor (including all such amounts which
would become due or would be secured but for the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding of the Debtor, any other Obligor or any other Person under any
Debtor Relief Law). [NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN ANY
ACTION OR PROCEEDING INVOLVING ANY STATE CORPORATE LAW, OR ANY STATE OR FEDERAL
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAW AFFECTING THE RIGHTS OF
CREDITORS GENERALLY IF THE SECURITY INTEREST GRANTED BY THE DEBTOR HEREIN SHALL
BE HELD VOID, INVALID OR UNENFORCEABLE, OR SUBORDINATED TO THE LIENS OR CLAIMS
OF ANY OTHER CREDITORS, ON ACCOUNT OF THE AMOUNT OF THE OBLIGATIONS SECURED BY
SUCH SECURITY INTEREST THEN, THE AMOUNT OF THE OBLIGATIONS SECURED BY SUCH
SECURITY INTEREST SHALL, WITHOUT ANY ACTION BY THE DEBTOR, THE COLLATERAL
AGENT, ANY OTHER SECURED PARTY OR ANY OTHER PERSONS, BE AUTOMATICALLY LIMITED
AND REDUCED TO THE HIGHEST AMOUNT THAT IS VALID AND ENFORCEABLE AND NOT
SUBORDINATED TO THE CLAIMS OF OTHER CREDITORS AS DETERMINED IN SUCH ACTION OR
PROCEEDING.]
- 2 -
<PAGE> 162
Section 1.3 Validity and Priority of Security Interest. The
Debtor agrees that the Security Interest shall at all times be valid,
perfected, continuing and binding and enforceable against the Debtor and all
other Persons, in accordance with the terms hereof, as security for the
Obligations, and that the Collateral shall not at any time be subject to any
other Lien, except Permitted Liens.
Section 1.4 Maintenance of Status of Security Interest,
Collateral and Rights.
(a) Required Action. The Debtor shall take all action that may be
necessary and that the Collateral Agent may reasonably request, so as at all
times (i) to maintain the validity, perfection, enforceability and priority of
the Security Interest in the Collateral in conformity with the requirements of
Section 1.3, and (ii) to protect and preserve, and to enable the exercise or
enforcement of, the rights of the Collateral Agent hereunder, including (A)
immediately discharging all Liens, except Permitted Liens, and (B) executing
and delivering financing or continuation statements, instruments of pledge,
notices and instructions in each case in form and substance reasonably
satisfactory to the Collateral Agent.
(b) Protection of Collateral. Except as permitted under the
Credit Agreements, the Debtor shall protect, preserve, renew and maintain, in
each case in a manner consistent with reasonably responsible business and legal
practices, all rights of the Debtor in the Collateral, including (i)
prosecuting such suits, proceedings or other actions for infringement, unfair
competition, dilution or other damage as the Debtor in its reasonable business
judgment deems appropriate under the circumstances or (ii) appearing in and
defending any action or proceeding that may materially adversely affect the
Debtor's title to or the Collateral Agent's security interest in all or any
material part of the Collateral, when such action is in the Debtor's reasonable
business judgment necessary to protect the Debtor's Collateral. Any expenses
incurred by the Debtor in protecting, preserving, renewing and maintaining the
Collateral shall be borne by the Debtor. To the maximum extent permitted by
Laws, during the continuance of an Event of Default, the Collateral Agent shall
have the right, without taking title to any Collateral, to bring suit to
enforce any or all Collateral or its Security Interest in any or all of the
Collateral, in which event the Debtor shall, at the reasonable request of the
Collateral Agent, do any and all lawful acts and execute any and all proper
documents reasonably required by the Collateral Agent in aid of such
enforcement. All reasonable costs, reasonable expenses and other moneys
reasonably advanced by the Collateral Agent in connection with the foregoing
shall, whether or not there are then outstanding any amounts under the Credit
Agreements, be treated as Obligations, but the making of any advances by the
Collateral Agent or any other Secured Party shall not relieve the Debtor of any
default hereunder.
(c) Authorized Action. The Collateral Agent is hereby authorized
to file one or more continuation statements, and during the continuance of an
Event of Default, financing statements, amendments thereto and instruments of
pledge, notices and instructions without the signature of or in the name of the
Debtor when permitted by Applicable Law provided that the Collateral Agent. A
carbon, photographic or other reproduction of this Agreement or of any
financing
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statement filed in connection with this Agreement shall be sufficient as a
financing statement where permitted by Applicable Law.
(d) Registrations. Except as permitted under the Credit
Agreements, the Debtor shall renew or maintain, as specified in and permitted
by any Applicable Law, and shall make any filings necessary to renew or
maintain the Registrations referred to in Section 2.4.
Section 1.5 Debtor Remains Obligated; the Collateral Agent and
Secured Parties Not Obligated. The grant by the Debtor to the Collateral Agent
of the Security Interest shall not relieve the Debtor from the performance of
any term, covenant, condition or agreement on its part to be performed or
observed (including by virtue of the exercise by the Collateral Agent of any of
its rights hereunder), or from any liability to any Person, under or in respect
of any of the Collateral or impose any obligation on the Collateral Agent or
any Secured Party or impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of the Debtor relative
thereto.
Section 1.6 Termination.
(a) After the latest of the Release Dates set forth in the Credit
Agreements, (i) this Agreement shall terminate and be of no further force and
effect (except as provided in Section 1.6(b)) and all rights to the Collateral
shall revert to the Debtor, and (ii) the Collateral Agent will, at the Debtor's
expense, execute and deliver to the Debtor such documents as the Debtor shall
reasonably request to evidence such termination.
(b) The Debtor agrees that, to the extent permitted by Applicable
Law, if at any time all or any part of any payment theretofore applied by the
Collateral Agent and the other Secured Parties to any of the Obligations is or
must be rescinded or returned by any Person for any reason whatsoever
(including the insolvency, bankruptcy or reorganization of the Debtor or any
other Person), such Obligations shall, for the purposes of this Agreement, to
the extent that such payment is or must be rescinded or returned, be deemed to
have continued in existence, notwithstanding such application by the Collateral
Agent or any other Secured Party, and the Security Interest granted hereunder
shall continue to be effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by the Collateral Agent or any
other Secured Party had not been made.
ARTICLE 2
Representations and Warranties
The Debtor represents and warrants as follows:
Section 2.1 Authorization; Enforceability; Required Consents;
Absence of Conflicts. The Debtor has the legal power, and has taken all
necessary legal action to authorize it, to
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execute, deliver and perform in accordance with its terms this Agreement and to
execute and deliver all financing statements and other filings contemplated
hereby, including those supplementary or additional filings referred to in
Section 3.5. This Agreement has been duly executed and delivered by the Debtor
and is the legal, valid and binding obligation of the Debtor, enforceable in
accordance with its terms subject to (i) equitable principles generally and
(ii) the Debtor Relief Laws (insofar as such laws relate to the bankruptcy,
insolvency or similar event of the Debtor). The execution, delivery and
performance in accordance with its terms by the Debtor of this Agreement does
not and (absent any change in any Law) will not (a) except for the filing in
the jurisdiction set forth in Schedule 1 hereto and acceptance of financing
statements and continuation statements in connection therewith delivered to the
Collateral Agent describing this Agreement and the Collateral under the UCC,
the timely filing of this Agreement with the United States Patent and Trademark
Office and acceptance thereof to the extent permitted by Applicable Law and
those supplementary or additional filings referred to in Section 3.5, require
any consent or approval on or prior to the Agreement Date not already obtained,
including any consent or approval of any shareholder or partner of or other
holder of an equity interest in the Debtor except to the extent that the
failure to obtain such consent or approval could not reasonably be expected to
have a Material Adverse Effect, (b) violate or conflict with its organizational
documents, or (c) violate or conflict with, result in a breach of, constitute a
default under, or result in or require the creation of any Lien (other than the
Security Interest) upon any assets of the Debtor under any contract or
agreement or Applicable Laws, in each case the effect of which could reasonably
be expected to have a Material Adverse Effect.
Section 2.2 Rights of the Debtor. The Debtor is the legal and
beneficial owner of the Collateral free and clear of any Lien, except for the
Security Interest and Permitted Liens. No effective financing statement or
other instrument similar in effect naming the Debtor as "debtor" covering all
or any part of the Collateral is on file in any recording office, except such
as (a) may have been filed in favor of the Collateral Agent relating to this
Agreement, (b) may be filed in respect of Permitted Liens, and (c) may be filed
in connection with respect to which the requirements of Section 3.1(i) of each
of the Credit Agreements have been notified.
Section 2.3 Perfection. This Agreement, together with the
filings referred to in Section 2.1(a) above, will create in favor of the
Collateral Agent valid and perfected security interests in the Collateral and
such security interests will be a first priority security interest on existing
Registrations, subject only to Permitted Liens; provided that additional
actions may be required with respect to the perfection of proceeds of the
Collateral held on the date hereof.
Section 2.4 Registrations. Annexes A-1, A-2, B-1 and B-2, as
applicable, set forth a true and complete list of all material Registrations in
the United States Patent and Trademark Office and related state filings owned
by the Debtor as of the date hereof.
Section 2.5 Other Property. On the date hereof, the Debtor has
no interest in any Copyright that is material to the operation of the Debtor's
existing and anticipated business and that are registered or subject to any
application for registration, except where the failure to do
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so could not reasonably be expected to have a Material Release Effect, and the
Debtor does not believe, after appropriate review of all relevant facts and
circumstances, that any registration or filing with respect to any interest the
Debtor may have in any property which may constitute Copyrights is material to
the operation of the Debtor's existing and anticipated business.
ARTICLE 3
Covenants
Section 3.1 Chief Executive Office. The Debtor shall maintain
its chief executive office and the office where the books and records relating
to the Collateral are kept only at the location specified on Schedule 1 to the
Security Agreement executed by the Debtor pursuant to the Credit Agreements.
Section 3.2 Preservation of Existence and Preservation of
Enforceability. The Debtor shall, so long as any of the Obligations remain
outstanding, take all reasonable action and obtain all material Necessary
Authorizations reasonably required so that its obligations under this Agreement
will at all times be legal, valid and binding and enforceable in accordance
with its terms, subject to (i) equitable principles generally and (ii) the
Debtor Relief Laws (insofar as such laws relate to the bankruptcy, insolvency
or similar event of the Debtor), except, in each case, where the failure to
obtain such Necessary Authorizations could not reasonably be expected to have a
Material Adverse Effect.
Section 3.3 No Disposition of Collateral. Except to the extent
permitted by the Credit Agreements, the Debtor shall not sell, transfer or
otherwise dispose of any of the Collateral or any interest therein that is
material to the Debtor's business, or grant any license thereunder, except for
licenses granted or other dispositions in the ordinary course of business.
Section 3.4 Additional Property. If after the date hereof, the
Debtor uses or acquires any interest in any Registration which is within the
definition of "Collateral" or modification, reformulation or other alteration
to any Registration that is material to the Debtor's business, the Debtor shall
execute and deliver to the Collateral Agent all documents and instruments the
Collateral Agent may reasonably require to grant to the Collateral Agent a
perfected first priority Lien therein (subject only to Permitted Liens) and to
subject all of such interest to this Agreement, including but not limited to
any new, supplementary or additional filings.
ARTICLE 4
Event of Default
Upon the occurrence and during the continuance of an Event of Default:
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Section 4.1 Application of Proceeds. All cash proceeds received
by the Collateral Agent upon any sale of, collection of, or other realization
upon, all or any part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and
expenses incurred in connection with the sale of, collection of or other
realization upon Collateral, including reasonable attorneys' fees and
disbursements;
Second: To the payment of the Obligations as provided in the
Intercreditor Agreement and in such order and in such manner as provided in the
Intercreditor Agreement (with the Debtor remaining liable for any deficiency);
and
Third: To the extent of the balance (if any) of such proceeds, to the
payment to the Debtor or other Person legally entitled thereto.
Section 4.2 Remedies.
(a) If an Event of Default has occurred and is continuing, the
Collateral Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of Texas at that time (the "UCC")
(whether or not the Uniform Commercial Code applies to the affected
Collateral), and also may (i) require the Debtor to, and the Debtor hereby
agrees that it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral (to the extent capable of
being assembled) as directed by the Collateral Agent and make it available to
the Collateral Agent at a place to be designated by the Collateral Agent, which
is reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Collateral or any portion thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Debtor
agrees that, to the extent notice of sale shall be required by Applicable Law,
ten days' written notice to the Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification, provided that ten days' written notice does not
violate any Applicable Law. The Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Collateral Agent may be the purchaser at any sale of the
Collateral and pay all or any part of the purchase price thereof by cancelling
part or all of the Obligations.
(b) If an Event of Default has occurred and is continuing, the
Collateral Agent may obtain the appointment of a receiver of the Collateral.
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(c) If an Event of Default has occurred and is continuing, the
Collateral Agent may without notice to the Debtor and at such time or times as
the Collateral Agent in its reasonable discretion may determine, exercise any
or all of the Debtor's rights in, to and under, or in any way connected with or
related to, any or all of the Collateral in accordance with Section 6.4,
including (i) enforcing the performance of, and exercising any or all of the
Debtor's rights with respect to the Collateral, in each case by legal
proceedings or otherwise and (ii) settling, adjusting, compromising, extending,
renewing, discharging and releasing any or all of, and any legal proceedings
brought with respect to any or all of, the Debtor's rights with respect to the
Collateral.
(d) If an Event of Default has occurred and is continuing, the
Collateral Agent may exercise any other right or remedy available under any
other Loan Document or Applicable Laws.
(e) The Debtor agrees that, in any sale of any of the Collateral
after an Event of Default that has occurred and is continuing, the Collateral
Agent is authorized to comply with any limitation or restriction in connection
with such sale as counsel may advise the Collateral Agent is necessary in order
to avoid any violation of applicable Law (including compliance with such
procedures as may restrict the number of prospective bidders or purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to Persons
who will represent and agree that they are purchasing for their own account or
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchase by any Tribunal, and the Debtor further agrees that such compliance
shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall the Collateral Agent or any
other Secured Party be liable or accountable to the Debtor for any discount
allowed solely by reason of the fact that such Collateral was sold in
compliance with any such limitation or restriction.
(f) Upon written demand of the Collateral Agent, after an Event of
Default has occurred and in continuing the Debtor shall execute and deliver to
the Collateral Agent an assignment or assignments of the Collateral and such
other documents as are reasonably necessary to carry out the intent and
purposes of this Agreement. The Debtor agrees that such an assignment and/or
recording shall be applied to reduce the Obligations outstanding only to the
extent that the Collateral Agent or any other Secured Party receives cash
proceeds in respect of the sale of, or realization upon, the Collateral.
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(g) For the purpose of enabling the Collateral Agent to exercise
rights and remedies under this Section 4.2 at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, the Debtor hereby grants to the Collateral Agent, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Debtor) to use, assign, license or sublicense any of
the Collateral now owned or hereafter acquired by the Debtor, wherever the same
may be located, including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof.
SECTION 4.3 INDEMNITY AND EXPENSES.
(a) THE DEBTOR AGREES TO INDEMNIFY (WHICH SHALL BE PAYABLE FROM
TIME TO TIME ON DEMAND) THE COLLATERAL AGENT AND OTHER SECURED PARTIES FROM AND
AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THIS AGREEMENT (INCLUDING
ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES, OR
LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF THE COLLATERAL AGENT OR ANY OTHER
SECURED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED SOLELY FROM
THE COLLATERAL AGENT'S OR ANY SECURED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, BUT EXCLUDING (I) ANY CLAIM OR LIABILITY THAT ARISES AS A DIRECT
RESULT OF THE OPERATION OF ANY COLLATERAL BY THE COLLATERAL AGENT OR ANY OF THE
OTHER SECURED PARTIES AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING ON OR WITH RESPECT TO SUCH COLLATERAL PRIOR TO
FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), (II) MATTERS RAISED
EXCLUSIVELY BY A PARTICIPANT AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED
PARTY, AND (III) MATTERS RAISED BY ONE LENDER AGAINST A LENDER OR BY ANY
SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT.
(b) The Debtor will upon demand pay to the Collateral Agent the
amount of any and all reasonable out-of- pocket expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by the Debtor to perform or observe any of the
provisions hereof.
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ARTICLE 5
Interpretation
Section 5.1 Definitional Provision.
(a) Certain Terms Defined by Reference. The terms "collateral",
"inventory", "rights", and "security interest" shall have the meanings ascribed
thereto in the UCC, or, when capitalized, the meanings specified in subsection
(b) below.
(b) Other Defined Terms. For purposes of this Agreement:
"Agreement" means this Agreement, including all schedules, annexes and
exhibits hereto.
"Collateral" means the Debtor's rights, title and interests, (whatever
they may be) in each of the following, in each case whether now or hereafter
existing or now owned or hereafter acquired by the Debtor and whether or not
the same is subject to Article 9 of the UCC, and wherever the same may be
located, but only to the extent such assets are not presently encumbered:
(i) the Trademarks and Goodwill;
(ii) the Patents;
(iii) all registrations or letters patent issued or applied
for (now or hereafter) with respect to the Trademarks and Patents and
renewals thereof in the United States and any state thereof (the
"Registrations");
(iv) any renewal, reissue, re-examination certificate,
extension or the like with respect to the Trademarks and Patents;
(v) all rights to use the Trademarks as trade names or
assumed names in all aspects of its business;
(vi) all inventions, processes, production methods,
proprietary information, know-how and trade secrets related to the
Patents;
(vii) all licenses, sublicenses or user or other agreements
granted in favor of or from the Debtor with respect to any of the
foregoing to the extent assignable without violation thereof, together
with any Goodwill connected with or symbolized by any such licenses
and agreements and the right to prepare for sale and sell any and all
inventory of the Debtor now or hereafter covered by such licenses and
agreements;
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(viii) all proceeds and products of the foregoing. The
inclusion of "proceeds" of Collateral in the definition of
"Collateral" shall not be deemed a consent by the Collateral Agent to
any sale or other disposition of any Collateral not otherwise
specifically permitted by the terms hereof or by the Credit
Agreements.
"Copyright" means any copyright, copyright registration and
applications for such registration, all subject matter related to such
copyrights, in any and all forms, and all copyrights and applications for
registration of copyrights related to such copyrights.
"Goodwill" means the goodwill of the businesses connected with the use
of (or associated with) and symbolized by the Trademarks, but not any other
goodwill.
"Governmental Approval" means any authorization, consent, approval,
license or exemption of, registration or filing with, or report or notice to,
any Tribunal.
"Information" means data, certificates, reports, statements (including
financial statements), documents and other information in form (including
electronic media) reasonably acceptable to the Collateral Agent.
"Patents" means all patents, all inventions and subject matter related
to such patents, in any and all forms, and all patents and applications for
patents related to such patents, including but not limited to the patents
listed on Annex A-1 attached hereto, all inventions and all subject matter
related to such patents, in any and all forms, and all patents and applications
for patents related to such patents, including those patents and applications
listed on Annex A-2 attached hereto, together with the reissues, divisions,
continuations, renewals, extensions and continuations- in-part thereof, all
income, royalties, damages and payments now or hereafter due and payable under
and with respect thereto, including, without limitation, damages for past or
future infringements thereof and the right to sue for past, present and future
infringements thereof.
"Security Interest" means the continuing security interest of the
Collateral Agent in the Collateral intended to be effected by the terms of this
Agreement or any financing and continuation statements or other filings
contemplated hereby.
"Trademarks" means all trade names, trademarks, and service marks, in
any and all forms, and all trade name, trademark and service mark registrations
and applications for registration related to such trademarks, trade names and
service marks, including but not limited to the registered trade names,
trademarks, and service marks listed on Annex B- 1 attached hereto, and all
applications for registration of trade names, trademarks, and service marks,
including those applications listed on Annex B-2 attached hereto, all common
law rights to such trade names, trademarks and service marks, the right to
recover for all past, present and future infringements thereof, and all other
rights of any kind whatsoever accruing thereunder or pertaining thereto.
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"UCC" means Article 9 of the Uniform Commercial Code as in effect from
time to time in the State of Texas.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to any Person shall be deemed to include such Person's
successors and assigns, (B) to any Applicable Law referred to herein
shall be deemed references to such Applicable Law as the same may have
been or may be amended or supplemented from time to time and (C) to
this Agreement or other agreement defined or referred to herein shall
be deemed a reference to this Agreement or other agreement as the
terms thereof may have been or may be amended, supplemented, waived or
otherwise modified from time to time.
(ii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, the masculine gender includes the
feminine, and the singular number includes the plural, and vice versa.
(iii) Except as otherwise indicated, any reference herein
to the "Collateral", the "Obligations" or any other collective or
plural term shall be deemed to be a reference to each and every item
included within the category described by such collective or plural
term, so that a reference to the "Collateral" or the "Obligations"
shall be deemed a reference to any or all of the Collateral or the
Obligations, as the case may be.
(iv) Capitalized Terms not otherwise defined herein have
the meaning specified in the Credit Agreements, and, to the extent of
any conflict, terms as defined in the Credit Agreements shall control
(provided, that a more expansive or explanatory definition shall not
be deemed a conflict).
Section 5.2 Power of Attorney. Each power of attorney, license
and other authorization in favor of the Collateral Agent or any other Person
granted by or pursuant to this Agreement shall be deemed to be irrevocable and
coupled with an interest.
ARTICLE 6
Miscellaneous
Section 6.1 Expenses of the Debtor's Agreements and Duties. The
Collateral Agent and the other Secured Parties shall not be liable for the
costs and expenses of the Debtor arising out of the Debtor's performance or
observance of the terms, conditions, covenants and agreements to be observed or
performed by the Debtor under this Agreement.
Section 6.2 Collateral Agent's Right to Perform on the Debtor's
Behalf. If the Debtor shall fail to observe or perform any of the terms,
conditions, covenants and agreements to be
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observed or performed by it under this Agreement, the Collateral Agent may (but
shall not be obligated to) do the same or cause it to be done or performed or
observed, either in its name or in the name and on behalf of the Debtor, and in
the event that the Debtor shall have failed to observe or perform any of the
terms, conditions, covenants and agreements to be observed or performed by it
under this Agreement, then the Debtor hereby authorizes the Collateral Agent to
do so, and the Debtor hereby appoints the Collateral Agent, and any other
Person the Collateral Agent may designate, as the Debtor's attorney-in-fact
(exercisable during the continuance of an Event of Default) to do, or cause to
be done, in the name, place and stead of the Debtor in any way in which the
Debtor itself could do, or cause to be done, any or all things necessary to
observe or perform the terms, conditions, covenants and agreements to be
observed or performed by the Debtor under this Agreement. In addition, the
Debtor hereby irrevocably appoints the Collateral Agent as the Debtor's
attorney-in-fact (exercisable during the continuance of an Event of Default) to
execute and deliver in the Debtor's name and stead to any purchaser at any sale
held under Section 4.2 hereof any and all documents and instruments of
assignment, transfer and conveyance necessary or appropriate to transfer to
such purchaser the Collateral sold at such sale. This appointment as
attorney-in-fact shall terminate upon the termination of this Agreement.
Section 6.3 Collateral Agent's Right to Use Agents. The
Collateral Agent may exercise its rights under this Agreement through an agent
or other designee.
Section 6.4 Limitation of the Collateral Agent's Obligations With
Respect to Collateral.
(a) Except for (i) exercising reasonable care in respect of
Collateral held by the Collateral Agent and (ii) accounting for moneys actually
received by it hereunder, the Collateral Agent shall not have any duty or
liability to protect or preserve any Collateral or to preserve rights
pertaining thereto, except to the extent of any gross negligence or willful
misconduct of the Collateral Agent or other Secured Parties.
(b) Nothing contained in this Agreement shall be construed as
requiring or obligating the Collateral Agent, and the Collateral Agent shall
not be required or obligated, to (i) present or file any claim or notice or
take any action, with respect to any Collateral or in connection therewith or
(ii) notify the Debtor of any decline in the value of any Collateral.
Section 6.5 Rights of the Collateral Agent under UCC and
Applicable Law. The Collateral Agent shall have, with respect to the
Collateral, in addition to all of their rights under this Agreement, (a) the
rights of a secured party under the UCC, whether or not the UCC would otherwise
apply to the collateral in question, and (b) the rights of a secured party
under all other Applicable Laws.
Section 6.6 Waivers of Rights Inhibiting Enforcement. To the
extent not prohibited by Applicable Law, the Debtor waives all rights of
redemption, appraisement, or marshalling of assets.
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Section 6.7 Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications
provided for hereunder shall be in writing (except in those cases where giving
notice by telephone is expressly permitted) and shall be deemed to have been
given on the date personally delivered or sent by telecopy (answer back
received), or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, addressed to
the party to which such notice is directed at its address determined as
provided in this Section 5.9.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or delivered at
the following respective addresses and telecopier and telephone numbers and to
the attention of the following individuals or departments:
(i) if to the Debtor, to it at:
Pillowtex Corporation
411 Mint Way
Dallas, Texas 75237
Telephone No.: (214) 333-3225
Telecopier No.: (214) 330-6016
Attention: Chief Financial Officer
(ii) if to the Collateral Agent, to it at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0280
Telecopier No.: (214) 508-0980
Attention: Suzanne Smith
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify by giving 10 days' written notice to the other
specifically captioned "Notice of Change of Address".
Section 6.8 Rights and Remedies Cumulative. Each of the
Collateral Agent's rights and remedies under this Agreement shall be in
addition to all of its other rights and remedies under this Agreement and
Applicable Law, and nothing herein shall be construed as limiting any such
rights or remedies.
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Section 6.9 Amendments; Waivers. Any term, covenant, agreement
or condition of this Agreement may be amended, and any right under this
Agreement may be waived, if, but only if, such amendment or waiver is in
writing and is signed by the Collateral Agent and, in the case of an amendment,
by the Debtor. Unless otherwise specified in such waiver, a waiver of any
right under this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. No election not to exercise, failure
to exercise or delay in exercising any right, nor any course of dealing or
performance, shall operate as a waiver of any right of the Collateral Agent
under this Agreement or Applicable Law, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
the exercise of any other right of the Collateral Agent under this Agreement or
Applicable Law.
SECTION 6.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED STATES OF
AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE REQUIRED TO BE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF TEXAS.
SECTION 6.11 WAIVER OF JURY TRIAL. THE COLLATERAL AGENT AND THE
DEBTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL
BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATED TO, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 6.12 Consent to Jurisdiction; Waiver of Immunities.
(a) The Debtor and the Collateral Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or Texas
State courts sitting in Dallas, Texas, in any action or proceeding arising out
of or relating to this Agreement, and the Debtor and the Collateral Agent
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
(b) Nothing in this section shall limit the right of the Debtor,
the Collateral Agent or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 6.13 Severability. Any provision of this Agreement which
is for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without
- 15 -
<PAGE> 175
invalidating the remaining provisions hereof in such jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 6.14 Counterparts. This Agreement may be signed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all such counterparts together shall constitute
but one and the same instrument.
Section 6.15 Successors and Assigns. All of the provisions of
this Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 6.16 Loan Documents. This Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 6.17 Obligations Not Affected. To the fullest extent
permitted by Applicable Law, the obligations of the Debtor under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(a) any amendment or modification or addition or supplement to any
Loan Documents or any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Collateral Agent
or any other Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty or the Collateral or any part
thereof provided pursuant to, this Agreement or any other Loan Documents;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement, any other Loan Documents or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor or any other
Person, whether or not the Debtor shall have notice or knowledge of any of the
foregoing.
SECTION 6.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL ARGUMENTS BETWEEN
THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- 16 -
<PAGE> 176
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers all as of the date first above
written.
DEBTOR:
Name:
Title:
- -----------------------------------
- -----------------------------------
Telephone No.:
---------------
Telecopier No.:
---------------
Attention:
----------------------
----------------------
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A., as the
Collateral Agent
By:
Name:
Title:
- 17 -
<PAGE> 177
Annex A-1
Patents
-------
<TABLE>
<S> <C> <C> <C>
Nature of Interest Country of
(e.g. owner, licensee) Patent No. Issue Date Issue
---------------------- ---------- ---------- ------------
</TABLE>
<PAGE> 178
Annex A-2
Patent Applications
-------------------
<TABLE>
<S> <C> <C> <C>
Nature of Interest Serial Country of
(e.g. owner, licensee) No. Filing Date Issue
---------------------- ------ ----------- ------------
</TABLE>
<PAGE> 179
Annex B-1
Registered Trademarks
---------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Nature of
Interest of Goods or
(e.g. owner, Registered Registration Int'l Class Services Date Country of
licensee Trademark No. Covered Covered Registered Reg.
------------ ---------- ------------ ----------- -------- ---------- ----------
</TABLE>
<PAGE> 180
Annex B-2
Trademark Applications
----------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Trademark
Nature of Application
Interest of relates to Int'l Goods or Country
(e.g. owner, following Serial Class Services Date of of
licensee Trademark No. Covered Covered Appl. Appl.
------------ ----------- ------ ------- -------- ------- -----
</TABLE>
<PAGE> 181
EXHIBIT D
COMPLIANCE CERTIFICATE
To: NationsBank of Texas, N.A., as Administrative Agent
From: Pillowtex Corporation
Date: ______________ ____, ____
Re: Amended and Restated Credit Agreement, dated as of December 19, 1997
("Credit Agreement"), among Pillowtex Corporation (the "Borrower"),
certain Lenders, and NationsBank of Texas, N.A., as Administrative
Agent
This Compliance Certificate is delivered pursuant to Section 6.3 of
the Credit Agreement. All capitalized terms used herein and defined in the
Credit Agreement shall be used as so defined. For purposes hereof, section
references herein related to sections of the Credit Agreement and bracketed
amounts or ratios refer to the maximum or minimum amounts or ratios required
under the relevant sections of the Credit Agreement.
I. Leverage Ratio
<TABLE>
<S> <C> <C> <C>
A. Total Debt, determined for the Borrower and its Subsidiaries on a
consolidated basis
1. Indebtedness for borrowed money $
------------
2. Obligations evidenced by bonds, debentures, notes or $
------------
other similar instruments
3. Non-contingent obligations to pay the deferred purchase $
------------
price of property or services other than trade payables
incurred in the ordinary course of business
4. Capitalized Lease Obligations $
------------
5. Total Debt [(1) + (2) + (3) + (4)] $
--------------
B. EBITDA, calculated for the four consecutive Fiscal Quarters
ending on the date of calculation (adjusted on a pro forma basis
to exclude from any period under consideration personnel costs
that have been eliminated concurrent with, or during the twelve-
month period subsequent to, the Agreement Date)
1. Earnings from operations
2. Depreciation $
------------
</TABLE>
<PAGE> 182
<TABLE>
<S> <C> <C> <C>
3. Amortization $
------------
4. Other non-cash charges (to the extent included in $
------------
determining Earnings from operations)
5. EBITDA [(1) + (2) + (3) + (4)] $
--------------
C. Leverage Ratio [(A) to (B)] to 1
----------
</TABLE>
II. Covenant Calculations. [To be completed quarterly] Demonstration of
compliance with certain covenants contained in Article 7 of the Credit
Agreement for the period ended ____________________.
<TABLE>
<S> <C> <C>
A. Section 7.1(c) Indebtedness of the Borrower and its Domestic $
-------------- --------------
Subsidiaries, including in respect of Capitalized Lease
Obligations, incurred to purchase, or to finance the purchase
of, assets which constitute property, plant and equipment
1. Maximum in aggregate principal amount outstanding, $35,000,000
when aggregated with Section 7.1(o)
--------------
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
B. Section 7.1(h) Indebtedness assumed in connection with
--------------
Acquisitions permitted under Section 7.6 (excluding the
-----------
Fieldcrest Cannon Transaction)
1. Maximum in aggregate principal amount outstanding $20,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
C. Section 7.1(o) Other Indebtedness of the Borrower and its
--------------
Domestic Subsidiaries
1. Maximum in aggregate principal amount outstanding, $35,000,000
when aggregated with Section 7.1(c)
--------------
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
D. Section 7.3(g) Investments consisting of non-cash
--------------
consideration received in connection with a sale of assets
permitted by Section 7.5
-----------
1. Maximum in aggregate amount outstanding at any time $25,000,000
</TABLE>
2
<PAGE> 183
<TABLE>
<S> <C> <C> <C>
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
E. Section 7.3(i) Loans or advances to directors, officers and
--------------
employees of the Borrower or any of its Subsidiaries
1. Maximum in aggregate amount outstanding at any time $5,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
F. Section 7.3(j) Other Investments
--------------
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
G. Section 7.5(c) Net Cash Proceeds from the disposition of
--------------
assets (to the extent not applied pursuant to Section 2.5(b))
--------------
outstanding and pending reinvestment pursuant to Section
-------
7.5(c)
------
1. Maximum at any time $5,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
H. Section 7.7 Capital Expenditures
-----------
1. Maximum after the Agreement Date in aggregate amount
a. 3.25% of cumulative net revenues of the $
Borrower and its Subsidiaries from and after ---------------
the Agreement Date
b. Maximum [$175,000,000 + (a)] $
--------------
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
I. Section 7.8(b) Dividends payable by the Borrower
--------------
1. Maximum in aggregate amount during any Fiscal Year $10,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
</TABLE>
3
<PAGE> 184
<TABLE>
<S> <C> <C> <C>
J. Section 7.11 Maximum Leverage Ratio
------------
1. Maximum
a. From and including the last Fiscal Quarter of 5.75 to 1
Fiscal Year 1997 to but not including the
last Fiscal Quarter of Fiscal Year 1998
b. From and including the last Fiscal Quarter of 5.25 to 1
Fiscal Year 1998 to but not including the
last Fiscal Quarter of Fiscal Year 1999
c. From and including the last Fiscal Quarter of 4.75 to 1
Fiscal Year 1999 to but not including the
last Fiscal Quarter of Fiscal Year 2000
d. From and including the last Fiscal Quarter of 4.25 to 1
Fiscal Year 2000 and thereafter
2. Actual (see I.C. above) to 1
-----------
K. Section 7.12 Minimum Fixed Charge Coverage Ratio
------------
1. Minimum at the end of each Fiscal Quarter commencing 1.10 to 1
with the first Fiscal Quarter of Fiscal Year 1998
2. Actual
a. Pretax Cash Flow, for the four consecutive
Fiscal Quarters ending on the date of
calculation
(1) EBITDA (see I.B.5. above) $
---------------
(2) Capital Expenditures $
---------------
(3) Cash proceeds received from the sale $
of assets pursuant to Section 7.5(d) ---------------
--------------
(4) Pretax Cash Flow [(1) - (2) + (3)] $
--------------
</TABLE>
4
<PAGE> 185
<TABLE>
<S> <C> <C> <C>
b. Fixed Charges, calculated for the Borrower
and its Subsidiaries on a consolidated basis;
for the first three Fiscal Quarters of Fiscal
Year 1998, on an annualized basis, and for
each Fiscal Quarter thereafter, for the four
consecutive Fiscal Quarters ending on the
date of calculation
(1) Scheduled principal payments in $
respect of Indebtedness ---------------
(2) Cash interest expense (including $
interest expense pursuant to ---------------
Capitalized Lease Obligations)
(3) Cash Dividends paid $
---------------
(4) Fixed Charges [(1) + (2) + (3)] $
--------------
c. Fixed Charge Coverage Ratio [(a) to (b)] to 1
----------
L. Section 7.13 Minimum Net Worth
------------
1. Minimum
a. Fixed amount $
---------------
(1) From the Agreement Date to but not $250,000,000
including the last Fiscal Quarter of
Fiscal Year 1998
(2) From and including the last Fiscal $260,000,000
Quarter of Fiscal Year 1998 to but
not including the last Fiscal
Quarter of Fiscal Year 1999
(3) From and including the last Fiscal $280,000,000
Quarter of Fiscal Year 199 to but
not including the last Fiscal
Quarter of Fiscal Year 2000
(4) From and including the last Fiscal $300,000,000
Quarter of Fiscal Year 2000 to but
not including the last Fiscal
Quarter of Fiscal Year 2001
(5) From and including the last Fiscal $320,000,000
Quarter of Fiscal Year 2001 to but
not including the last Fiscal
Quarter of Fiscal Year 2002
</TABLE>
5
<PAGE> 186
<TABLE>
<S> <C> <C> <C>
(6) From and including the last Fiscal $340,000,000
Quarter of Fiscal Year 2002 and
thereafter
b. An amount equal to the net worth of any $
Person that, on or after the Agreement Date ---------------
becomes a Subsidiary of the Borrower or any
of its Subsidiaries or is merged into or
consolidated with the Borrower or any of its
Subsidiaries or substantially all of the
assets of which are acquired by the Borrower
or any of its Subsidiaries to the extent that
the purchase price therefor is paid in
Capital Stock of the Borrower or any of its
Subsidiaries
c. An amount equal to 100% of any increase in $
Net Worth pursuant to offerings of Capital ---------------
Stock of the Borrower or any of its
Subsidiaries or pursuant to the conversion or
exchange of any convertible subordinated debt
or redeemable preferred stock into Capital
Stock of the Borrower or any of its
Subsidiaries
(excluding any such increase in b. and c. above as a
result of the Fieldcrest Cannon Transaction)
d. Minimum Net Worth [(a) + (b) + (c)] $
--------------
2. Actual $
--------------
3. Difference [(2) - (1)] $
--------------
</TABLE>
III. Compliance Certificate. [To be completed quarterly] The undersigned
hereby certifies to you as follows:
(a) I am the duly elected qualified and acting chief financial
officer [or chief accounting officer] of Borrower.
(b) I have reviewed the provisions of the Credit Agreement and the
other Loan Documents, and a review of the activities of
Borrower during the period from _____________ ___, ____ to
__________ ___, ____ (the "Reporting Period") has been made
under my supervision with a view toward determining whether,
during the Reporting Period, Borrower has kept, observed,
performed and fulfilled all its obligations under the Credit
Agreement and such other Loan Documents.
6
<PAGE> 187
(c) The representations and warranties made in the Loan Documents
are true and correct in all material respects as of the date
hereof as though made at and of the date hereof, except for
such representations and warranties which relate to a
particular date or which fail to be true and correct as a
result of events or occurrences permitted under the Loan
Documents, and no Default or Event of Default has occurred or
is continuing or is imminent.
This Compliance Certificate is executed and delivered on the ________
day of ______________________, ____.
PILLOWTEX CORPORATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
7
<PAGE> 188
EXHIBIT E
ASSIGNMENT AND ACCEPTANCE
Dated _______________, _____
Reference is made to the Amended and Restated Credit Agreement dated
as of December 19, 1997 (as amended, modified or supplemented, the "Credit
Agreement") among Pillowtex Corporation, a Texas corporation ("Borrower"),
NationsBank of Texas, N.A. as Administrative Agent ("Administrative Agent"),
and the lenders parties thereto. Capitalized terms used but not defined herein
shall have the meanings set forth in the Credit Agreement and the Intercreditor
Agreement.
____________________________("Assignor") and ________________________
("Assignee") agree as follows:
1. Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor, $ ______________ in aggregate amount of
the Commitment in effect on the Effective Date (as defined below), and the
related pro rata share of the principal amount of Revolving Credit Advances
owing to Assignor on the Effective Date, the Revolving Credit Note held by
Assignor, and Assignor's participation in any Letters of Credit and
Reimbursement Obligations outstanding on the Effective Date.
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other Loan Document or
(ii) the financial condition of the Borrower or any other Obligor or the
performance or observance by the Borrower or any other Obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document;
and (c) attaches the Revolving Credit Note referred to in Paragraph 1 above to
exchange such Revolving Credit Note for new Revolving Credit Notes as provided
in Section 11.6(f) of the Credit Agreement.
3. Assignee (a) confirms that it has received a copy of the
Credit Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Sections 4.1(j), 6.1 and 6.2 of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Assignment and
Acceptance; (b) agrees that it will, independently and without reliance upon
the Administrative Agent, Assignor, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement and the other Loan Documents;
<PAGE> 189
(c) appoints and authorizes the Administrative Agent and the Collateral Agent
to take such action as agent on its behalf and to exercise such powers under
the Credit Agreement, the other Loan Documents, and this Assignment and
Acceptance as are delegated to the Administrative Agent and the Collateral
Agent by the terms thereof and hereof, together with such powers as are
reasonably incidental thereto and hereto; (d) agrees that it will perform in
accordance with its terms all of the obligations which by the terms of the
Credit Agreement, the other Loan Documents, and this Assignment and Acceptance
are required to be performed by it as a Lender; (e) certifies that it is an
Eligible Assignee; and (f) specifies the addresses set forth in Schedule I
attached hereto as its address for the receipt of notices and as its initial
LIBOR Lender Office, respectively[; and (g) attaches the forms prescribed by
the IRS certifying as to Assignee's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to Assignee under the Credit Agreement, the other Loan Documents, and
this Assignment and Acceptance].
4. The effective date for this Assignment and Acceptance shall be
___________________, (the "Effective Date").
5. Upon such acceptance as of the Effective Date, the recordation
of the information herein in the Register and upon the remittance of a $3,500
processing fee to the Administrative Agent (less any processing fee paid in
respect of a simultaneous assignment under the Term Credit Agreement), (a)
Assignee shall be a party to the Credit Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and (b) Assignor shall, to the extent provided in this Assignment
and Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement.
6. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of Texas. Without excluding
any other jurisdiction, Assignee agrees that the courts of Texas will have
jurisdiction over proceedings in connection herewith.
7. After giving effect to this Assignment and Acceptance (and all
other assignments under the Credit Agreement to be effective as of the
Effective Date):
a. Assignee's Specified Percentage shall be _____%.
b. Assignee's Voting Specified Percentage shall be ____%.
c. Assignor's Specified Percentage shall be _____%.
d. Assignor's Voting Specified Percentage shall be ____%.
- 2 -
<PAGE> 190
8. This Assignment and Acceptance may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
[NAME OF ASSIGNOR]
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
[NAME OF ASSIGNEE]
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
Accepted this ___ day of ____________, _____
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
PILLOWTEX CORPORATION
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
- 3 -
<PAGE> 191
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Advances and Receipt of Notices
2. Initial LIBOR Lending Office
<PAGE> 192
EXHIBIT F
SUBSIDIARY GUARANTY
GUARANTY, dated _____________________________, made by each of the
parties listed on the signature pages hereof (collectively, the "Guarantors",
and each, a "Guarantor"), in favor of the Guarantied Parties referred to below.
W I T N E S S E T H:
WHEREAS, Pillowtex Corporation, a Texas corporation (the "Borrower"),
has entered into an Amended and Restated Credit Agreement, dated as of December
19, 1997, the financial institutions party thereto, and NationsBank of Texas,
N.A., as the administrative agent for said financial institutions (said Amended
and Restated Agreement, as it may be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", and capitalized terms
not defined herein but defined therein being used herein as therein defined);
and
WHEREAS, the Borrower, directly or indirectly, owns beneficially and
of record 100% of the capital stock or other equity interests of the
Guarantors, and the Borrower and each of the Guarantors are members of the same
consolidated group of companies and are engaged in related businesses, and the
Guarantors will derive direct and indirect economic benefit from the Advances;
and
WHEREAS, it is a condition precedent to the obligation of the Lender
to make Advances under [THE REQUIREMENT OF SECTION 5.12 OF] the Credit
Agreement that the Guarantors shall have executed and delivered this Guaranty;
and
WHEREAS, the Lenders and the Administrative Agent are herein referred
to as the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make Advances and issue Letters of Credit, the Guarantors hereby
agree as follows:
SECTION 1. Guaranty. Each Guarantor hereby unconditionally and
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise, of, and the performance of, the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, and any and all reasonable out-of-pocket
expenses (including, without limitation, reasonable counsel fees and expenses)
incurred by any of the Guarantied Parties in enforcing any rights under this
Guaranty. This Guaranty is an absolute guaranty of payment and performance and
not a guaranty of collection. In any action or proceeding involving any state
corporate Law, or any state or federal bankruptcy,
<PAGE> 193
insolvency, reorganization or other Law affecting the rights of creditors
generally (collectively, the "Fraudulent Transfer Laws") if the obligations of
any Guarantor hereunder would otherwise, in each case after giving effect to
all other liabilities of such Guarantor, contingent or otherwise, that are
relevant under the Fraudulent Transfer Laws (specifically excluding, however,
any liabilities of such Guarantor in respect of intercompany indebtedness to
the Borrower, other Affiliates of the Borrower or other Obligors to the extent
that such indebtedness would be discharged in an amount equal to the amount
paid by such Guarantor hereunder) and after giving effect as assets to the
value (as determined under the applicable provisions of Fraudulent Transfer
Laws) of any agreement providing for an equitable allocation among such
Guarantor and other Obligors of obligations arising under guaranties by such
parties (including, without limitation, Section 10 of this Guaranty), be held
or determined to be void, invalid or unenforceable or subordinated to the
claims of any other creditors, on account of the amount of its liability under
this Guaranty, then, notwithstanding any other provision hereof to the
contrary, the amount of such liability shall, without any further action by
such Guarantor, any Lender, the Administrative Agent or any other Person, be
automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, without set-off or
counterclaim, and regardless of any Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Guarantied
Parties with respect thereto. The liability of each Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of any
other Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, or any increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement, the Notes or any of
the other Loan Documents;
(c) any exchange, release or non-perfection of any Lien on any
collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Obligations;
(d) the absence of any attempt to collect any of the Obligations
from the Borrower or from any other Guarantor or any other action to enforce
the same or the election of any remedy by any of the Guarantied Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guarantied Parties with respect to any provision of
any other Loan Document;
- 2 -
<PAGE> 194
(f) the election by any of the Guarantied Parties in any
proceeding under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") of the application of section 1111(b)(2) of the Bankruptcy
Code;
(g) any borrowing or grant of a security interest by the Borrower,
as debtor-in-possession, under section 364 of the Bankruptcy Code;
(h) the disallowance, under section 502 of the Bankruptcy Code, of
all or any portion of the claims of any of the Guarantied Parties for payment
of any of the Obligations; or
(i) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a borrower or a guarantor.
SECTION 3. Waiver. (a) Each Guarantor hereby (i) waives (A)
promptness, diligence, notice of acceptance and any and all other notices with
respect to any of the Obligations or this Guaranty, (B) any requirement that
any of the Guarantied Parties protect, secure, perfect or insure any security
interest in or other Lien on any property subject thereto or exhaust any right
or take any action against the Borrower or any other Person or any Collateral,
(C) the filing of any claim with a court in the event of receivership or
bankruptcy of the Borrower, (D) protest or notice with respect to nonpayment of
all or any of the Obligations, (E) the benefit of any statute of limitation,
(F) all demands whatsoever (and any requirement that same be made on the
Borrower as a condition precedent to much Guarantor's obligations hereunder)
and (G) all rights by which it might be entitled to require suit on an accrued
right of action in respect of any of the Obligations or require suit against
the Borrower or any other guarantor, whether arising pursuant to Section 34.02
of the Texas Business and Commerce Code, as amended, Section 17.001 of the
Texas Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules
of Civil Procedure, as amended, or otherwise; and (ii) covenants and agrees
that, except as set forth in Section 11 hereof, this Guaranty will not be
discharged except by complete performance of the Obligations and any other
obligations of such Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies, any of
the Guarantied Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, each Guarantor hereby consents to such
action by such Guarantied Party and waives any claim based upon such action.
Any election of remedies which results in the denial or impairment of the right
of such Guarantied Party to seek a deficiency judgment against the Borrower
shall not impair the obligation of such Guarantor to pay the full amount of the
Obligations or any other obligation of such Guarantor contained herein.
(c) In the event any of the Guarantied Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Loan Documents, such Guarantied Party may bid all or less than the
amount of the Obligations and the amount of such bid, if successful, need not
be paid by such Guarantied Party but shall be credited against the
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Obligations. The amount of the successful bid at any such sale, whether such
Guarantied Party or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be deemed to be the amount of the Obligations guaranteed under this
Guaranty, subject to any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which any of
the Guarantied Parties might otherwise be entitled by reason of such bidding at
any such sale; provided, however, that the terms of such sale are commercially
reasonable and in accordance with the provisions of the Loan Documents.
(d) Each Guarantor agrees that notwithstanding the foregoing and
without limiting the generality of the foregoing if, after the occurrence and
during the continuance of an Event of Default, the Guarantied Parties are
prevented by Applicable Law from exercising their respective rights to
accelerate the maturity of the Obligations, to collect interest on the
Obligations, or to enforce or exercise any other right or remedy with respect
to the Obligations, or the Administrative Agent is prevented from taking any
action to realize on the Collateral, such Guarantor agrees to pay to the
Administrative Agent for the account of the Guarantied Parties, upon demand
therefor, the amount that would otherwise have been due and payable had such
rights and remedies been permitted to be exercised by the Guarantied Parties.
(e) Each Guarantor hereby assumes responsibility for keeping
itself informed of the financial condition of the Borrower and of each other
guarantor of all or any part of the Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations or any part thereof,
that diligent inquiry would reveal. Each Guarantor hereby agrees that the
Guarantied Parties shall have no duty to advise any Guarantor of information
known to any of the Guarantied Parties regarding such condition or any such
circumstance. In the event that any of the Guarantied Parties in its sole
discretion undertakes at any time or from time to time to provide any such
information to any Guarantor, such Guarantied Party shall be under no
obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which, pursuant to accepted
or reasonable banking or commercial finance practices, such Guarantied Party
wishes to maintain confidential, or (iii) to make any other or future
disclosures of such information or any other information to such Guarantor.
(f) Each Guarantor consents and agrees that the Guarantied Parties
shall be under no obligation to marshall any assets in favor of any Guarantor
or otherwise in connection with obtaining payment of any or all of the
Obligations from any Person or source.
SECTION 4. Representations and Warranties. Each Guarantor hereby
represents and warrants to the Guarantied Parties as follows:
(a) Such Guarantor (i) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the state of
its organization, (ii) is duly qualified as a foreign corporation or other
legal organization and in good standing under the laws of each jurisdiction in
which the character of its properties or the nature of its business requires
such
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qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect, (iii) has all requisite power and
authority to own its properties, to lease the property it operates under lease
and to conduct its business as now or currently proposed to be conducted, (iv)
is in compliance with its certificate of incorporation, by-laws, or other
similar organizational and governance documents, (v) is in compliance with all
other applicable requirements of Law except for such noncompliances as in the
aggregate would have no Material Adverse Effect, and (vi) has all Necessary
Authorizations, except for Necessary Authorizations which can be obtained by
the taking of ministerial action to secure the grant or transfer thereof or
failures which in the aggregate would not have any reasonable likelihood of
having a Material Adverse Effect.
(b) The execution, delivery and performance by such Guarantor of
this Guaranty:
(i) is within its legal powers;
(ii) has been duly authorized by all necessary legal
action, including, without limitation, the consent of stockholders,
partners or other equity holders where required; and
(iii) does not and will not (A) contravene its certificate
of incorporation or by-laws or other comparable governing documents,
(B) violate any other applicable requirement of Applicable Law
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System), or any order or decree of
any Tribunal or arbitrator except to the extent that any such
violation could not reasonably be expected to have a Material Adverse
Effect, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration
of, any of its agreements, (D) result in the creation or imposition of
any Lien upon any of its property (other than Liens in favor of the
Collateral Agent for the benefit of the Administrative Agent and the
Lenders and the administrative agent and the lenders under the Term
Credit Agreement), or (E) require the consent or approval of any
Tribunal or any other Person necessary on or prior to the Agreement
Date not already obtained, except to the extent that the failure to
obtain such consent or approval could not reasonably be expected to
have a Material Adverse Effect.
(c) This Guaranty has been duly executed and delivered by such
Guarantor and is the legal, valid and binding obligation of such Guarantor
enforceable against it in accordance with its terms, subject to Debtor Relief
Laws (insofar as any such law relates to the bankruptcy, insolvency or similar
event of the Guarantor) and general principles of equity.
(d) Except as reflected on Schedule 4 to the Credit Agreements as
of the Agreement Date, there is no Litigation pending against such Guarantor or
any of its Subsidiaries, or in any other manner relating directly and adversely
to such Guarantor or any of its Subsidiaries, or any of their properties, in
any court, Tribunal or arbitrator with respect to which there is a reasonable
likelihood of an adverse determination and that, if adversely determined, is
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reasonably likely to have a Material Adverse Effect. The performance by such
Guarantor under this Guaranty is not restrained or enjoined (either
temporarily, preliminarily or permanently).
SECTION 5. Amendments. Etc. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by any Guarantor herefrom shall
in any event be effective unless the same shall be in writing, approved by the
Determining Lenders (or by all the Lenders where the approval of each Lender is
required under the Credit Agreement) and signed by the Administrative Agent,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (except in those
cases where giving notice by telephone is expressly permitted) and shall be
deemed to have been given on the date personally delivered or sent by telecopy
(answer back received), or three days after deposit in the mail, designated as
certified mail, return receipt requested, postage prepaid, or one day after
being entrusted to a reputable commercial overnight delivery service, if to any
Guarantor, addressed to it at its address specified on the signature pages
hereof, and if to any Guaranteed Party, addressed to it at the address of such
Guaranteed Party specified in the Credit Agreement.
SECTION 7. No Waiver; Remedies. (a) No failure on the part of any
Guarantied Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by Law or any of the other Loan
Documents.
(b) Failure by any of the Guarantied Parties at any time or times
hereafter to require strict performance by the Borrower, any Guarantor or any
other Person of any of the provisions, warranties, terms or conditions
contained in any of the Loan Documents now or at any time or times hereafter
executed by the Borrower, any Guarantor or such other Person and delivered to
any of the Guarantied Parties shall not waive, affect or diminish any right of
any of the Guarantied Parties at any time or times hereafter to demand strict
performance thereof, and such right shall not be deemed to have been modified
or waived by any course of conduct or knowledge of any of the Guarantied
Parties or any agent, officer, employee of any of the Guarantied Parties.
(c) No waiver by the Guarantied Parties of any default shall
operate as a waiver of any other default or the same default on a future
occasion, and no action by any of the Guarantied Parties permitted hereunder
shall in way affect or impair any of the rights of the Guarantied Parties or
the obligations of any Guarantor under this Guaranty or under any of the other
Loan Documents, except as specifically set forth in any such waiver. Any
determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Obligations
shall be conclusive and binding on each Guarantor irrespective of whether such
Guarantor was a party to the suit or action in which such determination was
made.
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SECTION 8. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each of the Guarantied Parties, subject to
the Intercreditor Agreement, is hereby authorized at any time and from time to
time, to the fullest extent permitted by Law, to set off and apply any and all
deposits (general or special (except trust and escrow accounts), time or
demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Guarantied Party to or for the credit or the account of each
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing under this Guaranty, irrespective of whether or not such
Guarantied Party shall have made any demand under this Guaranty and although
such obligations may be contingent and unmatured. Each of the Guarantied
Parties agrees promptly to notify each Guarantor after any such set-off and
application made by such Guarantied Party; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Guarantied Party under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Guarantied Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. Subject to
Section 11, this Guaranty is a continuing guaranty and shall remain in full
force and effect until the Release Date, (ii) be binding upon each Guarantor,
its successors and assigns, and (iii) inure to the benefit of and be
enforceable by the Guarantied Parties and their respective successors,
transferees, and permitted assigns. Without limiting the generality of the
foregoing clause (iii), each of the Guarantied Parties may assign or otherwise
transfer any Note held by it or Obligations owing to it to any other Person,
and such other Person shall thereupon become vested with all the rights in
respect thereof granted to such Guarantied Party herein or otherwise with
respect to such of the Notes and Obligations so transferred or assigned,
subject, however, to compliance with the provisions of Section 11.6 of the
Credit Agreement in respect of assignments.
SECTION 10. Reimbursement. To the extent that any Guarantor shall be
required to repay a portion of the Advances which shall exceed the greater of
(a) the amount of such Advances actually received by such Guarantor and (b) the
amount which such Guarantor would otherwise have paid if such Guarantor had
repaid the aggregate amount of such Advances (excluding the amount thereof
repaid by the Borrower) in the same proportion as such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty bears to the aggregate net worth of the
Guarantors (calculated for each Guarantor based on such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty), then such Guarantor shall be reimbursed by
the other Guarantors for the amount of such excess, pro rata, based on their
respective net worth immediately after the Agreement Date or the date such
Guarantor becomes a party to this Guaranty, as applicable. This Section 10 is
intended only to define the relative rights of the Guarantors, and nothing set
forth in this Section 10 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay to the Guarantied Parties the
Obligations as and when the same shall become due and payable in accordance
with the terms hereof.
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SECTION 11. Reinstatement. This Guaranty shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Obligor for liquidation or reorganization, should any Obligor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Obligor's assets, and shall, to the fullest extent permitted by Applicable Law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to Applicable Law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligees of the Obligations or such part thereof,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 13. Submission to Jurisdiction; Jury Trial. (a) Any legal
action or proceeding with respect to this Guaranty or any document related
thereto may be brought in the courts of the State of Texas or the United States
of America for Dallas, Texas, and, each of the Guarantors and Guarantied
Parties hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the
Guarantors and Guarantied Parties hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) Nothing contained in this Section 13 shall affect the right of
any Guarantor or Guarantied Party to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against any
other party or its property in any other jurisdiction.
(c) THE GUARANTORS AND GUARANTIED PARTIES EACH, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON OR ARISING OUT OF THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT.
SECTION 14. Section Titles. The Section titles contained in this
Guaranty are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty.
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SECTION 15. Execution in Counterparts. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same Guaranty.
SECTION 16. Miscellaneous. All references herein to the Borrower or
to any Guarantor shall include their respective successors and assigns,
including, without limitation, a receiver, trustee or debtor-in-possession of
or for the Borrower or such Guarantor. All references to the singular shall be
deemed to include the plural where the context so requires.
SECTION 17. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation
contained herein to the contrary, until the Release Date, each Guarantor hereby
irrevocably waives any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of any Lender against the Borrower or any collateral which any
Lender now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statutes or common law, including
without limitation, the right to take or receive from the Borrower, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Guarantor in violation of the preceding sentence and the
Obligations shall not have been paid in full, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Lenders, and shall forthwith be paid to the Administrative
Agent to be credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this Section 17(a) is knowingly made in contemplation of
such benefits.
(b) Subordination. All debt and other liabilities of the Borrower
to any Guarantor ("Borrower Debt") are expressly subordinate and junior to the
Obligations and any instruments evidencing the Borrower Debt to the extent
provided below.
(i) Until the Release Date, each Guarantor agrees that it
will not request, demand, accept, or receive (by set-off or other
manner) any payment amount, credit or reduction of all or any part of
the amounts owing under the Borrower Debt or any security therefor,
except as specifically allowed pursuant to clause (ii) below of the
Credit Agreements;
(ii) Notwithstanding the provisions of clause (i), the
Borrower may pay to the Guarantors and the Guarantors may receive and
retain from the Borrower regularly scheduled payments due and owing
under the terms of the Borrower Debt, provided that
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the Borrower's right to pay and the Guarantor's right to receive any
such regularly scheduled amount shall automatically and be immediately
suspended and cease (A) upon the occurrence of a Default (as defined
in the Loan Documents) or (B) if, after taking into account the effect
of such payment, a Default would occur and be continuing. The
Guarantors' right to receive amounts under this clause (ii) (including
any amounts which theretofore may have been suspended) shall
automatically be reinstated in such time as the Default which was the
basis of such suspension has been cured to the Lenders' satisfaction
(provided that no subsequent Default has occurred) or such earlier
date, if any, and the Administrative Agent gives notice to the
Guarantors of reinstatement by the Determining Lenders, in the
Determining Lenders' sole discretion;
(iii) If any Guarantor receives any payment on the Borrower
Debt in violation of this Guaranty, such Guarantor will hold such
payment in trust for the Lenders and will immediately deliver such
payment to the Administrative Agent;
(iv) Until the Release Date, no Guarantor will demand or
accelerate the maturity of all or any part of the Borrower Debt, nor
collect or enforce, or attempt to collect or enforce, from the
Borrower all or any part of the Borrower Debt, whether through the
commencement or joinder of a suit, action or proceeding of any type
(judicial or otherwise) or proceeding under any Debtor Relief Laws
(the "Insolvency Proceeding"), the enforcement of any rights against
any property of the Borrower, or otherwise, except where any
Guaranteed Party shall request such Guarantor to file a claim in
connection with any such proceeding and except as set forth in clause
(v); and
(v) In the event of any Insolvency Proceeding, the
Obligations shall first be paid, discharged and performed in full
before any payment or performance is made upon the Borrower Debt
notwithstanding any other provisions which may be made in such
Insolvency Proceeding. In the event of any Insolvency Proceeding,
each Guarantor will at any time prior to the Release Date (A) file, at
the request of any Guarantied Party, any claim, proof of claim or
similar instrument necessary to enforce the Borrower's obligation to
pay the Borrower Debt, and (B) hold in trust for and pay to the
Guarantied Parties any and all monies, obligations, property, stock
dividends or other assets received in any such proceeding on account
of the Borrower Debt in order that the Guarantied Parties may apply
such monies or the cash proceeds of such other assets to the
Obligations. In the event that any Guarantor fails to take such
action upon any Guarantied Party's request, such Guarantied Party
shall be deemed to have been appointed the attorney-in-fact for such
Guarantor with respect to the Borrower Debt, and such Guarantied Party
may in that capacity (i) demand, sue for, collect and receive any and
all such monies, dividends or other assets, (ii) file any claim, proof
of claim or similar instrument, and (iii) institute such other
proceedings which such Guarantied Party, may deem reasonably necessary
for the collection of the Obligations and the enforcement of the terms
of this Guaranty. Upon request of any Guarantied Party, each
Guarantor will execute and deliver to such Guarantied Party such other
and further powers of attorney or other instruments as such Guarantied
Party may reasonably request
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to effect the purposes of this Guaranty. If in any proceeding to
enforce the payment of the Obligations it becomes necessary that any
Guarantor itself prove such claims, such Guarantor shall do so upon
reasonable request by such Guarantied Party. In proving these claims,
however, such Guarantor shall act as the collection agent of such
Guarantied Party and shall promptly pay any funds so received to such
Guarantied Party.
SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily
seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or
become a party to or be made the subject of any proceeding provided for by any
Debtor Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Lender granted hereunder, then,
the obligations of such Guarantor under this Guaranty shall be, as between such
Guarantor and such Lender, a fully-matured, due, and payable obligation of such
Guarantor to such Lender (without regard to whether the Borrower is then in
default under the Credit Agreement or whether any part of the Obligations is
then due and owing by the Borrower to such Lender), payable in full by such
Guarantor to such Lender upon demand, which shall be the estimated amount owing
in respect of the contingent claim created hereunder.
SECTION 19. Rate Provision. It is not the intention of any Lender to
make an agreement violative of the laws of any applicable jurisdiction relating
to usury. Regardless of any provision in this Guaranty, no Lender shall ever
be entitled to contract, charge, receive, collect or apply, as interest on the
Obligations, any amount in excess of the Highest Lawful Rate. In no event
shall any Guarantor be obligated to pay any amount in excess of the Highest
Lawful Rate. If from any circumstance the Administrative Agent or any Lender
shall ever receive, collect or apply anything of value deemed excess interest
under Applicable Law, an amount equal to such excess shall be applied to the
reduction of the principal amount of outstanding Advances, and any remainder
shall be promptly refunded to the payor. In determining whether or not
interest paid or payable with respect to the Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, the Guarantors and the Lenders
shall, to the maximum extent permitted by Applicable Law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(b) amortize, prorate, allocate and spread the total amount of interest
throughout the full term of such Obligations so that the interest paid on
account of such Obligations does not exceed the Highest Lawful Rate and/or (c)
allocate interest between portions of such Obligations; provided that if the
Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Highest Lawful Rate, the Lenders shall refund
to the payor the amount of such excess or credit the amount of such excess
against the total principal amount owing, and, in such event, no Lender shall
be subject to any penalties provided by any laws for contracting for, charging
or receiving interest in excess of the Highest Lawful Rate.
Section 20. Severability. Any provision of this Guaranty which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without
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invalidating the remaining provisions hereof in such jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
SECTION 21. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
--------------------------------------
Notice Address for all Guarantors
for this Guaranty:
By:
----------------------------------
- ----------------------------------- Name:
--------------------------------
- ----------------------------------- Title:
-------------------------------
- -----------------------------------
Telephone:
------------------------
Telecopier:
------------------------
Accepted and Acknowledged:
NATIONSBANK OF TEXAS, N.A., as
the Administrative Agent
By:
----------------------------
Name:
-----------------------
Title:
----------------------
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EXHIBIT G
NOTICE OF BORROWING
NationsBank of Texas, N.A., as
the Administrative Agent
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Marie T. Lancaster
Re: Pillowtex Corporation
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Pillowtex Corporation,
pursuant to the Amended and Restated Credit Agreement, dated as of December 19,
1997, among the undersigned, the financial institutions party thereto and
NationsBank of Texas, N.A., as the Administrative Agent (said Agreement, as it
may be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement" and capitalized terms not defined herein but defined therein
being used herein as therein defined), hereby gives you notice, irrevocably,
pursuant to Section 2.2 of the Credit Agreement, that the undersigned hereby
requests a Revolving Credit Advance under the Credit Agreement, and in that
connection sets forth below the information relating to such borrowing (the
"Proposed Borrowing") as required by Section 2.2 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _____________,
____.
(ii) The aggregate amount of the Revolving Credit Advances
constituting the Proposed Borrowing is $___________, of which amount
$_______ consists of Base Rate Advances, $_________ consists of LIBOR
Rate Advances having an initial Interest Period of _____ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the representations and warranties of the Borrower contained
in Article 4 of the Credit Agreement and in each of the other Loan
Documents to which it is a party (other than those representations and
warranties that specifically relate to an earlier date) are true and
correct as though made on and as of such date, except as otherwise
expressly provided in Section 4.2 of the Credit Agreement; and
(B) no Default or Event of Default is continuing, or will result
from the Proposed Borrowing.
Very truly yours,
PILLOWTEX CORPORATION
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE> 206
EXHIBIT H-1
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Gene L. Jameson
DONOHOE, JAMESON & CARROLL, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE STATE OF NORTH CAROLINA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF CATAWBA )
THAT, BEACON MANUFACTURING COMPANY, a North Carolina corporation
("Grantor"), for and in consideration of the sum of Ten Dollars to Grantor in
hand paid by MICHAEL F. HORD, Trustee, of 901 Main Street, 67th Floor, Dallas,
Dallas County, Texas 75202 ("Trustee"), in order to secure the payment of the
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements and undertakings of Grantor hereinafter described, does
hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to Trustee,
WITH POWER OF SALE, for the benefit of NationsBank of Texas, N.A., a national
banking association ("NationsBank"), having its principal office at 901 Main
Street, 67th Floor, Dallas, Texas 75202, as the collateral agent (in such
capacity NationsBank is called "Collateral Agent") on behalf of NationsBank and
each other lender (and affiliate of each other lender) which is now or
hereafter a party to the Credit Agreements (as defined below) (collectively,
"Lenders" and singly, a "Lender") all of Grantor's leasehold interest in the
real estate situated in the State of North Carolina, in the Counties set forth
in Exhibit A attached hereto and described in Exhibit A attached hereto and
made a part hereof (the "Land"), together with (i) all rights, power and
privileges of Grantor as lessee under those certain Lease Agreements with the
lessors (the "Lessors") as described on Exhibit B attached hereto and made a
part hereof, and memoranda of which are, or will be simultaneously herewith,
recorded in the office of County Clerk of Catawba County, State of North
Carolina (such Lease Agreements, together with any amendments, modifications,
renewals, extensions, amendments and restatements thereof, collectively, the
"Leases" and individually, a "Lease"); (ii) all of Grantor's interest in the
buildings and other improvements ("Improvements") now on or that may be
hereafter placed on said Land; (iii) Grantor's interest in all materials,
equipment, fixtures or other property whatsoever, now or hereafter attached to,
installed in, or used in connection with the buildings and other improvements
now erected or hereafter to be erected on said Land, including, but not limited
to, all heating, plumbing, lighting, water heating, cooking,
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laundry, refrigerating, incinerating, ventilating and air conditioning
equipment, disposals, dishwashers, refrigerators and ranges, utility lines and
equipment (whether owned individually or jointly with others), sprinkler
systems, fire extinguishing apparatus and equipment, tanks, engines, pipers,
fittings, dynamos, generators, machines, elevators, motors, cabinets, shades,
blinds, partitions, window screens, screen doors, storm windows, awnings,
drapes, and rugs and other floor coverings, and all fixtures, accessions and
appurentances thereto, and all renewals or replacements of or substitutions for
any of the foregoing, all of which property and things are hereby declared to
be permanent fixtures and accessions to the leasehold and part of the realty
conveyed herein as security for the indebtedness herein mentioned; (iv) all
interests now or hereafter of Grantor in and to all easements and rights of way
now or hereafter used in connection with any of the foregoing real estate or as
a means of ingress to or egress from said real estate; (v) all interests now or
hereafter of Grantor in and to any streets, ways, alleys and/or strips of land
adjoining said Land or any part thereof; (vi) all licenses of Grantor necessary
for the operation and maintenance of the foregoing; and (vii) all rights,
estates, hereditaments, powers and privileges of Grantor appurtenant or
incident to the foregoing. This conveyance shall include and the lien,
security interest and assignment created hereby shall encumber and extend to
all other, further or additional title, estates, interest or rights which may
exist now or at any time be acquired by Grantor in or to the property demised
under any lease creating a leasehold estate related to or covering all or any
of the foregoing property and including Grantor's rights, if any, to purchase
the property demised under any such lease and, if fee simple title to any of
such property shall ever become vested in Grantor, such fee simple interest
shall be encumbered by this Deed of Trust in the same manner as if Grantor had
fee simple title to such property as of the date of execution hereof.
TO HAVE AND TO HOLD the foregoing property (the "Mortgaged Property")
unto Trustee and his successors or substitutes in this trust and to his or
their successors and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of
Collateral Agent, however, upon the terms, provisions and conditions herein set
forth.
In order to secure the payment of the indebtedness described in this
Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Financing Statement ("Deed of Trust") and the performance of the obligations,
covenants, agreements and undertakings of Grantor described in this Deed of
Trust, Grantor hereby grants to Collateral Agent a security interest and lien
in all of Grantor's right, title and interest in and to all present and future
(i) goods, inventory, equipment (excluding, however, any equipment or other
property which is financed with Indebtedness permitted to be incurred pursuant
to Sections 7.1(c) and 7.1(h) of the Credit Agreements), furnishings, fixtures,
furniture, chattels and personal property of whatever nature owned by Grantor
now or hereafter attached or affixed to or used in or about the building or
buildings now erected or hereafter to be erected on the Mortgaged Property, or
otherwise located on the Mortgaged Property, (ii) fixtures, accessions and
appurtenances to any of the foregoing or following, (iii) renewals or
replacements of or substitutions for any of the foregoing or following, (iv)
building materials and equipment now or hereafter delivered to said premises
and intended to be installed therein, (v) occupancy agreements, leases, rents
(including security deposits and advance rentals under lease agreements now or
at any time hereafter
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covering or affecting any of the Mortgaged Property and all property described
in this Paragraph and held by or for the benefit of Grantor), fees, royalties,
bonuses, issues, room rents, profits, revenues or other income or benefits of
whatever nature received or due in connection with the Mortgaged Property and
all property described in this Paragraph, (vi) monetary deposits which Grantor
has been required to give to any public or private utility with respect to
utility services furnished to the Mortgaged Property or to the Lessor or other
lessor of the Real Property, (vii) permits, licenses, franchises, certificates
and agreements related to the foregoing, and other rights and privileges
obtained in connection with, or necessary for the operation and maintenance of,
the foregoing, and all other rights and privileges obtained in connection with
the Mortgaged Property and all property described in this Paragraph, (viii)
plans, specifications, maps, surveys, reports, operating, management and
maintenance contracts, architectural, engineering and construction contracts,
books of account, insurance policies, guarantees, warranties and other
documents, of whatever kind or character, relating to the use, construction
upon, occupancy, leasing, sale or operation of the Mortgaged Property and all
property described in this Paragraph, (ix) all proceeds from the taking of any
of the Mortgaged Property and any property described in this Paragraph or any
rights appurtenant thereto by right of eminent domain or by private or other
purchase in lieu thereof, (x) all proceeds (including premium refunds) of each
policy of insurance relating to the Mortgaged Property and any property
described in this Paragraph, (xi) all guarantees, sureties and other agreements
assuring performance of any obligation of any tenant of the Mortgaged Property
and all property described in this Paragraph, and (xii) all proceeds arising
from or by virtue of the sale, lease or other disposition of the Mortgaged
Property and any property described in this Paragraph (all of the property
described in this Paragraph hereinafter collectively called the "Personal
Property") and all proceeds and products of the Personal Property. (The
Mortgaged Property and the Personal Property are hereinafter sometimes
collectively called the "Property").
ARTICLE I
Secured Indebtedness
1.1. Secured Indebtedness. This Deed of Trust is made to secure
and enforce the payment of the following, agreements, documents, obligations,
indebtedness and liabilities: (a) all present and future obligations,
indebtedness and liabilities, and all renewals and extensions of all or any
part thereof of Grantor to Lenders or any Lender arising from, by virtue of, or
pursuant to (i) that certain Amended and Restated Credit Agreement dated as of
December 19, 1997, among the [Grantor][Pillowtex Corporation, a Texas
corporation (the "Borrower)], NationsBank of Texas, N.A., in its capacity as
Administrative Agent, and certain of the (said Amended and Restated Credit
Agreement, as amended, modified, renewed, extended, restated or refinanced from
time to time, the "Amended and Restated Credit Agreement"), (ii) that certain
Term Credit Agreement dated as of December 19, 1997, among [Grantor] [the
Borrower], NationsBank of Texas, N.A., in its capacity as Administrative Agent,
and certain of the Lenders (said Term Credit Agreement, as amended, modified,
renewed, extended, restated or refinanced from time to time, the "Term Credit
Agreement") (The Amended and Restated
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Credit Agreement and the Term Credit Agreement are herein, collectively, called
the "Credit Agreements"), (iii) the Notes (as defined in the Credit
Agreements), and (iv) the other Loan Documents (as defined in the Credit
Agreements), including, without limitation, interest, fees and other charges
that would accrue or become owing both prior to and subsequent to and but for
the commencement of any proceeding against or with respect to Grantor under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et. seq. whether
or not a claim is allowed for the same in any such proceeding, and (b) all
indebtedness and obligations incurred or arising pursuant to the provisions of
this Deed of Trust. The indebtedness referred to in this Paragraph 1.1 is
hereinafter sometimes called the "Secured Indebtedness". Initially-capitalized
terms used herein and not otherwise herein defined shall have the meaning given
to such terms in the Credit Agreements.
1.2 Obligations Secured; Future Advances. The following obligations
("Secured Obligations") are secured by this Deed of Trust:
This Deed of Trust is given wholly or partially to secure future
obligations which may be incurred hereunder and which are evidenced by the
Notes. The amount of present obligations secured hereby is Three Million Three
Hundred Sixty Thousand and 00/100 Dollars ($3,360,000) and the maximum
principal amount, including present and future obligations, which may be
secured at any one time is Three Million Three Hundred Sixty Thousand and
00/100 Dollars ($3,360,000). All such future obligations shall be incurred no
later than December 1, 2012, but in no event later than fifteen (15) years from
the date hereof.
ARTICLE II.
Representations and Warranties
2.1. Representations and Warranties. Grantor represents and
warrants to the Trustee, the Collateral Agent and the Lenders as follows:
(a) Title and Authority. Grantor is the lawful owner of
good title to the Leases, and has good right and authority to grant,
bargain, sell, transfer, assign and mortgage the Mortgaged Property,
subject to Lessor's consent, and to grant a security interest in the
Personal Property.
(b) Warranty. For so long as any of the Secured
Indebtedness shall be outstanding, Grantor will warrant and defend the
title to the Mortgaged Property against the claims of all persons
whomsoever claiming or to claim the same or any part thereof, subject
to Permitted Liens.
(c) Leases. The Leases on the Land are in full force and
effect; no default (nor any event, which with notice or lapse of time
or both, could cause such a default) has occurred and is continuing
thereunder and there have been no renewals and/or
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extensions of, or supplements, modifications, or amendments to any
Lease. Grantor is in the possession of the premises covered by, and
leased under the Leases. No other lease or rental agreement, oral or
written, relates to Grantor's use or occupancy of the Mortgaged
Property other than the Leases.
2.2. Covenants and Agreements. So long as the Secured Indebtedness
or any part thereof remains unpaid, Grantor covenants and agrees with the
Trustee, the Collateral Agent and the Lenders as follows:
(a) Taxes on Lien.
In the event of the enactment after the date hereof of any
Applicable Law deducting from the value of property for the purpose of
taxation any lien or security interest thereon, or imposing upon the
Trustee, the Collateral Agent or any Lender the payment of the whole
or any part of the taxes (excluding income, franchise, gross receipts
or similar taxes imposed on the Lenders, the Trustee or the Collateral
Agent) or assessments or charges or liens herein required to be paid
by Grantor, or changing in any way the laws relating to the taxation
of deeds of trust or mortgages or security agreements or debts secured
by deeds of trust or mortgages or security agreements or the interest
of the trustee or beneficiary or mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes,
so as to affect this Deed of Trust or any of the Secured Indebtedness
or the Trustee, the Collateral Agent or any Lender, then, and in any
such event, Grantor, upon demand by the Trustee, the Collateral Agent
or any Lender, shall to the extent not prohibited by Applicable Law,
pay such taxes, assessments, charges or liens, or reimburse the
Trustee, the Collateral Agent or such Lender therefor.
(b) Insurance. Grantor will maintain insurance with
respect to the Mortgaged Property in accordance with the Credit
Agreements. Collateral Agent understands and acknowledges that the
Lease may require that all property insurance maintained with respect
to the leased premises provide that the proceeds of such insurance be
payable to the Lessors or the Lessors' mortgagees, subject to all
applicable provisions of the Leases with respect to the use of such
proceeds to restore the Improvements.
(c) Protection and Defense of Lien. If the validity of
this Deed of Trust or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Property or
any part thereof shall be attacked directly or indirectly or if any
legal proceedings are instituted against Grantor with respect thereto,
Grantor will give prompt written notice thereof to the Collateral
Agent and at Grantor's own cost and expense diligently will endeavor
to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings,
including but not limited to the employment of counsel, the
prosecution or defense of litigation and the release or discharge of
all adverse claims, other than Permitted Liens, and the Trustee and
Collateral Agent, or either of them (whether or not named as parties
to legal
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proceedings with respect thereto) are hereby authorized and empowered
to take such additional steps as in their judgment and discretion
reasonably may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity of this Deed of
Trust and the rights, titles, liens and security interests created or
evidenced hereby, including but not limited to the employment of
counsel, the prosecution or defense of litigation, the compromise or
discharge of any adverse claims made with respect to the Property,
other than Permitted Liens, the purchase of any tax title and the
removal of prior liens or security interests which do not constitute
Permitted Liens, and all reasonable expenses so incurred of every kind
and character shall be a demand obligation owing by Grantor, and the
party incurring such expenses shall be subrogated to all rights of the
person receiving such payment. Should the Trustee or the Collateral
Agent intend to take any such action described in the immediately
preceding sentence, the Trustee or the Collateral Agent, as
appropriate, shall, subject to the immediately succeeding proviso,
prior to taking any such action notify Grantor of such intention and
give Grantor a reasonable opportunity to provide such defense or
protection; provided, however, if in the reasonable opinion of the
Trustee or the Collateral Agent the giving of such notice and
opportunity to provide such defense or protection would materially
impair or materially hinder such defense or protection or would
otherwise be materially disadvantageous to rights or interests of the
Trustee or the Collateral Agent hereunder or the rights, title, liens
or security interests created or evidenced hereby, the Trustee and the
Collateral Agent shall have no obligation to give such notice and
opportunity to provide such defense or protection prior to the taking
of any such action, but after taking any such action Trustee or
Collateral Agent shall give notice thereof to Grantor.
(d) Permitted Liens. Grantor will comply with and will
perform all of the covenants, agreements and obligations imposed upon
it or the Property in the Permitted Liens in accordance with their
respective terms and provisions if the failure to do so would have a
Material Adverse Effect. Grantor will not modify or permit any
modification of any Permitted Lien against the Mortgaged Property the
result of which would have a Material Adverse Effect without the prior
written consent of Collateral Agent.
(e) [Intentionally omitted.]
(f) Leases. Grantor may not lease or enter into any
other occupancy agreement authorizing the occupancy of any portion of
any of the Mortgaged Property by third parties without the prior
written consent of Collateral Agent, which consent shall not be
unreasonably withheld.
(g) Estoppel Certificate. Grantor shall at any time and
from time to time furnish promptly upon request a written statement in
such form as may be reasonably required by Collateral Agent stating
(if it is the fact) that the Leases are in full force and effect; that
the Leases have not been released, subordinated or modified; that
there are no offsets or defenses against the enforcement of any Lease;
that this Deed of Trust is
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a valid and binding obligation of Grantor, enforceable against Grantor
in accordance with its terms, subject to Debtor Relief Laws (as such
term is defined in the Credit Agreement); that this Deed of Trust has
not been released, subordinated or modified; and that to the best of
Grantor's knowledge there are no offsets or defenses against the
enforcement of this Deed of Trust, or if any of the foregoing
statements are untrue, specifying the reasons therefor.
(h) Compliance with Laws. Grantor shall, and shall use
reasonable efforts to cause any tenant of the Property to, comply with
all applicable restrictive covenants and all Applicable Laws except
where failure to do so could not be reasonably expected to have a
Material Adverse Effect.
(i) Tax and Insurance Escrow. Upon the occurrence and
during the continuance of a Default, Grantor will upon written request
of Collateral Agent, deposit with Collateral Agent a sum equal to
accrued and unpaid ad valorem taxes, assessments and charges (which
charges for the purpose of this subparagraph shall include without
limitation ground rents and water and sewer rents and any other
recurring charge which could create or result in a lien against the
Property) against the Property for the then current year and the
accrued and unpaid premiums for such policies of insurance for the
then current year, all as reasonably estimated by Collateral Agent and
prorated to the end of the calendar month following the month during
which such Default occurred, and thereafter will deposit with
Collateral Agent sufficient funds (as reasonably estimated from time
to time by Collateral Agent) to permit the Collateral Agent to pay, at
least 5 days prior to the delinquency date thereof, the next maturing
ad valorem taxes, assessments and charges and premiums for such
policies of insurance. Collateral Agent shall have the right to rely
upon tax information furnished by applicable taxing authorities in the
payment of such taxes or assessments and shall have no obligation to
make any protest of any such taxes or assessments. Any excess over
the amounts required for such purposes shall be held by Collateral
Agent for payment of future taxes, assessments, charges and premiums,
applied to any Secured Indebtedness, or refunded to Grantor, at
Collateral Agent's option; and any deficiency in such funds so
deposited shall be made up by Grantor upon demand of Collateral Agent.
All such funds so deposited shall bear interest at the normal interest
rate for money market deposits at NationsBank, may be mingled with the
general funds of Collateral Agent and shall be applied by Collateral
Agent toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Collateral Agent by
Grantor (which statements shall be presented by Grantor to Collateral
Agent a reasonable time before the applicable amount is due);
provided, however, that if Collateral Agent has made demand for
payment of all of the Secured Indebtedness, such funds may at
Collateral Agent's option be applied to the payment of the Secured
Indebtedness in the order determined by Collateral Agent and that
Collateral Agent may at any time, in its discretion, apply all or any
part of such funds toward the payment of any such taxes, assessments,
charges or premiums which are past due, together with any penalties or
late charges with respect thereto. The conveyance or transfer of
Grantor's interest in the Property for any reason
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(including without limitation the foreclosure of a subordinate lien or
security interest or a transfer by operation of law) shall constitute
an assignment of transfer of Grantor's interest in and rights to such
funds held by Collateral Agent under this subparagraph (i) but subject
to the rights of Collateral Agent hereunder.
(j) Further Assurances. Grantor will, on request of
Collateral Agent, (i) promptly correct any defect or error which may
be discovered in the contents of this Deed of Trust or in any other
instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record
or file such further instruments (including without limitation further
deeds of trust, security agreements, financing statements,
continuation statements and assignments of rents or leases) and do
such further acts as may be reasonably necessary or proper to carry
out more effectively the purposes of this Deed of Trust and such other
instruments and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof and thereof to
be covered hereby and thereby including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property; (iii) execute, acknowledge, deliver,
procure and record or file any document or instrument (including
specifically any financing statement) deemed reasonable by Collateral
Agent to protect the lien or the security interest hereunder against
the rights or interests of third persons, and Grantor will pay all
reasonable costs connected with any of the foregoing; and (iv) use
reasonable efforts to cause any tenant under any lease agreement of
any of the Property to furnish, in the manner and to the extent
required under the Lease, any instrument or perform, in the manner and
to the extent required under the Lease, any act reasonably deemed
advisable by Collateral Agent to protect the lien or the security
interest hereunder.
(k) Leases. To the extent that a contrary action or
omission would be reasonably likely to cause a Material Adverse
Effect: (1) Grantor shall punctually and properly perform, observe,
and otherwise comply with each and every covenant, agreement,
requirement and condition set forth in the Leases, and do or cause to
be done all things necessary or appropriate to keep the Leases in full
force and effect and to preserve and keep unimpaired the rights of
Grantor, Trustee and Collateral Agent thereunder, and Grantor shall
neither do nor suffer to be done any act of commission or omission
which would justify the Lessor under any Lease to cancel same, evict
Grantor, or declare due and payable all or any part of the rental and
other sums payable thereunder in advance of the time specified therein
for the payment thereof; (2) Grantor will not, without the express
written consent of Collateral Agent, surrender, forfeit, cancel or
terminate, or permit the surrender, forfeiture, cancellation, or
termination of any Lease in whole or in part, whether or not a default
shall have occurred and shall be continuing thereunder; and (3)
Grantor will not, without the express prior written consent of
Collateral Agent, amend, modify or impair, or permit the amendment,
modification or impairment of any Lease in any manner which would
materially adversely affect rights of Grantor, Trustee or Collateral
Agent thereunder. Grantor shall promptly notify Collateral Agent in
writing upon receipt or delivery by Grantor of any written notice of
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default under any Lease. If for any reason Grantor cannot timely make
any payment under any Lease or perform or comply with any of its
obligations under any Lease, Grantor shall notify Collateral Agent in
sufficient time to enable Collateral Agent (but Collateral Agent shall
not be obligated) to timely make such payments and/or to perform or
comply with such other obligations.
2.3. Right of Collateral Agent to Perform. Grantor agrees that, if
after any applicable notice or grace period, Grantor fails to perform any act
or to take any action which hereunder Grantor is required to perform or take,
or to pay any money which hereunder Grantor is required to pay, Collateral
Agent, in Grantor's name or in its own name and after the giving of any
required notice and expiration of any applicable cure period, may but shall not
be obligated to perform or cause to be performed such act or take such action
or pay such money, and any reasonable expenses so incurred by Collateral Agent,
and any money so paid by Collateral Agent, shall be a demand obligation owing
by Grantor to Collateral Agent and Collateral Agent, upon making such payment,
shall be subrogated to all of the rights of the person or entity receiving such
payment. Any amounts due and owing by Grantor to Collateral Agent pursuant to
this Deed of Trust shall bear interest from the date such amount becomes due
until paid at a rate of interest per annum equal to the lesser of (i) the
Default Rate or (ii) the Highest Lawful Rate, and shall be a part of the
Secured Indebtedness and shall be secured by this Deed of Trust and by any
other Loan Document. Should Collateral Agent intend to perform or cause to be
performed such act or take such action or pay such money, Collateral Agent
shall, subject to the immediately succeeding proviso, prior to taking any such
action notify Grantor of such intention and give Grantor a reasonable
opportunity to take such action; provided, however, if in the reasonable
opinion of Collateral Agent the giving of such notice and opportunity to take
action would materially impair the validity or priority of this Deed of Trust,
the rights or interests of the Trustee or Collateral Agent hereunder or any
rights, titles, liens or security interests created or evidenced hereby,
Collateral Agent shall have no obligation to give such notice and opportunity
to take action prior to taking of such action, but, nevertheless, shall give
prompt written notice of the taking of such action to Grantor.
ARTICLE III.
Remedies in Event of Default
3.1. Defaults. The term "Default" as used in this Deed of Trust
shall mean the occurrence and continuance of an "Event of Default" as defined
in the Credit Agreements.
3.2. Acceleration. Upon the occurrence and during the continuance
of a Default, Collateral Agent shall have the option of declaring all Secured
Indebtedness in its entirety to be immediately due and payable, and the liens
and security interests evidenced hereby shall be subject to foreclosure in any
manner provided for herein or provided for by law as Collateral Agent may
elect.
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<PAGE> 215
3.3. Possession. Upon the occurrence and during the continuance of
a Default, Collateral Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Property, including
the right to rent the same for the account of Grantor and to deduct from such
rents all reasonable costs, expenses and liabilities of every reasonable
character incurred by Collateral Agent in collecting such rents and in
managing, operating, maintaining, protecting or preserving the Property and to
apply the remainder of such rents on the Secured Indebtedness in such manner as
Collateral Agent may elect. All such costs, expenses and liabilities incurred
by Collateral Agent in collecting such rents and in managing, operating,
maintaining, protecting or preserving the Property, if not paid out of rents as
hereinabove provided, shall constitute a demand obligation owing by Grantor and
shall bear interest from the date of expenditure until paid at a rate of
interest per annum equal to the Default Rate, all of which shall constitute a
portion of the Secured Indebtedness. If necessary to obtain the possession
provided for above, Collateral Agent may invoke any and all legal remedies to
dispossess Grantor, including specifically one or more actions for forcible
entry and detainer, trespass to try title and restitution. In connection with
any action taken by Collateral Agent pursuant to this Paragraph 3.3, Collateral
Agent shall not be liable for any loss sustained by Grantor resulting from any
failure to let the Property, or any part thereof, or from any other act or
omission of Collateral Agent in managing the Property, including without
limitation, the negligence of Collateral Agent, unless such loss is caused by
the gross negligence or willful misconduct of Collateral Agent, and Collateral
Agent shall not be obligated to perform or discharge any obligation, duty or
liability under any lease agreement covering the Property or any part thereof
or under or by reason of this instrument or the exercise of rights or remedies
hereunder. Should Collateral Agent incur any such liability, the amount
thereof, including reasonable costs, expenses and reasonable attorneys' fees,
shall be secured hereby, and Grantor shall reimburse Collateral Agent therefor
immediately upon demand. Nothing in this Paragraph 3.3 shall impose any duty,
obligation or responsibility upon Collateral Agent for the control, care,
management or repair of the Property, or shall operate to make Collateral Agent
responsible or liable for any waste committed on the Property or by any other
parties or for any dangerous or defective condition of the Property, or for any
negligence in the management, upkeep, operation, repair or control of the
Property resulting in loss or injury or death to any tenant, licensee, employee
or stranger, unless such waste, dangerous or defective condition or injury or
death is directly a result of gross negligence or willful misconduct by
Collateral Agent, and not just Collateral Agent's own ordinary negligence.
3.4. Foreclosure. During a Default, Trustee, his successor or
substitute, is authorized and empowered and it shall be his special duty at the
request of Collateral Agent to take all actions necessary to sell the Mortgaged
Property in accordance with the statutes of the State where the Land is
located, as such statutes are then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by Trustee hereunder
may be of the entire Mortgaged Property or in such parcels as Collateral Agent
may request, and any sale may be adjourned by announcement at the time and
place appointed for such sale without further notice
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except as may be required by law. The sale by Trustee of less than the whole
of the Mortgaged Property shall not exhaust the power of sale herein granted,
and Trustee is specifically empowered to make successive sale or sales under
such power until the whole of the Mortgaged Property shall be sold; and, if the
proceeds of such sale of less than the whole of the Mortgaged Property shall be
less than the aggregate of the Secured Indebtedness and the expense of
executing this trust as provided herein, this Deed of Trust and the lien hereof
shall remain in full force and effect as to the unsold portion of the Mortgaged
Property just as though no sale had been made; provided, however, that Grantor
shall never have any right to require the sale of less than the whole of the
Mortgaged Property but Collateral Agent shall have the right, at its sole
election, to request Trustee to sell less than the whole of the Mortgaged
Property. After each sale, Trustee shall make to the purchaser or purchasers
at such sale good and sufficient conveyances in the name of Grantor, conveying
the Mortgaged Property so sold to the purchaser or purchasers with general
warranty of leasehold title, and shall receive the proceeds of said sale or
sales and apply the same as herein provided. Payment of the purchase price to
Trustee shall satisfy the obligation of purchaser at such sale therefor, and
such purchaser shall not be responsible for the application thereof. The power
of sale granted herein shall not be exhausted by any sale held hereunder by
Trustee or his substitute or successor, and such power of sale may be exercised
from time to time and as many times as Collateral Agent may deem necessary
until all of the Mortgaged Property has been duly sold and all of the Secured
Indebtedness has been fully paid. In the event any sale hereunder is not
completed or is defective in the opinion of Collateral Agent, such sale shall
not exhaust the power of sale hereunder and Collateral Agent shall have the
right to cause a subsequent sale or sales to be made hereunder. Any and all
statements of fact or other recitals made in any deed or deeds given by Trustee
or any successor or substitute appointed hereunder as to nonpayment of the
Secured Indebtedness, or as to the occurrence of any Default, or as to
Collateral Agent having declared all of such indebtedness to be due and
payable, or as to the request to sell, or as to notice of time, place and terms
of sale and of the properties to be sold having been duly given, or as to the
refusal, failure or inability to act of Trustee or any substitute or successor,
or as to the appointment of any substitute or successor trustee, or as to any
other act or thing having been duly done by Collateral Agent or by such
Trustee, substitute or successor, shall be taken as prima facie evidence of the
truth of the facts so stated and recited. Trustee, his successor or
substitute, may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale held by Trustee, including
the posting of notices and the conduct of sale, but in the name and on behalf
of Trustee, his successor or substitute.
3.5. Judicial Foreclosure. This instrument shall be effective as a
mortgage as well as a deed of trust and during a Default may be foreclosed as
to any of the Property in any manner permitted by the laws of any State in
which any part of the Property is situated, and any foreclosure suit may be
brought by the Trustee or by Collateral Agent. In the event a foreclosure
hereunder shall be commenced by the Trustee or his or her substitute or
successor, Collateral Agent may at any time before the sale of the Property
direct the said Trustee to abandon the sale, and may then institute suit for
the collection of the Notes and the other Secured Indebtedness, and for the
foreclosure of this Deed of Trust. It is agreed that if Collateral Agent
should institute a suit for the collection of the Notes or any other Secured
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Indebtedness and for the foreclosure of this Deed of Trust, Collateral Agent
may at any time before the entry of a final judgment in said suit dismiss the
same, and require the Trustee or his or her substitute or successor to sell the
Property in accordance with the provisions of this Deed of Trust.
3.6. Receiver. In addition to all other remedies herein provided
for, Grantor agrees that during a Default, subject to any mandatory
requirements of applicable law, Collateral Agent shall as a matter of right be
entitled to the appointment of a receiver or receivers for all or any part of
the Property, whether such receivership be incident to a proposed sale of such
Property or otherwise, and without regard to the value of the Property or the
solvency of any person or persons liable for the payment of the Secured
Indebtedness, and Grantor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment and
agrees not to oppose any application therefor by Collateral Agent, but nothing
herein is to be construed to deprive Collateral Agent of any other right,
remedy or privilege it may now or hereafter have under the law to have a
receiver appointed; provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Collateral Agent to
receive payment of the rents and income from the Property. Any money advanced
by Collateral Agent in connection with any such receivership shall be a demand
obligation owing by Grantor to Collateral Agent and shall bear interest from
the date of making such advancement by Collateral Agent until paid at a rate of
interest per annum equal to the lesser of (i) the Base Rate Basis plus 2%, or
(ii) the Highest Lawful Rate, and shall be secured by this Deed of Trust and by
any other instrument securing the Secured Indebtedness.
3.7. Proceeds of Sale. The proceeds of any sale held by the
Trustee or any receiver or public officer in foreclosure of the liens evidenced
hereby shall be applied:
first, to the payment of all necessary reasonable costs and
expenses incident to such foreclosure sale, including but not limited
to all court costs and charges of every character in the event
foreclosed by suit, and a reasonable fee to the Trustee acting under
the provisions of Paragraph 3.4 if foreclosed by power of sale as
provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness
(including specifically without limitation the principal, interest and
reasonable attorneys' fees due and unpaid on the Notes and the amounts
due and unpaid and owed to Collateral Agent under this Deed of Trust),
to be distributed in accordance with the Intercreditor Agreement; and
third, the remainder, if any, shall be paid to Grantor or
other party legally entitled thereto.
3.8. The Collateral Agent as Purchaser. Collateral Agent shall
have the right to become the purchaser at any sale held by any Trustee or
substitute or successor or by any receiver or public officer, and Collateral
Agent purchasing at such sale shall have the right to
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credit upon the amount of the bid made therefor, to the extent necessary to
satisfy such bid, the Secured Indebtedness owing to the Collateral Agent and/or
Lenders for the equal and ratable benefit of Lenders.
3.9. Uniform Commercial Code.
(a) During a Default, the Collateral Agent may exercise
its rights of enforcement with respect to the Personal Property under
the Uniform Commercial Code as adopted in the State of Texas, as
amended, and in conjunction with, in addition to or in substitution
for those rights and remedies, and all rights and remedies granted to
Lenders under any Loan Document executed by Grantor governing security
interests in personal property of Grantor.
(b) any sale made pursuant to the provisions of this
Paragraph 3.9 shall be deemed to have been a public sale conducted in
a commercially reasonable manner if held contemporaneously with the
sale of the Mortgaged Property under power of sale as provided herein
upon giving the same notice with respect to the sale of the Personal
Property hereunder as is required for such sale of the Mortgaged
Property under power of sale; and
(c) any and all statements of fact or other recitals made
in any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Secured
Indebtedness, or as to the occurrence of any Default, or as to
Collateral Agent and/or Lenders having declared all of such
indebtedness to be due and payable, or as to notice of time, place and
terms of sale and of the properties to be sold having been duly given,
or as to any other act or thing having been duly done by Collateral
Agent and/or Lenders, shall be taken as prima facie evidence of the
truth of the facts so stated and recited; and
(d) Collateral Agent may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident
to any sale held by Collateral Agent, including the sending of notices
and the conduct of the sale, but in the name and on behalf of
Collateral Agent.
3.10. Partial Foreclosure. During a Default, Collateral Agent shall
have the right to proceed with foreclosure of the liens and security interests
evidenced hereby without declaring the entire Secured Indebtedness due, and in
such event any such foreclosure sale may be made subject to the unmatured part
of the Secured Indebtedness; and any such sale shall not in any manner affect
the unmatured part of the Secured Indebtedness, but as to such unmatured part
this Deed of Trust shall remain in full force and effect just as though no sale
had been made. The proceeds of any such sale shall be applied as provided in
Paragraph 3.7 except that the amount paid under subparagraph second thereof
shall be only the matured portion of the Secured Indebtedness and any proceeds
of such sale in excess of those provided for in subparagraphs first and second
(modified as provided above) shall be applied to installments of principal of
and
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interest on the Notes in the inverse order of maturity. Several sales may be
made hereunder without exhausting the right of sale for any unmatured part of
the Secured Indebtedness.
3.11. Remedies Cumulative. All remedies herein expressly provided
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Indebtedness, or any part
thereof, or otherwise benefiting the Trustee, the Collateral Agent and the
Lenders, and the Trustee, the Collateral Agent and the Lenders shall, in
addition to the remedies herein provided, be entitled to avail themselves of
all such other remedies as may now or hereafter exist at law or in equity for
the collection of the Secured Indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and security interests evidenced
hereby, and the resort to any remedy provided for hereunder or under any such
other instrument or provided for by law shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies, except as
may be provided under applicable law.
3.12. Resort to Any Security. Collateral Agent may resort to any
security given by this Deed of Trust or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to Collateral
Agent in its sole and uncontrolled discretion, and any such action shall not be
considered as a waiver of any of the rights, benefits, liens or security
interests evidenced by this Deed of Trust, except as may be provided under
applicable law.
3.13. Waiver. To the full extent Grantor may do so, Grantor agrees
that Grantor will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension or redemption, and Grantor, for Grantor and Grantor's heirs,
devisees, representatives, successors and assigns, and for any and all persons
ever claiming any interest in the Property, to the extent permitted by law and
except with respect to rights set forth herein or in the other Loan Documents,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of intention to mature or declare due the whole of
the Secured Indebtedness and all rights to a marshaling of the assets of
Grantor, including the Property, or to a sale in inverse order of alienation in
the event of foreclosure of the liens and security interests hereby created.
Grantor shall not have or assert any right under any statute or rule of law
pertaining to the marshaling of assets, sale in inverse order of alienation,
the exemption of homestead, the administration of estates of decedents or other
matters whatever to defeat, reduce or affect the rights of the Trustee or
Collateral Agent under the terms of this Deed of Trust to a sale of the
Property for the collection of the Secured Indebtedness without any prior or
different resort for collection, or the rights of the Trustee or Collateral
Agent under the terms of this Deed of Trust to the payment of such indebtedness
out of the proceeds of sale of the Property in preference to every other
claimant whatever. If any law referred to in this Paragraph 3.13 and now in
force, of which Grantor or Grantor's successors and assigns and such other
persons claiming any interest in the Property might take advantage despite this
Paragraph 3.13 shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to preclude the application of this Paragraph
3.13. TO THE
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EXTENT NOT PROHIBITED BY APPLICABLE LAWS, IF THE PROPERTY IS SOLD IN ACCORDANCE
WITH THE TERMS OF THIS DEED OF TRUST FOR AN AMOUNT LESS THAN THE OBLIGATIONS OF
GRANTOR TO TRUSTEE, LENDERS OR COLLATERAL AGENT, THE DEFICIENCY SHALL BE
DETERMINED BY THE PURCHASE PRICE AT THE SALE.
3.14. Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale Grantor or
Grantor's successors or assigns or any other persons claiming any interest in
the Property by, through or under Grantor are occupying or using the Property,
or any part thereof, each and all shall immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the property occupied, such rental to be due daily
to the purchaser. In the event the tenant fails to surrender possession of
said property upon demand, the purchaser shall be entitled to institute and
maintain an action for forcible entry and detainer of said property in the
Justice of the Peace Court in the Justice Precinct in which such property, or
any part thereof, is situated.
3.15. Insurance Premiums. Subject to the terms of the Leases, upon
any foreclosure of the Mortgaged Property pursuant to this Deed of Trust,
Collateral Agent shall have the right to cancel any policy of insurance
covering all or any part of the Mortgaged Property and shall be entitled to
receive any unearned premiums from such policy. The unearned premiums received
by Collateral Agent shall be applied in the same manner as provided in
Paragraph 3.7 above regarding the application of proceeds of sale of the
Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
Contracts and Bonds
4.1. Assignment. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to Collateral Agent all rents,
income, profits and proceeds to be derived from the Property, including without
limitation the immediate and continuing right, subject to the license granted
below, to collect and receive all of the rents, income, receipts, revenues,
issues, profits and other sums of money that may now or at any time hereafter
become due and payable to Grantor under the terms of any present or future
leases now or hereafter covering the Property, or any part thereof, including
but not limited to minimum rents, additional rents, percentage rents,
deficiency rents and liquidated damages following default, all proceeds payable
under any policy of insurance covering the loss of rents resulting from
untenantability caused by destruction or damage to the Property, and liens and
rights, whether constitutional, statutory, contractual or otherwise, in favor
of Grantor as the lessor of any of the Property, and all of Grantor's rights to
recover monetary amounts from any lessee in bankruptcy including, without
limitation, rights of recovery for use and occupancy and damage claims arising
out of lease defaults, including rejections, under the Bankruptcy Reform Act of
1978, as amended, or any other present or
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future federal or state insolvency, bankruptcy or similar law (all of the
foregoing hereinafter collectively called "Applicable Bankruptcy Law"),
together with any sums of money that may now or at any time hereafter become
due and payable to Grantor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind or character
arising under any and all present and future oil, gas and mining leases
covering the Property or any part thereof; and all proceeds and other amounts
paid or owing to Grantor under or pursuant to any and all contracts and bonds
relating to the construction, erection or renovation of the Property; subject
however to a license hereby granted by Collateral Agent to Grantor to collect
and receive and expend all of the foregoing, subject to the terms and
conditions hereof. Upon the occurrence and continuance of any Default,
Collateral Agent shall have the right, power and privilege (but shall be under
no duty) to terminate such license whereupon Collateral Agent shall have the
right and authority, whether or not it takes possession of the Property, to
seek enforcement of any such lease, contract or bond and to demand, collect,
receive, sue for and recover in its own name any and all of the above described
amounts assigned hereby and to apply the sum(s) collected, first to the payment
of reasonable expenses incident to the collection of the same, second to the
payment of the Secured Indebtedness, and the balance, if any, to Grantor or
other party legally entitled thereto; provided, however, that Collateral Agent
shall not be deemed to have taken possession of the Property except on the
exercise of its option to do so, evidenced by its demand and overt act for such
purpose. Grantor shall make no assignment or other disposition of the above
described amounts assigned hereby, nor, unless permitted under the Credit
Agreement, shall Grantor cancel or amend any such lease, contract, bond or any
other instrument under which such amounts are to be paid or waive, excuse,
condone, discount, set off, compromise or in any manner release any obligation
thereunder if to do so could reasonably be expected to have a Material Adverse
Effect, nor shall Grantor during the existence of a Default receive or collect
any such amount thus assigned for a period of more than one month in advance of
the date on which payment thereof is due and Grantor shall duly and punctually
observe and perform every obligation to be performed by it under each such
lease, contract, bond or other instrument if the failure to do so could
reasonably be expected to have a Material Adverse Effect, and shall not do or
permit to be done anything to impair the security thereof and shall enforce if
the failure to do so could reasonably be expected to have a Material Adverse
Effect, every obligation of each other party thereto. The assignment contained
in this Paragraph 4.1. shall become null and void upon the release of this Deed
of Trust. It shall never be necessary for Collateral Agent to institute legal
proceedings of any kind whatsoever to enforce the provisions of this Paragraph
4.1.
ARTICLE V.
Hazardous Materials
5.1. Definitions. For the purpose of this Deed of Trust, Grantor,
Collateral Agent and Trustee agree that, unless the context otherwise specifies
or requires, the following terms shall have the meaning specified below:
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(a) "Hazardous Materials" means (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), as amended from time to time, and
regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as
amended from time to time, and regulations promulgated thereunder; (c)
asbestos; (d) polychlorinated biphenyls; (e) underground storage
tanks, whether empty, filled or partially filled with any substance,
(f) any substance the presence of which on the Land and Improvements
is prohibited by any Governmental Requirements (as defined below); and
(g) any other substance which by any Governmental Requirements
requires special handling or notification of any federal, state or
local governmental entity in its collection, storage, treatment, or
disposal.
(b) "Hazardous Materials Contamination" means the
contamination (whether presently existing or with respect to Sections
5.3, 5.4 and 5.5 only, hereafter occurring) of the buildings,
facilities, soil, groundwater, air or other elements on or of the Land
and Improvements by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on or
of any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Deed of Trust) emanating
from the Land and Improvements, in either case, in a manner violating
applicable Governmental Requirements.
(c) "Governmental Requirements" means all laws,
ordinances, rules, and regulations of any Governmental Authority (as
defined below) applicable to Grantor or the Land and Improvements.
(d) "Governmental Authority" means the United States, the
state, county, city, or any other political subdivision in which the
Land and Improvements is located, and any other political subdivision,
agency, or instrumentality exercising jurisdiction over Grantor or the
Land and Improvements.
5.2. [Intentionally omitted.]
5.3. Grantor's Covenants. Grantor agrees to (a) give notice to
Collateral Agent promptly upon Grantor's acquiring knowledge of the presence of
any Hazardous Materials which would have a Material Adverse Effect on the Land
and Improvements or of any Hazardous Materials Contamination which would have a
Material Adverse Effect with a full description thereof; and (b) promptly
comply with any Governmental Requirements requiring the removal, treatment or
disposal of such Hazardous Materials or Hazardous Materials Contamination and
provide Collateral Agent with reasonably satisfactory evidence of such
compliance, except to the extent that Grantor's liability for such removal,
treatment and disposal of such Hazardous Materials or Hazardous Materials
Contamination is being contested in good faith by Grantor.
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5.4. Site Assessments. Grantor will permit Collateral Agent (by
its officers, employees and agents) from time to time, but not more frequently
than once in any twelve-month period (unless otherwise required by any Tribunal
having supervisory authority over Collateral Agent) to contract for the
services of persons (the "Site Reviewers") to perform environmental site
assessments (the "Site Assessments") on the Land and Improvements for the
purpose of determining whether there exists on the Land and Improvements any
environmental condition which could reasonably be expected to result in any
liability, cost or expense to the owner, occupier or operator of the Land and
Improvements arising under any Governmental Requirements relating to Hazardous
Materials. Subject to the consent of the Lessor and subject to the provisions
of the Lease, the Site Assessments may be performed at any time or times, upon
reasonable notice, and under reasonable conditions established by Grantor which
do not impede the performance of the Site Assessments. Site Assessments shall
be conducted in accordance with Governmental Requirements. Subject to the
consent of the Lessor and subject to the provisions of the Lease, the Site
Reviewers are hereby authorized to enter upon the Land and Improvements for
such purposes. Subject to the consent of the Lessor and subject to the
provisions of the Lease, the Site Reviewers are further authorized to perform
both above and below the ground testing for environmental damage or the
presence of Hazardous Materials on the Land and Improvements and such other
tests on the Land and Improvements as may be necessary to conduct the Site
Assessments in the reasonable opinion of the Site Reviewers. Grantor will
supply to the Site Reviewers such historical and operational information
regarding the Land and Improvements as Grantor has in its possession or control
and as may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments and will make available for meeting with the Site Reviewers
appropriate personnel employed by Grantor having knowledge of such matters.
The costs of performing such Site Assessments, except during a Default, shall
be paid by Collateral Agent. During a Default, the reasonable cost of
performing such Site Assessments shall be paid by Grantor upon demand of
Collateral Agent and any such expenses borne by Collateral Agent and not
promptly reimbursed by Grantor shall be secured by this Deed of Trust.
5.5. [Intentionally omitted.]
ARTICLE VI.
Miscellaneous
6.1. Release. Upon the Release Date, (as defined in the Term
Credit Agreement) the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be
released of record by Collateral Agent at Grantor's cost.
6.2. Successor Trustee. The Trustee may resign by an instrument in
writing addressed to Collateral Agent, or the Trustee may be removed at any
time with or without cause by an instrument in writing executed by Collateral
Agent. In case of the death, resignation, removal or disqualification of the
Trustee or if for any reason Collateral Agent shall deem it desirable
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to appoint a substitute or successor trustee to act instead of the herein named
trustee or any substitute or successor trustee, then Collateral Agent shall
have the right and hereby is authorized and empowered to appoint a successor
trustee, or a substitute trustee, without other formality than appointment and
designation in writing executed by Collateral Agent and the authority hereby
conferred shall extend to the appointment of other successor and substitute
trustees successively until the Secured Indebtedness finally has been paid in
full or until the Property is sold hereunder. In the event the Secured
Indebtedness is owned by more than one person or entity, the holder or holders
of not less than a majority in the amount of such indebtedness shall have the
right and authority to make the appointment of a successor or substitute
trustee provided for in the preceding sentence. Such appointment and
designation by Collateral Agent or by the holder or holders of not less than a
majority of the Secured Obligations shall be full evidence of the right and
authority to make the same and of all facts therein recited. If Collateral
Agent is a corporation and such appointment is executed in its behalf by an
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the
corporation. Upon the making of any such appointment and designation, all of
the estate and title of the Trustee in the Property shall vest in the named
successor or substitute trustee and thereupon he shall succeed to and shall
hold, possess and execute all the rights, powers, privileges, immunities and
duties herein conferred upon the Trustee; but, nevertheless, upon the written
request of Collateral Agent or of the successor or substitute Trustee, the
Trustee ceasing to act shall execute and deliver an instrument transferring to
such successor or substitute Trustee all of the estate and title in the
Property of the Trustee so ceasing to act, together with all the rights,
powers, privileges, immunities and duties herein conferred upon the Trustee,
and shall assign, transfer and deliver any of the properties and moneys held by
said Trustee hereunder to said successor or substitute Trustee. All references
herein to the Trustee shall be deemed to refer to the Trustee (including any
successor or substitute appointed and designated as herein provided) from time
to time acting hereunder. Grantor hereby ratifies and confirms any and all
acts which the herein named Trustee or her successor or successors, substitute
or substitutes, in this trust, lawfully shall do by virtue hereof.
6.3. Liability and Indemnification of Trustee. The Trustee shall
not be liable for any error of judgment or act done by the Trustee in good
faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for the Trustee's gross negligence or willful misconduct.
The Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by
him or her hereunder, believed by him or her in good faith to be genuine. All
moneys received by the Trustee, until used or applied as herein provided, shall
be held in trust for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the extent required
by law), and the Trustee shall be under no liability for interest on any monies
received by him or her hereunder, except to the extent required hereunder or
under Applicable Law. Grantor will reimburse the Trustee for, and indemnify
and save harmless him or her against, any and all liability and expenses which
reasonably may be incurred by him or her in the performance of his or her
duties hereunder, except for such liability and expenses
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attributable to the Trustee's gross negligence or willful misconduct. The
foregoing indemnity shall not terminate upon release, foreclosure or other
termination of this Deed of Trust.
6.4. Waiver by Collateral Agent. Collateral Agent may, subject to
the Credit Agreement, at any time and from time to time in writing (a) waive
compliance by Grantor with any covenant herein made by Grantor to the extent
and in the manner specified in such writing; (b) consent to Grantor doing any
act which Grantor hereunder is prohibited from doing, or consent to Grantor
failing to do any act which Grantor hereunder is required to do, to the extent
and in the manner specified in such writing; (c) release any part of the
Property, or any interest therein, from the lien and security interest of this
Deed of Trust without the joinder of the Trustee, or (d) release any party
liable, either directly or indirectly, for the Secured Indebtedness or for any
covenant herein or in any other instrument now or hereafter securing the
payment of the Secured Indebtedness, without impairing or releasing the
liability of any other party. No such act shall in any way impair the rights
of Trustee or Collateral Agent hereunder except to the extent specifically
agreed to by Collateral Agent in such writing.
6.5. Actions by Trustee or Collateral Agent. The lien, security
interest and other security rights of Trustee, Collateral Agent and Lenders
hereunder shall not be impaired by any indulgence, moratorium or release
granted by Collateral Agent (except as provided in Section 6.1), including but
not limited to (a) any renewal, extension, increase or modification which
Collateral Agent or any Lender may grant with respect to any Secured
Indebtedness, (b) any surrender, compromise, release, renewal, extension,
exchange or substitution which Collateral Agent or any Lender may grant in
respect of the Property, or any part thereof or any interest therein (except to
the extent specifically surrendered, compromised, released, renewed, extended,
exchanged or substituted), or (c) any release or indulgence granted to any
endorser, guarantor or surety of any Secured Indebtedness. The taking of
additional security by Trustee or Collateral Agent shall not release or impair
the lien, security interest or other security rights of Trustee or Collateral
Agent hereunder or affect the liability of Grantor or of any endorser or
guarantor or other surety or improve the right of any permitted junior
lienholder in the Property.
6.6. Rights of Collateral Agent. Collateral Agent may, subject to
the Credit Agreement, waive any Default or other default without waiving any
other prior or subsequent Default or other default. Collateral Agent may
remedy any Default or other default without waiving the Default or other
default remedied. Neither the failure by Collateral Agent to exercise, nor the
delay by Collateral Agent in exercising, any right, power or remedy upon any
Default or other default shall be construed as a waiver of such Default or
other default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Collateral Agent of
any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification
or waiver of any provision hereof or consent to any departure by Grantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent, and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and
to the extent therein specified. No notice to or demand on Grantor in any case
shall
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of itself entitle Grantor to any other or further notice or demand in similar
or other circumstances. Acceptance by Collateral Agent of any payment in an
amount less than the amount then due on any Secured Indebtedness shall be
deemed an acceptance on account only and shall not in any way affect the
existence of a Default or other default hereunder.
6.7. Reproduction as Financing Statement. A carbon, photographic
or other reproduction of this Deed of Trust or of any financing statement
relating to this Deed of Trust shall be sufficient as a financing statement.
6.8. Fixture Filing. Some of the above goods are or are to become
fixtures on the Land. This Deed of Trust shall be effective as a financing
statement filed as a fixture filing with respect to all fixtures included
within the Property and is to be filed for record in the real property records
of the county where the Land is situated. The mailing address of Grantor is
set forth below the signature of Grantor to this Deed of Trust and the address
of Collateral Agent from which information concerning the security interest may
be obtained is 901 Main Street, Suite 6700, Dallas, Texas 75202.
6.9. Filing and Recordation. Grantor will cause this Deed of Trust
and all amendments and supplements thereto and substitutions therefor and all
financing statements and continuation statements relating hereto to be
recorded, filed, re-recorded and refiled in such manner and in such places as
the Trustee or Collateral Agent shall reasonably request, and will pay all such
recording, filing, re-recording and refiling taxes, fees and other charges.
6.10. Dealing with Successor. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Grantor,
Collateral Agent may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Deed of Trust and to the Secured
Indebtedness in the same manner as with Grantor, without in any way vitiating
or discharging Grantor's liability hereunder or for the payment of the Secured
Indebtedness. Except as agreed to in writing by all Lenders and Collateral
Agent, no sale of the Property, no forbearance on the part of Collateral Agent
or any Lender and no extension of the time for the payment of any of the
Secured Indebtedness given by Collateral Agent or any Lender shall operate to
release, discharge, modify, change or affect, in whole or in part, the
liability of Grantor hereunder or for the payment of the Secured Indebtedness
or the liability of any other person hereunder or for the payment of the
Secured Indebtedness, except to the extent proceeds of any such sale are
applied as provided in Paragraph 3.7.
6.11. Place of Payment. Secured Indebtedness which may be owing
hereunder at any time by Grantor shall be payable at the place designated in
the Loan Documents, or if no such designation is made, at the office of
Collateral Agent at the address indicated in this Deed of Trust, or at such
other place in the continental United States as Collateral Agent may designate
in writing.
6.12. Subrogation. To the extent that proceeds of the Secured
Indebtedness are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior
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encumbrance against the Property, such proceeds have been advanced by Lenders
at Grantor's request and Lenders shall be subrogated to any and all rights,
security interests and liens owned or held by any owner or holder of such
outstanding liens, security interests, charges or encumbrances, irrespective of
whether said liens, security interests, charges or encumbrances are released;
provided, however, that the terms and provisions of this Deed of Trust shall
govern the rights and remedies of Lenders and shall supersede the terms,
provisions, rights and remedies under and pursuant to the instruments creating
the lien or liens to which Lenders are subrogated hereunder.
6.13. Application of Indebtedness. If any part of the Secured
Indebtedness cannot be lawfully secured by this Deed of Trust or if any part of
the Property cannot be lawfully subject to the lien and security interest
hereof to the full extent of such indebtedness, then all payments made shall be
applied on said indebtedness first in discharge of that portion thereof which
is unsecured by this Deed of Trust.
6.14. Usury. It is the intent of the Lenders and Grantor in the
execution of the Credit Agreement, this Deed of Trust, the other Loan Documents
and all other instruments now or hereafter securing the Secured Indebtedness or
executed in connection therewith or under any other written or oral agreement
by the undersigned in favor of Collateral Agent and/or Lenders to contract in
strict compliance with applicable usury law. In furtherance thereof,
Collateral Agent, Lenders and Grantor stipulate and agree that none of the
terms and provisions contained in the Credit Agreement, this Deed of Trust, the
other Loan Documents or any other instrument securing the Notes or executed in
connection herewith, or in any other written or oral agreement by Grantor in
favor of Lenders and/or Collateral Agent, shall ever be construed to create a
contract to pay for the use, forbearance or detention of money, or interest at
a rate in excess of the maximum interest rate permitted to be charged by
applicable law. Neither Grantor nor any guarantors, endorsers, sureties or
other parties now or hereafter becoming liable for the Secured Indebtedness or
any part thereof shall ever be required to pay interest on Secured Indebtedness
or arising under any instrument securing the Secured Indebtedness or under any
of the other Loan Documents, or in any other written or oral agreement by
Grantor in favor of Lenders and/or Collateral Agent, at a rate in excess of the
maximum interest that may be lawfully charged under Applicable Laws, and the
provisions of this Paragraph 6.14 shall control over all other provisions of
the Credit Agreements, this Deed of Trust, the other Loan Documents and any
other instruments now or hereafter securing the Secured Indebtedness or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. All interest paid or agreed to be paid
to Lenders and/or Collateral Agent shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Secured Indebtedness so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by Applicable Laws. Lenders and/or Collateral Agent expressly
disavow any intention to charge or collect excessive unearned interest or
finance charges in the event the maturity of the Secured Indebtedness is
accelerated. If the maturity of the Secured Indebtedness shall be accelerated
for any reason or if the principal of the Secured Indebtedness is paid prior to
the end of the term of the Secured Indebtedness, and as a result thereof the
interest received for the actual period
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of existence of the loan evidenced by the Secured Indebtedness exceeds the
applicable maximum lawful rate, Lenders and/or Collateral Agent shall refund to
Grantor the amount of such excess or shall credit the amount of such excess
against the principal balance of the Secured Indebtedness then outstanding. In
the event that Lenders and/or Collateral Agent shall collect monies and/or any
other thing of value which are deemed to constitute interest which would
increase the effective interest rate on the Secured Indebtedness to a rate in
excess of that permitted to be charged by applicable law, an amount equal to
interest in excess of the lawful rate shall, upon such determination, at the
option of Lenders and/or Collateral Agent, be either immediately returned to
Grantor or credited against the principal balance of the other Secured
Indebtedness, without further penalty to such holder. By execution of this
Deed of Trust, Grantor acknowledges that it believes the loan to be
non-usurious and agrees that if, at any time, Grantor should have reason to
believe that such loan is in fact usurious, it will give Lenders and/or
Collateral Agent notice of such condition, and Grantor agrees that Lenders
and/or Collateral Agent shall have 90 days after receipt of such notice in
which to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. As used in this Paragraph 6.14,
"interest" means any sum that must be treated as interest under Applicable Laws
in determining whether a loan is usurious. THE TERM "APPLICABLE LAWS" AS USED
IN THIS PARAGRAPH 6.14 SHALL MEAN THE LAWS OF THE STATE OF TEXAS OR THE LAWS OF
THE UNITED STATES, WHICHEVER LAWS ALLOW THE GREATER RATE OF INTEREST, AS SUCH
LAWS NOW EXIST OR MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE.
6.15. Notice. Any notice, request, demand or other communication
required or permitted hereunder, or under the Loan Documents, or under any
other instrument securing the payment of the Loan Documents (unless otherwise
expressly provided therein) shall be given in the same manner as in Section
11.1 of the Credit Agreements.
6.16. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the representatives,
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Property, and shall inure to the
benefit of the Trustee and Collateral Agent and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the land. All references in this Deed of Trust to Grantor, Trustee or
Collateral Agent shall be deemed to include all such heirs, devisees,
representatives, successors, substitutes and assigns.
6.17. Severability. A determination that any provision of this Deed
of Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and any determination that the application of
any provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
6.18. Gender and Number. Within this Deed of Trust, words of any
gender shall be held and construed to include any other gender, and words in
the singular and plural number shall be held and construed to include the other
number, unless the context otherwise requires.
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<PAGE> 229
6.19. Counterparts. This Deed of Trust may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All such counterparts shall be construed together and shall
constitute one instrument.
6.20. Reporting Requirements. Grantor agrees to comply with any and
all reporting requirements applicable to the transaction secured by this Deed
of Trust which are set forth in any law, statute, ordinance, rule, regulation,
order or determination of any governmental authority, and further agrees upon
request of Collateral Agent to furnish Collateral Agent with evidence of such
compliance.
6.21. Headings. The paragraph headings contained in this Deed of
Trust are for convenience only and shall in no way enlarge or limit the scope
or meaning of the various and several paragraphs hereof.
6.22. Modification or Termination. The Loan Documents may only be
modified or terminated by a written instrument or instruments executed by the
party against whom enforcement of the modification or termination is asserted.
Any alleged modification or termination which is not so documented shall not be
effective as to any party.
6.23. ENTIRE AGREEMENT. THIS DEED OF TRUST, TOGETHER WITH THE
CREDIT AGREEMENTS, AND ALL OTHER LOAN DOCUMENTS (ALL AS IN EFFECT ON THE DATE
HEREOF AND AS THE SAME MAY BE AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED
HEREAFTER FROM TIME TO TIME) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
6.24. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE REAL PROPERTY
LOANS OF ANY STATE IN WHICH ANY OF THE MORTGAGED PROPERTY MAY BE LOCATED
CONTROLS, THIS DEED OF TRUST SHALL BE CONSTRUED, INTERPRETED, ENFORCED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS
OF THE UNITED STATES APPLICABLE TO TRANSACTIONS WITHIN TEXAS.
6.25. Multiple Advance Loan. This Deed of Trust is given to secure,
among other things, a multiple advance loan and shall secure not only presently
existing indebtedness but also future advances, whether such advances are
obligatory or to be made at the option of the Collateral Agent or any Lender or
otherwise, to the same extent as if such future advances were made on the date
of execution of this Deed of Trust. The lien of this Deed of Trust shall be
valid as to all indebtedness hereby secured, including future advances, from
the time of its filing for record in the recorder's or registrar's office of
the county in which the Mortgaged Property is located.
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<PAGE> 230
IN WITNESS WHEREOF, Grantor has executed this Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing as of the
19th day of December, 1997.
BEACON MANUFACTURING COMPANY
[Corporate Seal]
Attest:
By:
------------------------------------
- ------------------------- Name: J. Mark Kirkpatrick
Title: Vice President and Treasurer
Address: 4111 Mint Way
Dallas, Texas 75237-1699
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
This ________ day of December, 1997, personally came before me,
_______________________, Notary Public of ___________ County, State of
__________________, J. Mark Kirkpatrick, who being by me duly sworn, says that
he is the Vice President and Treasurer of Beacon Manufacturing Company, a North
Carolina corporation, and that the seal affixed to the foregoing instrument in
writing is the corporate seal of said corporation, and that said writing was
signed and sealed by him in behalf of said corporation by its authority duly
given. And the said Vice President and Treasurer acknowledged the said writing
to be the act and deed of said corporation.
Witness my hand and notarial seal, this the __________ day of
December, 1997.
----------------------------------
Notary Public, State of
----------
----------------------------------
Print Name of Notary here
My Commission Expires:
- ----------------------------------
(NOTARY SEAL)
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<PAGE> 231
EXHIBIT H-2
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Gene L. Jameson
DONOHOE, JAMESON & CARROLL, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
DEED TO SECURE DEBT, ASSIGNMENT OF LEASES
AND RENTS, AND SECURITY AGREEMENT
STATE OF GEORGIA (
( KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF COLUMBUS (
THAT, _____________________________________________, a _______
corporation (hereinafter called "Grantor"), in order to secure the payment of
the indebtedness hereinafter referred to and the performance of the
obligations, covenants, agreements and undertakings of Grantor hereinafter
described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET
OVER to NATIONSBANK OF TEXAS, N.A., a national banking association (hereinafter
called "NationsBank"), having its principal office at 901 Main Street, 67th
Floor, Dallas, Texas 75202, as the collateral agent (hereinafter in such
capacity NationsBank is called the "Collateral Agent") on behalf of NationsBank
and each other lender (and affiliate of each other lender) a party to the
Credit Agreements described below (hereinafter collectively called "Lenders"),
all of the real estate situated in the State of ___________________________, in
the Counties set forth in Exhibit "A" attached hereto and described in Exhibit
"A" attached hereto and made a part hereof (the "Land"), together with (i) all
the buildings and other improvements now on or that may be hereafter placed on
said Land; (ii) Grantor's interest in all materials, equipment, fixtures or
other property whatsoever, now or hereafter attached to, installed in, or used
in connection with the buildings and other improvements now erected or
hereafter to be erected on said Land, including, but not limited to, all
heating, plumbing, lighting, water heating, cooking, laundry, refrigerating,
incinerating, ventilating and air conditioning equipment, disposals,
dishwashers, refrigerators and ranges, utility lines and equipment (whether
owned individually or jointly with others),
THE AGGREGATE PRINCIPAL INDEBTEDNESS, EXCLUSIVE OF INTEREST AND COSTS, SECURED
BY THIS INSTRUMENT IS [spell out in letters] ($____________). THE PRINCIPAL
INDEBTEDNESS SECURED BY THIS INSTRUMENT MATURES ______________, 19__.
<PAGE> 232
sprinkler systems, fire extinguishing apparatus and equipment, tanks, engines,
pipes, fittings, dynamos, generators, machines, elevators, motors, cabinets,
shades, blinds, partitions, window screens, screen doors, storm windows,
awnings, drapes, and rugs and other floor coverings, and all fixtures,
accessions and appurtenances thereto, and all renewals or replacements of or
substitutions for any of the foregoing, all of which property and things are
hereby declared to be permanent fixtures and accessions to the freehold and
part of the realty conveyed herein as security for the indebtedness herein
mentioned; (iii) Grantor's interest in all easements and rights of way now or
hereafter used in connection with any of the foregoing real estate or as a
means of ingress to or egress from said real estate; (iv) Grantor's interest,
now or hereafter acquired, in and to any streets, ways, alleys and/or strips
and gores of land adjoining said Land or any part thereof; and (v) Grantor's
interest in and to all rights, estates, hereditaments, powers and privileges
appurtenant or incident to the foregoing.
TO HAVE AND TO HOLD the foregoing property (herein called the
"Mortgaged Property") unto Collateral Agent and its successors and assigns, in
fee simple, however, upon the terms, provisions and conditions herein set
forth.
Notwithstanding any other provision of this instrument to the
contrary, this instrument is (1) a security deed passing title to the Mortgaged
Property and made in compliance with the provisions of Section 44-14-60 et seq.
of the Official Code of Georgia Annotated, as amended, and not a mortgage, and
(2) a security agreement covering all of the fixtures located on or comprising
a part of the Property under the Uniform Commercial Code, as enacted in the
State of Georgia.
In order to secure the payment of the indebtedness hereinafter
referred to and the performance of the obligations, covenants, agreements and
undertakings of Grantor hereinafter described, Grantor further grants (to the
extent not prohibited by Applicable Law) to the Collateral Agent a security
interest and lien in Grantor's right, title and interest in and to all present
and future (i) goods, inventory, equipment (excluding, however, any equipment
or other property which is financed with Indebtedness permitted to be incurred
pursuant to Sections 7.1(c) and 7.1(h) of the Credit Agreements), furnishings,
fixtures, furniture, chattels and other personal property of whatever nature
owned by Grantor now or hereafter attached or affixed to or used in or about
the building or buildings now erected or hereafter to be erected on the
Mortgaged Property or otherwise located on the Mortgaged Property, (ii)
fixtures, accessions and appurtenances to any of the foregoing or following,
(iii) renewals or replacements of or substitutions for any of the foregoing or
following, (iv) building materials and equipment now or hereafter delivered to
said premises and intended to be installed therein, (v) occupancy agreements,
leases, rents (including security and other deposits and advance rentals under
occupancy agreements and lease agreements now or at any time hereafter covering
or affecting any of the Mortgaged Property and all property described in this
paragraph and held by or for the benefit of Grantor), fees, royalties, bonuses,
issues, room rents, profits, revenues or other income or benefits of whatever
nature received or due in connection with the Mortgaged Property and all
property described in this
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paragraph, (vi) monetary deposits which Grantor has been required to give to
any public or private utility with respect to utility services furnished to the
Mortgaged Property, (vii) permits, licenses, franchises, certificates, and
agreements related to any of the foregoing or following, and all other rights
and privileges obtained in connection with, or necessary for the operation and
maintenance of, the foregoing, and all other rights and privileges obtained in
connection with the Mortgaged Property and all property described in this
paragraph, (viii) plans, specifications, maps, surveys, reports, operating and
management and maintenance contracts, architectural, engineering, construction
and development contracts, books of account, insurance policies, guarantees,
warranties and other documents, of whatever kind or character, relating to the
ownership, use, construction upon, occupancy, leasing, sale or operation of the
Mortgaged Property and all property described in this paragraph, (ix) oil, gas
and other hydrocarbons and other minerals produced from or allocated to the
Mortgaged Property and all products processed or obtained therefrom, the
proceeds thereof, and all accounts and general intangibles under which such
proceeds may arise, (x) all proceeds from the taking of any of the Mortgaged
Property and any property described in this paragraph or any rights appurtenant
thereto by right of eminent domain or by private or other purchase in lieu
thereof, (xi) all proceeds (including premium refunds) of each policy of
insurance relating to the Mortgaged Property and any property described in this
paragraph, (xii) all guarantees, sureties and other agreements assuring
performance of any obligation of any tenant of the Mortgaged Property and all
property described in this paragraph, and (xiii) all proceeds arising from or
by virtue of the sale, lease or other disposition of the Mortgaged Property and
any property described in this paragraph (all of the property described in this
paragraph hereinafter collectively called the "Personal Property") and all
proceeds and products of the Personal Property. (The Mortgaged Property and
the Personal Property are hereinafter sometimes collectively called the
"Property").
ARTICLE I.
Secured Indebtedness
1.1. Secured Indebtedness. This Deed to Secure Debt, Assignment of
Leases and Rents, and Security Agreement (hereinafter called this "Deed") is
made to secure and enforce the payment of the following, agreements, documents,
obligations, indebtedness and liabilities: (a) all present and future
obligations, indebtedness and liabilities, and all renewals and extensions of
all or any part thereof of Grantor to Lenders or any Lender arising from, by
virtue of, or pursuant to (i) that certain Amended and Restated Credit
Agreement dated as of December __, 1997 among [Grantor] [Pillowtex Corporation,
a Texas corporation (the "Borrower")], NationsBank of Texas, N.A., in its
capacity as Administrative Agent and certain Lenders named therein (said
Amended and Restated Credit Agreement, as amended, modified, renewed, extended
or restated from time to time, the "Amended and Restated Credit Agreement"),
(ii) that certain Term Credit Agreement dated as of December __, 1997, among
[Grantor] [the Borrower], NationsBank of Texas, N.A., in its capacity as
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<PAGE> 234
Administrative Agent, and certain Lenders named therein (said Term Credit
Agreement, as amended, modified, renewed, extended, restated or refinanced from
time to time, the "Term Credit Agreement") (the Amended and Restated Credit
Agreement and the Term Credit Agreement are herein collectively called the
"Credit Agreements"), (iii) the Notes (as defined in the Credit Agreements),
and (iv) the other Loan Documents (as defined in the Credit Agreements),
including, without limitation, interest, fees and other charges that would
accrue or become owing both prior to and subsequent to and but for the
commencement of any proceeding against or with respect to Grantor under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et. seq. whether
or not a claim is allowed for the same in any such proceeding, and (b) all
indebtedness and obligations incurred or arising pursuant to the provisions of
this Deed. The indebtedness referred to in this Paragraph 1.1 is hereinafter
sometimes called the "Secured Indebtedness". Initially capitalized terms used
herein and not otherwise herein defined shall have the respective meanings
given to such terms in the Credit Agreements. This Deed, the Credit
Agreements, the Notes, the other Loan Documents as defined in the Credit
Agreements, and all other instruments, certificates, affidavits or documents
evidencing, governing, securing, guaranteeing, or relating to the Secured
Indebtedness all as amended, modified, renewed, extended or restated from time
to time, are hereinafter collectively called the "Loan Documents."
ARTICLE II.
Representations and Warranties
2.1. Representations and Warranties. Grantor represents and
warrants to the Collateral Agent and the Lenders as follows:
(a) Title and Authority. Grantor is the lawful owner of
good and indefeasible fee simple title to the Property, subject only
to the matters described in Exhibit "B" attached hereto and made a
part hereof (the "Permitted Encumbrances") and has good right and
authority to grant, bargain, sell, transfer, assign and mortgage the
Mortgaged Property and to grant a security interest in the Personal
Property.
(b) Compliance with Covenants and Laws. The
construction, occupancy, operation and use of the Property and the
intended use thereof by Grantor subject to the provisions of Article V
below complies with all laws, statutes, ordinances, rules,
regulations, orders and determinations of any governmental authority
and any board of fire underwriters (or any body exercising similar
functions) and any restrictive covenants or deed restrictions (whether
recorded or otherwise), including, without limitation, all applicable
zoning, subdivision, platting, licensing, building, and flood disaster
statutes, ordinances, rules, regulations, orders and determinations of
any governmental authority (hereinafter sometimes collectively called
"Applicable Laws"), except where the failure to so comply could not
have a material adverse effect on (i) the financial condition or
prospects of Grantor, (ii) the value of the Property taken
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<PAGE> 235
as a whole, (iii) Grantor's use of, and business operations of, the
Property taken as a whole, or (iv) the validity or enforceability of
this Deed or the liens and security interests granted hereunder
(hereinafter collectively called "Material Adverse Effect"). Grantor
has obtained all requisite zoning, utility, building, health,
operating and occupancy permits from the governmental authorities
having jurisdiction over the Property, except where the failure to
obtain such zoning and permits would not have a Material Adverse
Effect.
(c) No Suits. There are no judicial or administrative
actions, suits or proceedings pending or, to the best of Grantor's
knowledge threatened, affecting the Property which, if adversely
determined, would be reasonably likely to have a Material Adverse
Effect, or involving the validity, enforceability or priority of this
Deed.
(d) Condition of Property. To the best of Grantor's
knowledge after reasonable investigation, the Mortgaged Property is
served by electric, gas, storm and sanitary sewers, sanitary water
supply, telephone and other utilities required for the Grantor's
current and anticipated uses thereof on the date hereof at or within
the boundary lines of the Mortgaged Property. To the best of
Grantor's knowledge after reasonable investigation, all streets,
alleys and easements (including without limitation easements for
ingress and egress, easements for vehicular traffic and parking and
for pedestrian traffic, easements for utilities, and easements for
reciprocal uses) necessary to serve Grantor's current and anticipated
uses of the Mortgaged Property have been completed and are
serviceable, such streets, alleys and easements have been dedicated
and accepted by applicable governmental entities, and/or all
agreements creating such easements have been filed of record in the
real property records of the County set forth on Exhibit "A" attached
hereto. The Mortgaged Property is in reasonably good condition and
repair and proper working order, and is free from damage caused by
fire or other casualty. Grantor has no actual knowledge of any latent
or patent structural or other significant defect or deficiency in the
Mortgaged Property that (i) would materially and adversely affect
Grantor's intended use of the Mortgaged Property or (ii) have a
Material Adverse Effect. None of the Mortgaged Property not covered
by flood insurance is within a flood plain. To the best of Grantor's
knowledge after reasonable investigation, none of the improvements on
the Mortgaged Property create an encroachment over, across or upon any
of the Mortgaged Property boundary lines, rights of way or easements,
and no buildings or other improvements on adjoining land create such
an encroachment, except as disclosed on the survey of the Land
delivered to the Collateral Agent. There is, to the actual knowledge
of Grantor, no condemnation proceeding pending or threatened that
would affect the Mortgaged Property.
(e) Warranty. Grantor will warrant and forever defend
the title to the Mortgaged Property against the claims of all persons
whomsoever claiming or to claim the same or any part thereof, subject
to the Permitted Encumbrances.
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<PAGE> 236
2.2. Covenants and Agreements. So long as the Secured Indebtedness
or any part thereof remains unpaid, Grantor covenants and agrees with the
Collateral Agent and the Lenders as follows:
(a) Taxes on Lien.
In the event of the enactment after the date hereof of any
Applicable Laws deducting from the value of property for the purpose
of taxation any lien or security interest thereon, or imposing upon
the Collateral Agent or any Lender the payment of the whole or any
part of the taxes (other than taxes imposed on the overall income of
Lenders or the Collateral Agent) or assessments or charges or liens
herein required to be paid by Grantor, or changing in any way the laws
relating to the taxation of deeds of trust or mortgages or security
agreements or debts secured by deeds of trust or mortgages or security
agreements or the interest of the secured party in the property
covered thereby, or the manner of collection of such taxes, so as to
affect this Deed or any of the Secured Indebtedness or the Collateral
Agent or any Lender, then, and in any such event, Grantor, upon demand
by the Collateral Agent or any Lender, shall to the extent not
prohibited by any Applicable Laws, pay such taxes, assessments,
charges or liens, or reimburse the Collateral Agent or such Lender
therefor.
(b) Ad Valorem Taxes. Grantor will cause to be paid
prior to delinquency all taxes and assessments heretofore or hereafter
levied or assessed against the Property, or any part thereof, and upon
request of the Collateral Agent will furnish the Collateral Agent with
receipts showing payment of such taxes and assessments prior to the
applicable delinquency date therefor; except that Grantor in good
faith may contest, by appropriate proceedings, the validity,
applicability or amount of any asserted tax or assessment, and,
pending such contest, Grantor shall not be deemed in Default hereunder
if, prior to delinquency of the asserted tax or assessment, Grantor
establishes an escrow, or provides security reasonably acceptable to
the Collateral Agent, or adequate reserves have been established to
cover the payment of such tax or assessment with costs, interest and
penalties and a reasonable additional sum to cover possible costs,
interest and penalties (which escrow and/or security shall be returned
to Grantor upon payment of all such taxes, assessments, costs,
interest and penalties), and if Grantor promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with
all costs, interest and penalties thereon, promptly after such
judgment becomes final; provided, however, that in any event each such
contest shall be concluded and the tax assessment, costs, interest and
penalties shall be paid prior to the date any writ or order is issued
under which the Property, or any part thereof, may be sold. No
reserve (or security required in (d) below) is required until such
time that the aggregate of alleged unpaid ad valorem taxes on all
properties of Grantor and all unpaid debts described in (d) below
shall exceed $100,000.
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<PAGE> 237
(c) Operation of Property. Grantor will operate, and
will cause the operation of, the Property in a reasonably good and
workmanlike manner and in accordance with all Applicable Laws and will
pay all fees or charges of any kind in connection therewith, except
where the failure to so operate and pay such fees or charges would not
have a Material Adverse Effect. Grantor will keep, and will cause the
keeping of, the Property occupied to the extent necessary not to
impair the insurance carried thereon. Grantor will not use or occupy,
or allow the use or occupancy of, the Property in any manner which
violates any Applicable Laws, or except where the failure to so occupy
would not have a Material Adverse Effect, which constitutes a public
or private nuisance or which makes void, voidable or cancelable, any
insurance then in force with respect thereto. Grantor will not,
without the prior written consent of the Collateral Agent (which
consent shall not be unreasonably withheld), initiate or consent to
any zoning reclassification of the Property or seek or consent to any
variance under existing zoning ordinances applicable to the Property
or use or permit the use of the Property in such a manner as would
result in such use becoming a nonconforming use under applicable
zoning ordinances or other Applicable Laws. Grantor will not, without
the prior written consent of the Collateral Agent (which consent shall
not be unreasonably withheld), impose any restrictive covenant or any
encumbrance upon the Property which does not constitute a Permitted
Encumbrance, execute or file any subdivision plat affecting the
Property or consent to the annexation of the Property to any
municipality. Grantor shall not cause or permit any drilling or
exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property. Grantor will not do
anything to cause the value of the Property to be materially lessened.
If Grantor receives a written notice or claim from any federal, state
or other governmental entity pertaining to the Property, including,
specifically but without limitation, a notice that the Property is not
in compliance with any Applicable Law, Grantor promptly will furnish a
copy of such notice or claim to the Collateral Agent.
(d) Debts for Construction. Grantor will cause all debts
and liabilities of any character, including without limitation all
debts and liabilities for labor, material and equipment and all debts
and charges for utilities servicing the Property, incurred in the
construction, maintenance, operation or development of the Property to
be paid before the same become delinquent. Notwithstanding the
foregoing, Grantor in good faith may contest, by appropriate
proceedings, the validity, applicability or amount of any asserted
mechanics' or materialmen's liens, and, pending such contest, Grantor
shall not be deemed in Default hereunder if Grantor provides the
Collateral Agent with security reasonably satisfactory to the
Collateral Agent and if Grantor promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all
costs and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event each such contest shall be
concluded and the lien, interest and costs shall be paid, bonded
around or otherwise removed prior to the date any writ or order is
issued under which the Property, or any part thereof, may be sold. No
security (or reserve required in (b) above) is required until such
time
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<PAGE> 238
that the aggregate of alleged unpaid ad valorem taxes on all
properties and all unpaid debts described in this clause (d) shall
exceed $100,000.
(e) Repair and Maintenance. Grantor will keep the
Property reasonably in good order, repair, operating condition and
appearance, causing all reasonably necessary repairs and replacements,
promptly to be made, and will not allow any of the Property to be
misused, abused or wasted or to deteriorate, normal wear and tear and
casualty excepted. Grantor promptly will replace all worn-out or
obsolete fixtures or personal property covered by this Deed that are
reasonably necessary in the operation of the Property with fixtures or
personal property comparable to the replaced fixtures or personal
property, and will repaint the Property when reasonably needed.
Notwithstanding the foregoing, Grantor will not, without the prior
written consent of the Collateral Agent do or permit to be done
anything to the Property that materially may impair its value,
including but not limited to (i) removing from the Property any
fixtures or personal property covered by this Deed (but not including
any personal property in which Grantor is the lessee thereof) which
are necessary or desirable in the operation of the Property, except
such as is replaced by Grantor by an article of equal suitability and
value, owned by Grantor, free and clear of any lien or security
interest (except that (i) created by this Deed or any other Loan
Document, (ii) otherwise permitted in the Loan Documents or (iii) in
respect of capitalized leases) or such as is permitted to be removed
by a tenant pursuant to such tenant's lease or (ii) making any
structural or other alteration to the Property that materially impairs
the value thereof. Nothing contained herein will prevent tenants of
the Property from making alterations and improvements expressly
permitted under their leases of any part of the Mortgaged Property.
Upon request of the Collateral Agent, Grantor will deliver to the
Collateral Agent an inventory describing and showing the make, model,
serial number and location of all fixtures and personal property used
in the management, maintenance and operation of the Property, with a
certification by Grantor that said inventory is a true and complete
schedule of all such fixtures and personal property used in the
management, maintenance and operation of the Property, that such items
specified in the inventory constitute all of the fixtures and personal
property required in the management, maintenance and operation of the
Property, and that all such items are owned by Grantor free and clear
of any lien or security interest (except the Permitted Encumbrances).
(f) Insurance and Casualty. Grantor will keep the
Property insured against loss or damage by fire, explosion, windstorm,
hail, flood (as to any portion of the Property which shall at any time
be located in an identified "flood prone" area in which flood
insurance has been made available pursuant to the federal Flood
Disaster Protection Act of 1973, and then in the amount of the
outstanding balance of the Notes or the maximum amount of coverage
available, whichever is less), tornado and such other hazards as
required by the Collateral Agent and consistent with industry
standards. Notwithstanding the foregoing, Grantor further covenants
and agrees to keep the Property insured by policies of fire, extended
coverage and other insurance
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<PAGE> 239
in such company or companies reasonably acceptable to the Collateral
Agent and upon such terms and provisions, and with such endorsements,
all as reasonably may be acceptable to the Collateral Agent and
consistent with industry standards. Grantor further agrees that
Grantor will deliver to the Collateral Agent receipts evidencing the
payment of all premiums, and certificates of insurance addressed to
the Collateral Agent evidencing compliance with the insurance
requirements set forth herein and, when appropriate, evidencing
renewals of all such policies of insurance before any such insurance
shall expire. All insurance policies required pursuant to this
subparagraph (f) shall contain a prohibition against cancellation,
material endorsement, material alteration or reissuance of such policy
effecting a change in coverage thereunder unless such insurer first
shall have given the Collateral Agent 30 days prior written notice
thereof. All fire, extended and other insurance coverage insurance
policies required hereunder shall be on a replacement cost basis in an
amount not less than that necessary to comply with any co-insurance
percentage stipulated in the policy, but not less than one hundred
percent (100%) of the Property's insurable value, and shall be subject
to deductibles, if any, not to exceed $250,000. Grantor further
agrees that all insurance policies shall provide that proceeds
thereunder will be jointly payable to the Collateral Agent and
Grantor, for the benefit of Grantor and Lenders as their interests may
appear pursuant and subject to a mortgagee clause (without
contribution) of standard form attached to or otherwise made a part of
the applicable policy. In the event any of the Property covered by
such insurance is destroyed or damaged by fire, explosion, windstorm,
hail or by any other casualty against which insurance shall have been
required hereunder, (i) the Collateral Agent may, but shall not be
obligated to, make proof of loss if not made promptly by Grantor, (ii)
each insurance company concerned is hereby authorized and directed to
make payment for such loss jointly to the Collateral Agent and
Grantor, and (iii) the Collateral Agent shall apply the insurance
proceeds as follows:
(A) first, to reimburse the Collateral Agent for
all costs and expenses, including reasonable attorneys' fees,
incurred in connection with the collection of such proceeds;
and
(B) second, if a Default has not occurred or, if
a Default has occurred, such Default is not then continuing,
proceeds of insurance from losses shall be used at Grantor's
option by Grantor (i) for repair or replacement of Property
and Grantor shall provide the Collateral Agent with evidence
satisfactory to the Collateral Agent of such use or (ii) to be
applied to Secured Indebtedness.
(C) third, if a Default has occurred and is
continuing, proceeds of insurance from losses shall at
Lenders' option be applied to Secured Indebtedness as provided
in the Intercreditor Agreement or to repair or replacement of
Property.
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<PAGE> 240
In any event, the unpaid portion of the Secured Indebtedness shall
remain in full force and effect and Grantor shall not be excused in
the payment thereof. If any act or occurrence of any kind or nature
(including any casualty on which insurance was not obtained or
obtainable) shall result in material damage to or material loss or
destruction of the Property, Grantor shall give prompt notice thereof
to the Collateral Agent and, if Grantor elects to restore the Property
to its prior condition (pursuant to subparagraph B of this Paragraph
2.2(f)(iii)), Grantor, at Grantor's sole cost and expense and
regardless of whether the insurance proceeds, if any, shall be
sufficient for the purpose, promptly shall restore, repair, replace
and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such damage, loss or destruction in
accordance with plans and specifications submitted to and reasonably
and promptly approved by the Collateral Agent. Grantor hereby
irrevocably appoints the Collateral Agent as Grantor's
attorney-in-fact, with full authority in place and stead of Grantor
and in the name of Grantor or otherwise, after the occurrence of any
Default and during the continuance of same to obtain any insurance
required to be obtained pursuant to this Paragraph 2.2(f) and which is
not so obtained and to receive, indorse, and collect any drafts or
other instruments, documents and chattel paper, in connection
therewith. The appointment of the Collateral Agent as
attorney-in-fact is coupled with an interest and is irrevocable prior
to final payment in full of the Secured Indebtedness.
(g) Liability and Other Insurance. Grantor shall
maintain comprehensive general liability insurance against claims for
bodily injury or death and property damage occurring in or upon or
resulting from the Property, in standard form and with such insurance
company or companies and policy coverage limits and terms as
reasonably may be acceptable to the Collateral Agent, and such other
insurance as the Collateral Agent from time to time reasonably may
require, with companies reasonably acceptable to the Collateral Agent,
upon such terms and provisions, in such amounts, and with such
endorsements, all as reasonably are approved by the Collateral Agent.
Grantor shall maintain with respect to each policy or agreement
evidencing such comprehensive general liability insurance such
endorsements as reasonably may be required by the Collateral Agent
consistent with accepted industry practice and shall at all times
following request therefor by the Collateral Agent deliver and
maintain with the Collateral Agent receipts evidencing the payment of
all premiums, and certificates of insurance addressed to the
Collateral Agent, evidencing compliance with the insurance
requirements set forth herein and, when appropriate, evidencing
renewals of all such policies of insurance 30 days before any such
insurance shall expire. All insurance policies required pursuant to
this subparagraph (g) shall contain a prohibition against
cancellation, material endorsement, material alteration or reissuance
of such policy effecting a change in coverage thereunder unless such
insurer first shall have given the Collateral Agent 30 days prior
written notice thereof. Grantor further agrees that all insurance
policies described in this Paragraph 2.2(g) shall name the Collateral
Agent, for the benefit of Lenders, as an additional insured party.
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<PAGE> 241
(h) Condemnation. Promptly upon obtaining actual
knowledge of the institution of any proceedings for the condemnation
of the Property, or any portion thereof, or any other proceedings
arising out of injury or damage to the Property, or any portion
thereof, Grantor will notify the Collateral Agent of the pendency of
such proceedings. The Collateral Agent may participate in any such
proceedings if in the reasonable opinion of the Collateral Agent such
participation is necessary to protect the rights or interests of the
Collateral Agent, and Grantor shall from time to time deliver to the
Collateral Agent all instruments reasonably requested by it to permit
such participation. Grantor shall, at its expense, diligently
prosecute any such proceedings, and shall consult with the Collateral
Agent, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. All proceeds of
condemnation awards or proceeds of sale in lieu of condemnation with
respect to the Property, or any portion thereof, and all judgments,
decrees and awards for injury or damage to the Property, or any
portion thereof, shall be paid to the Collateral Agent and shall be
applied as follows:
(i) first, to reimburse Grantor or the Collateral
Agent for all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in connection with
collection of such proceeds;
(ii) second, to the payment of Secured Indebtedness
as provided in the Intercreditor Agreement; and
(iii) third, to the extent of the balance (if any)
of such proceeds, to Grantor or other party legally entitled
thereto.
Grantor hereby assigns and transfers all such proceeds, judgments,
decrees and awards to Lenders and agrees to execute such further
assignments of all such proceeds, judgments, decrees and awards as
Lenders may reasonably request; provided, however, the disbursement of
such proceeds, judgments, decrees and awards shall be applied as
provided above in this Paragraph 2.2(h). Lenders are hereby
authorized, in the name of Grantor, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or
award. Lenders shall not be, in any event or circumstances, liable or
responsible for failure to collect, or for failure to exercise
diligence in the collection of, any such proceeds, judgments, decrees
and/or awards.
(i) Protection and Defense of Lien. If the validity or
priority of this Deed or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Property, or
any part thereof, shall be attacked directly or indirectly or if any
legal proceedings are instituted against Grantor with respect thereto,
Grantor will give prompt written notice thereof to the Collateral
Agent and at Grantor's own cost and expense diligently will endeavor
to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal
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<PAGE> 242
proceedings, including but not limited to the employment of counsel,
the prosecution or defense of litigation and the release or discharge
of all adverse claims (other than Permitted Encumbrances), and the
Collateral Agent, (whether or not named as a party to legal
proceedings with respect thereto) is hereby authorized and empowered
to take such additional steps as in its judgment and discretion
reasonably may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of
this Deed and the rights, titles, liens and security interests created
or evidenced hereby, including but not limited to the employment of
counsel, the prosecution or defense of litigation, the compromise or
discharge of any adverse claims (other than Permitted Encumbrances)
made with respect to the Property or any part thereof, the purchase of
any tax title and the removal of prior liens or security interests
which do not constitute Permitted Encumbrances, and all reasonable
expenses so incurred of every kind and character shall be a demand
obligation owing by Grantor, and the party incurring such expenses
shall be subrogated to all rights of the person receiving such
payment. Should the Collateral Agent intend to take any such action
described in the immediately preceding sentence, the Collateral Agent
shall, subject to the immediately succeeding proviso, prior to taking
any such action notify Grantor of such intention and give Grantor a
reasonable opportunity to provide such defense or protection;
provided, however, if in the reasonable opinion of the Collateral
Agent the giving of such notice and opportunity to provide such
defense or protection would impair or hinder such defense or
protection or would otherwise be disadvantageous to rights or
interests of the Collateral Agent hereunder or the rights, title,
liens or security interests created or evidenced hereby, the
Collateral Agent shall have no obligation to give such notice and
opportunity to provide such defense or protection prior to the taking
of any such action, but after taking any such action the Collateral
Agent shall give notice thereof to Grantor.
(j) Permitted Encumbrances. Grantor will comply with and
will perform all of the covenants, agreements and obligations imposed
upon it or the Property in the Permitted Encumbrances in accordance
with their respective terms and provisions if the failure to do so
would have a Material Adverse Effect. Grantor will not modify or
permit any modification of any Permitted Encumbrances against the
Mortgaged Property, the result of which would have a Material Adverse
Effect without the prior written consent of the Collateral Agent.
(k) Books and Records. Grantor will permit all
contracts, statements, invoices, bills and claims for labor, materials
and services supplied for the construction and operation of the
improvements forming a part of the Property to be inspected and copied
by the Collateral Agent and its representatives at all times during
reasonable business hours upon reasonable notice; provided, however,
if a Default shall have occurred and be continuing there shall be no
requirement to give reasonable notice. If applicable, such
information shall be kept confidential in accordance with the
applicable Sections of the Credit Agreements.
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<PAGE> 243
(l) Leases. Grantor may not lease or enter into any
other occupancy agreement covering any material portion of any of the
Mortgaged Property by third parties without the prior written consent
of Grantor, which consent shall not be unreasonably withheld.
(m) Fees and Expenses; Indemnification. Grantor will pay
all appraisal fees, filing and recording fees, inspection fees, survey
fees, taxes, brokerage fees and commissions, abstract fees, title
policy fees, uniform commercial code search fees, escrow fees,
reasonable attorney's fees, and all other costs and expenses of every
character reasonably and properly incurred by Grantor, the Collateral
Agent or Lenders in connection with this Deed, either at the closing
thereof or at any time during the term thereof, or otherwise
attributable or chargeable to Grantor as owner of the Property, and
will reimburse the Trustee, the Collateral Agent and Lenders for all
such costs and expenses incurred by each of them. Grantor shall pay
all reasonable and proper expenses and reimburse the Collateral Agent
and Lenders for any reasonable expenditures, including reasonable
attorney's fees and legal expenses, incurred or expended in connection
with (i) the breach, by Grantor of any covenant herein or (ii) the
Collateral Agent's or Lender's reasonable exercise of any of the
rights and remedies hereunder or the Collateral Agent's or Lenders'
reasonable protection of the Property and the lien and security
interest therein. Notwithstanding anything to the contrary contained
in this Deed, any provision requiring the payment of attorneys' fees
or reasonable attorneys' fees shall, in all instances, mean attorneys'
fees calculated at such attorneys' regular hourly rates for the actual
number of hours expended on the matter, and the parties agree that the
provisions of the Official Code of Georgia Section 13-1-11(a)(2) shall
not apply. Grantor will indemnify and hold harmless, the Collateral
Agent and Lenders (for purposes of this subparagraph (m), the terms
"Collateral Agent" and "Lenders" shall include the directors,
officers, employees and agents of the Collateral Agent and Lenders and
any persons or entities owned or controlled by or affiliated with the
Collateral Agent and Lenders) from and against, and reimburse them
for, all claims, demands, liabilities, losses, damages, judgments,
penalties, costs and expenses (including, without limitation,
reasonable attorney's fees) which may be imposed upon, asserted
against or incurred or paid by any of them by reason of, on account
of or in connection with any bodily injury or death or property damage
occurring in or upon or in the vicinity of the Property through any
cause whatsoever, or asserted against any of them on account of any
act performed or omitted to be performed hereunder or on account of
any transaction arising out of or in any way connected with the
Property or with this Deed. The foregoing indemnities shall not apply
with respect to matters caused by or arising out of the gross
negligence or willful misconduct of the Collateral Agent and/or
Lenders. Grantor agrees, however, that it expressly intends to
indemnify the Collateral Agent and Lenders from and hold each of them
harmless against any and all losses, liabilities, claims, damages or
expenses arising out of their ordinary negligence. The foregoing
indemnities, however, shall not apply with respect to any losses,
liabilities, claims, damages or expenses incurred by the Collateral
Agent, Lenders or the Trustee
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<PAGE> 244
in any action or proceeding by Grantor against the Collateral Agent,
Lenders unless the Collateral Agent or Lenders prevail in such action
or proceeding. The foregoing indemnities shall not terminate upon
release, foreclosure or other termination of this Deed but will
survive foreclosure of this Deed or conveyance in lieu of foreclosure
and the repayment of the Secured Indebtedness and the discharge and
release of this Deed and the other Loan Documents, but Grantor shall
not be liable for any damages as a result of an event that occurs
after foreclosure of the Mortgaged Property (or any portion thereof)
or the taking of a deed in lieu of foreclosure covering the Mortgaged
Property (or any portion thereof), unless such damage occurs as a
result of or arises out of a condition that existed prior to such
foreclosure or such taking of a deed in lieu of foreclosure. Any
amount to be paid hereunder by Grantor to the Collateral Agent and/or
Lenders shall be a demand obligation owing by Grantor to the
Collateral Agent and/or Lenders and shall be subject to and governed
by the provisions of Paragraph 2.3 hereof.
(n) Estoppel Certificate. Grantor shall at any time and
from time to time furnish promptly upon request a written statement in
such form as may be reasonably required by the Collateral Agent
stating that this Deed is a valid and binding obligation of Grantor,
enforceable against Grantor in accordance with its terms, subject to
Debtor Relief Laws (as such term is defined in the Credit Agreement);
that this Deed has not been released, subordinated or modified; and
that to the best of Grantor's knowledge there are no offsets or
defenses against the enforcement of this Deed, or if any of the
foregoing statements are untrue, specifying the reasons therefor.
(o) Compliance with Laws. Grantor shall, and shall use
reasonable efforts to cause any tenant of the Property to, comply with
all applicable restrictive covenants and all Applicable Laws with
respect to which the failure to so comply would have a Material
Adverse Effect.
(p) Tax and Insurance Escrow. In order to secure the
performance and discharge of Grantor's obligations under subparagraphs
(b), (f) and (g) of this Paragraph 2.2, but not in lieu of such
obligations, Grantor will upon written request of the Collateral
Agent, deposit with the Collateral Agent upon the occurrence and
continuance of a Default, a sum equal to accrued and unpaid ad valorem
taxes, assessments and charges (which charges for the purpose of this
subparagraph shall include without limitation ground rents and water
and sewer rents and any other recurring charge which could create or
result in a lien against the Property) against the Property for the
then current year and the accrued and unpaid premiums for such
policies of insurance for the then current year, all as reasonably
estimated by the Collateral Agent and prorated to the end of the
calendar month following the month during which such Default occurred,
and thereafter will deposit with the Collateral Agent, sufficient
funds (as reasonably estimated from time to time by the Collateral
Agent) to permit the Collateral Agent to pay, at least 5 days prior to
the delinquency
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<PAGE> 245
date thereof, the next maturing ad valorem taxes, assessments and
charges and premiums for such policies of insurance. The Collateral
Agent shall have the right to rely upon tax information furnished by
applicable taxing authorities in the payment of such taxes or
assessments and shall have no obligation to make any protest of any
such taxes or assessments. Any excess over the amounts required for
such purposes shall be held by the Collateral Agent for payment of
future taxes, assessments, charges and premiums, applied to any
Secured Indebtedness, or refunded to Grantor, at the Collateral
Agent's option; and any deficiency in such funds so deposited shall be
made up by Grantor upon demand of the Collateral Agent. All such
funds so deposited shall bear interest at the normal interest rate for
money market deposits at NationsBank, may be mingled with the general
funds of the Collateral Agent and shall be applied by the Collateral
Agent toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to the Collateral
Agent by Grantor (which statements shall be presented by Grantor to
the Collateral Agent a reasonable time before the applicable amount is
due); provided, however, that if the Collateral Agent has made demand
for payment of all of the Secured Indebtedness, such funds may at the
Collateral Agent's option be, applied to the payment of the Secured
Indebtedness in the order determined by the Collateral Agent and that
the Collateral Agent may at any time, in its discretion, apply all or
any part of such funds toward the payment of any such taxes,
assessments, charges or premiums which are past due, together with any
penalties or late charges with respect thereto. The conveyance or
transfer of Grantor's interest in the Property for any reason
(including without limitation the foreclosure of a subordinate lien or
security interest or a transfer by operation of law) shall constitute
an assignment or transfer of Grantor's interest in and rights to such
funds held by the Collateral Agent under this subparagraph (p) but
subject to the rights of the Collateral Agent hereunder.
(q) Further Assurances. Grantor will, on request of the
Collateral Agent, (i) promptly correct any defect or error which may
be discovered in the contents of this Deed or in any other instrument
executed in connection herewith or in the execution or acknowledgment
thereof; (ii) execute, acknowledge, deliver and record or file such
further instruments (including without limitation further deeds of
trust, security agreements, financing statements, continuation
statements and assignments of rents or leases) and do such further
acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Deed and such other instruments and
to subject to the liens and security interests hereof and thereof any
property intended by the terms hereof or thereof to be covered hereby
or thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to
the Property; (iii) execute, acknowledge, deliver, procure and record
or file any document or instrument (including specifically any
financing statement) deemed advisable by the Collateral Agent to
protect the lien or the security interest hereunder against the rights
or interests of third persons, and Grantor will pay all reasonable
costs associated with any of the foregoing; (iv) use reasonable
efforts to cause any tenant under any lease agreement of any of the
Property to furnish any
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<PAGE> 246
instrument or perform any act deemed advisable by the Collateral Agent
to protect the lien or the security interest hereunder; and (v)
provide such certificates, documents, reports, information, affidavits
and other instruments (including but not limited to appraisals,
surveys and current title reports) and do such further acts as may be
reasonably necessary or proper in the reasonable determination of the
Collateral Agent to enable the Collateral Agent to comply with the
requirements or requests of any agency having jurisdiction over the
Collateral Agent or any of the Lenders or any examiners of such
agencies with respect to the Secured Indebtedness, Grantor or the
Property.
2.3. Right of the Collateral Agent to Perform. Grantor agrees
that, if, after any applicable notice or grace period, Grantor fails to perform
any act or to take any action which hereunder Grantor is required to perform or
take, or to pay any money which hereunder Grantor is required to pay, the
Collateral Agent, in Grantor's name or in its own name and after the giving of
any required notice and expiration of any applicable cure period, may but shall
not be obligated to perform or cause to be performed such act or take such
action or pay such money, and any reasonable expenses so incurred by the
Collateral Agent, and any money so paid by the Collateral Agent, shall be a
demand obligation owing by Grantor to the Collateral Agent and the Collateral
Agent, upon making such payment, shall be subrogated to all of the rights of
the person or entity receiving such payment. Any amounts due and owing by
Grantor to the Collateral Agent pursuant to this Deed shall bear interest from
the date such amount becomes due until paid at a rate of interest per annum
equal to the lesser of (i) the Base Rate Basis, plus 2%, or (ii) the highest
lawful rate, and shall be a part of the Secured Indebtedness and shall be
secured by this Deed and by any other Loan Document. Should the Collateral
Agent intend to perform or cause to be performed such act or take such action
or pay such money, the Collateral Agent shall, subject to the immediately
succeeding proviso, prior to taking any such action notify Grantor of such
intention and give Grantor a reasonable opportunity to take such action;
provided, however, if in the reasonable opinion of the Collateral Agent the
giving of such notice and opportunity to take action would materially impair
the validity or priority of this Deed, the rights or interests of the
Collateral Agent hereunder or any rights, titles, liens or security interests
created or evidenced hereby, the Collateral Agent shall have no obligation to
give such notice and opportunity to take action prior to taking such action,
but, nevertheless, shall give prompt written notice of the taking of such
action to Grantor.
ARTICLE III.
Remedies in Event of Default
3.1. Defaults. The term "Default" as used in this Deed shall mean
the occurrence and continuance of an "Event of Default" as defined in the
Credit Agreements.
3.2. Acceleration. Upon the occurrence and during the continuance
of a Default, the Collateral Agent shall have the option of declaring all
Secured Indebtedness in its entirety
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<PAGE> 247
to be immediately due and payable, and the liens and security interests
evidenced hereby shall be subject to foreclosure in any manner provided for
herein or provided for by law as the Collateral Agent may elect.
3.3. Possession. Upon the occurrence and during the continuance of
a Default, the Collateral Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Property, including
the right to rent the same for the account of Grantor and to deduct from such
rents all reasonable costs, expenses and liabilities of every reasonable
character incurred by the Collateral Agent in collecting such rents and in
managing, operating, maintaining, protecting or preserving the Property and to
apply the remainder of such rents on the Secured Indebtedness in such manner as
the Collateral Agent may elect. All such costs, expenses and liabilities
incurred by the Collateral Agent in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Property, if not paid out
of rents as hereinabove provided, shall constitute a demand obligation owing by
Grantor and shall bear interest from the date of expenditure until paid at a
rate of interest per annum equal to the Default Rate, all of which shall
constitute a portion of the Secured Indebtedness. If necessary to obtain the
possession provided for above, the Collateral Agent may invoke any and all
legal remedies to dispossess Grantor, including specifically one or more
actions for forcible entry and detainer, trespass to try title and restitution.
In connection with any action taken by the Collateral Agent pursuant to this
Paragraph 3.3, the Collateral Agent shall not be liable for any loss sustained
by Grantor resulting from any failure to let the Property, or any part thereof,
or from any other act or omission of the Collateral Agent in managing the
Property, including without limitation, the negligence of the Collateral Agent,
unless such loss is caused by the gross negligence or willful misconduct of the
Collateral Agent, and the Collateral Agent shall not be obligated to perform or
discharge any obligation, duty or liability under any lease agreement covering
the Property or any part thereof or under or by reason of this instrument or
the exercise of rights or remedies hereunder. Should the Collateral Agent
incur any such liability, the amount thereof, including reasonable costs,
expenses and reasonable attorneys' fees, shall be secured hereby, and Grantor
shall reimburse the Collateral Agent therefor immediately upon demand. Nothing
in this Paragraph 3.3 shall impose any duty, obligation or responsibility upon
the Collateral Agent for the control, care, management or repair of the
Property, or shall operate to make the Collateral Agent responsible or liable
for any waste committed on the Property or by any other parties or for any
dangerous or defective condition of the Property, or for any negligence in the
management, upkeep, operation, repair or control of the Property resulting in
loss or injury or death to any tenant, licensee, employee or stranger, unless
such waste, dangerous or defective condition or injury or death is directly a
result of gross negligence or willful misconduct by the Collateral Agent, and
not just the Collateral Agent's own ordinary negligence. Grantor hereby
assents to, ratifies and confirms any and all actions of the Collateral Agent
with respect to the Property taken under this Paragraph 3.3.
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3.4. Foreclosure. Collateral Agent may sell and dispose of the
Mortgaged Property at public auction, at the usual place for conducting sales
at the courthouse in the county where the Mortgaged Property or any part
thereof may be located, to the highest bidder for cash, first advertising the
time, terms and place of such sale by publishing a notice thereof once a week
for four consecutive weeks (without regard to the actual number of days) in a
newspaper in which sheriff's advertisements are published in said county, all
other notice being hereby waived by Grantor; and Collateral Agent may thereupon
execute and deliver to the purchaser at said sale a sufficient conveyance of
the Mortgaged Property in fee simple, which conveyance may contain recitals as
to the happening of the default upon which the execution of the power of sale,
herein granted, depends, the said recitals shall be presumptive evidence that
all preliminary acts prerequisite to said sale and deed were in all things duly
complied with. Grantor hereby constitutes and appoints Collateral Agent or its
assigns agent and attorney-in-fact to make such recitals, sale and conveyance,
and all of the acts of such attorney-in-fact are hereby ratified, and Grantor
agrees that such recitals shall be binding and conclusive upon Grantor and that
the conveyance to be made by Collateral Agent or its assigns (and in the event
of a deed in lieu of foreclosure, then as to such conveyance) shall be
effectual to bar all right, title and interest, equity of redemption, including
all statutory redemption, homestead, dower, curtesy and all other exemptions of
Grantor, or its successors in interest, in and to the Mortgaged Property. At
the election of Collateral Agent, the Mortgaged Property, or any part thereof,
may be sold in one parcel and as an entirety, or in such parcels, manner or
order as Collateral Agent may elect, and one or more exercises of the powers
herein granted shall not extinguish or exhaust the powers unless the entire
Mortgaged Property is sold or the indebtedness secured hereby is paid in full,
and Collateral Agent, or its assigns, shall collect the proceeds of such sale,
applying such proceeds as hereinafter provided (in the event of deficiency,
Grantor shall immediately on demand from Collateral Agent pay over to
Collateral Agent, or its nominee, such deficiency). Grantor acknowledges that
Collateral Agent may bid for and purchase the Mortgaged Property at any such
foreclosure sale and shall be entitled to apply all or any part of the
indebtedness secured hereby as a credit to the purchase price. The power and
agency hereby granted are coupled with an interest and are irrevocable by death
or otherwise.
3.5. Receiver. In addition to all other remedies herein provided
for, Grantor agrees that upon the occurrence and during the continuance of a
Default, the Collateral Agent shall as a matter of right be entitled to the
appointment of a receiver or receivers for all or any part of the Property,
whether such receivership be incident to a proposed sale of such Property or
otherwise, and without regard to the value of the Property or the solvency of
any person or persons liable for the payment of the Secured Indebtedness, and
Grantor does hereby consent to the appointment of such receiver or receivers,
waives any and all defenses to such appointment and agrees not to oppose any
application therefor by the Collateral Agent, but nothing herein is to be
construed to deprive the Collateral Agent of any other right, remedy or
privilege it may now or hereafter have under any Applicable Laws to have a
receiver appointed; provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of the Collateral Agent
to receive payment of the rents, room
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rents, deposits for lodging and income from the Property. Any money advanced
by the Collateral Agent in connection with any such receivership shall be a
demand obligation owing by Grantor to the Collateral Agent and shall bear
interest from the date of making such advancement by the Collateral Agent until
paid at a rate of interest per annum equal to the Highest Lawful Rate, and
shall be secured by this Deed and by any other instrument securing the Secured
Indebtedness.
3.6. Proceeds of Sale. The proceeds of any sale held by the
Collateral Agent or any receiver or public officer in foreclosure of the liens
evidenced hereby shall be applied:
first, to the payment of all necessary and reasonable costs
and expenses incident to such foreclosure sale, including but not
limited to all court costs and charges of every character in the event
foreclosed by suit, and a reasonable fee to the Collateral Agent
acting under the provisions of Paragraph 3.4 if foreclosed by power of
sale as provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness
(including specifically without limitation the principal, interest and
reasonable attorneys' fees due and unpaid on the Notes and the amounts
due and unpaid and owed to the Collateral Agent under this Deed), to
be distributed in accordance with the Intercreditor Agreement; and
third, the remainder, if any, shall be paid to Grantor or
other party legally entitled thereto.
3.7. The Collateral Agent as Purchaser. The Collateral Agent shall
have the right to become the purchaser at any foreclosure sale, and the
Collateral Agent purchasing at such sale shall have the right to credit upon
the amount of the bid made therefor, to the extent necessary to satisfy such
bid, the Secured Indebtedness owing to the Collateral Agent and/or Lenders for
the equal and ratable benefit of Lenders.
3.8. Uniform Commercial Code.
(a) Upon the occurrence and during the continuance of a
Default, the Collateral Agent may exercise its rights of enforcement
with respect to the Personal Property under the Uniform Commercial
Code as adopted in the State of Georgia, as amended from time to time,
and in conjunction with, in addition to or in substitution for those
rights and remedies, and all rights and remedies granted to the
Collateral Agent and/or Lenders under any Loan Document executed by
Grantor governing security interests in personal property of Grantor;
(b) any sale made pursuant to the provisions of this
Paragraph 3.9 shall be deemed to have been a public sale conducted in
a commercially reasonable manner if held contemporaneously with the
sale of the Mortgaged Property under power of sale
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as provided herein upon giving the same notice with respect to the
sale of the Personal Property hereunder as is required for such sale
of the Mortgaged Property under power of sale;
(c) any and all statements of fact or other recitals made
in any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Secured
Indebtedness, or as to the occurrence of any Default, or as to the
Collateral Agent and/or Lenders having declared all of such
indebtedness to be due and payable, or as to notice of time, place and
terms of sale and of the properties to be sold having been duly given,
or as to any other act or thing having been duly done by the
Collateral Agent and/or Lenders, shall be taken as prima facie
evidence of the truth of the facts so stated and recited; and
(d) The Collateral Agent may appoint or delegate any one
or more persons as agent to perform any act or acts necessary or
incident to any sale held by the Collateral Agent, including the
sending of notices and the conduct of the sale, but in the name and on
behalf of the Collateral Agent.
3.9. Partial Foreclosure. During a Default, the Collateral Agent
shall have the right to proceed with foreclosure of the liens and security
interests evidenced hereby without declaring the entire Secured Indebtedness
due, and in such event any such foreclosure sale may be made subject to the
unmatured part of the Secured Indebtedness; and any such sale shall not in any
manner affect the unmatured part of the Secured Indebtedness, but as to such
unmatured part this Deed shall remain in full force and effect just as though
no sale had been made. The proceeds of any such sale shall be applied as
provided in Paragraph 3.7 hereof, except that the amount paid under
subparagraph second thereof shall be only the matured portion of the Secured
Indebtedness and any proceeds of such sale in excess of those provided for in
subparagraphs first and second (modified as provided above) shall be applied to
installments of principal of and interest on the Notes in the inverse order of
maturity. Several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the Secured Indebtedness.
3.10. Remedies Cumulative. All remedies herein expressly provided
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Indebtedness, or any part
thereof, or otherwise benefiting the Collateral Agent and Lenders, and the
Collateral Agent and Lenders shall, in addition to the remedies herein
provided, be entitled to avail themselves of all such other remedies as may now
or hereafter exist at law or in equity for the collection of the Secured
Indebtedness and the enforcement of the covenants herein and the foreclosure of
the liens and security interests evidenced hereby, and the resort to any remedy
provided for hereunder or under any such other instrument or provided for by
law shall not prevent the concurrent or subsequent employment of any other
appropriate remedy or remedies.
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3.11. Resort to Any Security. The Collateral Agent may resort to
any security given by this Deed or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to the
Collateral Agent in its sole and uncontrolled discretion, and any such action
shall not in anywise be considered as a waiver of any of the rights, benefits,
liens or security interests evidenced by this Deed, except as may be provided
to the contrary under Applicable Laws.
3.12. Waiver. To the full extent Grantor may do so, Grantor agrees
that Grantor will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension, redemption or reinstatement, and Grantor, for Grantor and Grantor's
heirs, devisees, representatives, successors and assigns, and for any and all
persons ever claiming any interest in the Property, to the extent permitted by
Applicable Laws and except with respect to rights expressly set forth herein or
in the other Loan Documents, hereby waives and releases all rights of
redemption, valuation, appraisement, stay of execution, notice of intention to
mature or declare due the whole of the Secured Indebtedness and all rights to a
marshaling of the assets of Grantor, including the Property, reinstatement
(including all rights under Official Code of Georgia Annotated Section
44-14-85) or to a sale in inverse order of alienation in the event of
foreclosure of the liens and security interests hereby created. Grantor shall
not have or assert any right under any statute or rule of law pertaining to the
marshaling of assets, sale in inverse order of alienation, the exemption of
homestead, the administration of estates of decedents or other matters whatever
to defeat, reduce or affect the rights of the Collateral Agent under the terms
of this Deed to a sale of the Property for the collection of the Secured
Indebtedness without any prior or different resort for collection, or the
rights of the Trustee or the Collateral Agent under the terms of this Deed to
the payment of such indebtedness out of the proceeds of sale of the Property in
preference to every other claimant whatsoever. If the Property is sold for an
amount less than the Secured Indebtedness, the deficiency shall be determined
by the purchase price at the sale or sales. If any law referred to in this
Paragraph 3.13 and now in force, of which Grantor or Grantor's successors and
assigns and such other persons claiming any interest in the Property might take
advantage despite this Paragraph 3.13 shall hereafter be repealed or cease to
be in force, such law shall not thereafter be deemed to preclude the
application of this Paragraph 3.13. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAWS, IF THE PROPERTY IS SOLD IN ACCORDANCE WITH THE TERMS OF THIS DEED FOR AN
AMOUNT LESS THAN THE OBLIGATIONS OF GRANTOR TO COLLATERAL AGENT or LENDERS, THE
DEFICIENCY SHALL BE DETERMINED BY THE PURCHASE PRICE AT THE SALE.
3.13. Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale Grantor or
Grantor's successors or assigns or any other persons claiming any interest in
the Property by, through or under Grantor are occupying or using the Property,
or any part thereof, each and all shall immediately become the tenant at
sufferance to the purchaser at such sale, which tenancy shall be terminable at
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the will of landlord. In the event the tenant fails to surrender possession of
said Property upon demand, the purchaser shall be entitled to summarily
dispossess such tenant.
3.14. Tender After Acceleration. If, following the occurrence of a
Default and the acceleration of the Secured Indebtedness but prior to the
foreclosure of this Deed against the Property, Grantor shall tender to the
Collateral Agent and/or Lenders payment of an amount sufficient to pay the
entire Secured Indebtedness, such tender shall be deemed to be a voluntary
prepayment and, consequently, Grantor shall also pay to Lenders any charge or
premium required to be paid in order to prepay principal and, if such principal
payment is made during any period when prepayment is prohibited by this Deed,
or the Loan Documents, the applicable charge or premium shall be the maximum
prepayment penalty provided for in the Loan Documents; provided, however, that
in no event shall any amount payable under this Paragraph 3.15, when added to
the interest otherwise payable on the Secured Indebtedness, exceed the maximum
interest permitted under Applicable Laws.
3.15. Insurance Premiums. Upon any foreclosure of the Mortgaged
Property pursuant to this Deed, the Collateral Agent shall have the right to
cancel any policy of insurance covering all or any part of the Mortgaged
Property and shall be entitled to receive any unearned premiums from such
policy. The unearned premiums received by the Collateral Agent shall be
applied in the same manner as provided in Paragraph 3.7 above regarding the
application of proceeds of sale of the Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
Contracts and Bonds
4.1. Assignment. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to the Collateral Agent all
rents, income, profits and proceeds to be derived from the Property, including
without limitation the immediate and continuing right, subject to the license
granted below, to collect and receive all of the rents, income, receipts,
revenues, issues, profits and other sums of money that may now or at any time
hereafter become due and payable to Grantor under the terms of any present or
future leases now or hereafter covering the Property, or any part thereof,
including but not limited to minimum rents, additional rents, percentage rents,
deficiency rents and liquidated damages following default, all proceeds payable
under any policy of insurance covering the loss of rents resulting from
untenantability caused by destruction or damage to the Property, and liens and
rights, whether constitutional, statutory, contractual or otherwise, in favor
of Grantor as the lessor of any of the Property, and all of Grantor's rights to
recover monetary amounts from any lessee in bankruptcy including, without
limitation, rights of recovery for use and occupancy and damage claims arising
out of lease defaults, including rejections, under the Bankruptcy Reform Act of
1978, as amended, or any other present or future federal or state insolvency,
bankruptcy or similar law (all of the foregoing hereinafter collectively called
"Applicable Bankruptcy Law"), together with any sums of money that may now or
at any
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time hereafter become due and payable to Grantor by virtue of any and all
royalties, overriding royalties, bonuses, delay rentals and any other amount of
any kind or character arising under any and all present and future oil, gas and
mining leases covering the Property, or any part thereof; and all proceeds and
other amounts paid or owing to Grantor under or pursuant to any and all
contracts and bonds relating to the construction, erection or renovation of the
Property, or any part thereof; subject however, to a license hereby granted by
the Collateral Agent to Grantor to collect and receive and expend all of the
foregoing, subject to the terms and conditions hereof. Upon the occurrence and
continuance of any Default, the Collateral Agent shall have the right, power
and privilege (but shall be under no duty) to terminate such license whereupon
the Collateral Agent shall have the right and authority, whether or not it
takes possession of the Property, to seek enforcement of any such lease,
contract or bond and to demand, collect, receive, sue for and recover in its
own name any and all of the above described amounts assigned hereby and to
apply the sum(s) collected, first to the payment of reasonable expenses
incident to the collection of the same, second to the payment of the Secured
Indebtedness, and the balance, if any, to Grantor or other party legally
entitled thereto; provided, however, that the Collateral Agent shall not be
deemed to have taken possession of the Property except on the exercise of its
option to do so, evidenced by its demand and overt act for such purpose.
Grantor shall make no assignment or other disposition of the above described
amounts assigned hereby, nor, unless permitted under the Credit Agreements,
shall Grantor cancel or amend any such lease, contract, bond or any other
instrument under which such amounts are to be paid or waive, excuse, condone,
discount, set off, compromise or in any manner release any obligation
thereunder if to do so could reasonably be expected to have a Material Adverse
Effect, nor shall Grantor during the existence of a Default receive or collect
any such amount thus assigned for a period of more than one month in advance of
the date on which payment thereof is due and Grantor shall duly and punctually
observe and perform every obligation to be performed by it under each such
lease, contract, bond or other instrument if the failure to do so could
reasonably be expected to have a Material Adverse Effect and shall not do or
permit to be done anything to impair the security thereof and shall enforce, if
the failure to do so could reasonably be expected to have a Material Adverse
Effect, every obligation of each other party thereto. The assignment contained
in this Paragraph 4.1. shall become null and void upon the release of this
Deed. It shall never be necessary for the Collateral Agent to institute legal
proceedings of any kind whatsoever to enforce the provisions of this Paragraph
4.1.
ARTICLE V.
Hazardous Materials
5.1. Definitions. For the purpose of this Deed, Grantor and the
Collateral Agent agree that, unless the context otherwise specifies or
requires, the following terms shall have the meaning specified below:
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(a) "Hazardous Materials" means (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), as amended from time to time, and
regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as
amended from time to time, and regulations promulgated thereunder; (c)
asbestos; (d) polychlorinated biphenyls; (e) underground storage
tanks, whether empty, filled or partially filled with any substance,
(f) any substance the presence of which on the Mortgaged Property is
prohibited by any Governmental Requirements (as defined below); and
(g) any other substance which by any Governmental Requirements
requires special handling or notification of any federal, state or
local governmental entity in its collection, storage, treatment, or
disposal.
(b) "Hazardous Materials Contamination" means the
contamination (whether presently existing or hereafter occurring) of
the buildings, facilities, soil, groundwater, air or other elements on
or of the Mortgaged Property by Hazardous Materials, or the
contamination of the buildings, facilities, soil, groundwater, air or
other elements on or of any other property as a result of Hazardous
Materials at any time (whether before or after the date of this Deed)
emanating from the Mortgaged Property, in either case, in a manner
violating applicable Governmental Requirements.
(c) "Governmental Requirements" means all laws,
ordinances, rules, and regulations of any Governmental Authority (as
defined below) applicable to Grantor or the Mortgaged Property.
(d) "Governmental Authority" means the United States, the
State, county, city, or any other political subdivision in which the
Mortgaged Property is located, and any other political subdivision,
agency, or instrumentality exercising jurisdiction over Grantor or the
Mortgaged Property.
5.2. Grantor's Warranties. Grantor hereby represents and warrants
that:
(a) To Grantor's actual knowledge, no Hazardous
Materials have been collected, stored, treated or disposed of in a
manner which materially violates any Applicable Laws, and no Hazardous
Materials which would have a Material Adverse Effect are now located
on the Mortgaged Property other than Hazardous Materials used in the
ordinary course of Grantor's operations, all of which have been used
in accordance, in all material respects, with proper specifications
and procedures in accordance with Applicable Laws, and neither Grantor
nor, to Grantor's actual knowledge and belief, any other person has
ever caused or permitted any Hazardous Materials which would have a
Material Adverse Effect to be placed, held, located or disposed of on,
under or at the Mortgaged Property, or any part thereof other than
Hazardous Materials used in the ordinary course of Grantor's
operations, all of which
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have been used in accordance, in all material respects, with proper
specifications and procedures in accordance with Applicable Laws;
(b) To Grantor's actual knowledge, no part of the
Mortgaged Property is being used nor, to Grantor's actual knowledge
and belief, has been previously used for the disposal, storage,
treatment, processing or other handling of Hazardous Materials, the
effect of which would have a Material Adverse Effect, nor is any part
of the Mortgaged Property affected by any Hazardous Materials
Contamination which would have a Material Adverse Effect;
(c) To Grantor's actual knowledge and belief, no property
adjoining the Mortgaged Property is being used, or has ever been used
at any previous time for the disposal, storage, treatment, processing
or other handling of Hazardous Materials which would have a Material
Adverse Effect, nor is any other property adjoining the Mortgaged
Property affected by Hazardous Materials Contamination which would
have a Material Adverse Effect.
5.3. Grantor's Covenants. Grantor agrees to (a) give notice to the
Collateral Agent promptly upon Grantor's acquiring knowledge of the presence of
any Hazardous Materials which would have a Material Adverse Effect on the
Mortgaged Property or of any Hazardous Materials Contamination which would have
a Material Adverse Effect, with a full description thereof; (b) promptly comply
with any Governmental Requirements requiring the removal, treatment or disposal
of such Hazardous Materials or Hazardous Materials Contamination and provide
the Collateral Agent with reasonably satisfactory evidence of such compliance;
and (c) provide the Collateral Agent within thirty (30) days after demand by
the Collateral Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Collateral Agent's reasonable satisfaction that the
necessary funds are available to pay the cost of removing, treating and
disposing of such Hazardous Materials or Hazardous Materials Contamination and
discharging any assessments which may be established on the Mortgaged Property
as a result thereof.
5.4. Site Assessments. Grantor will permit the Collateral Agent
(by its officers, employees and agents) at any time and from time to time, but
not more frequently than once in any twelve-month period (unless otherwise
required by any Tribunal having supervisory authority over the Collateral
Agent) to contract for the services of persons (the "Site Reviewers") to
perform environmental site assessments (the "Site Assessments") on any
Mortgaged Property for the purpose of determining whether there exists on such
Mortgaged Property any environmental condition which could reasonably be
expected to result in any liability, cost or expense to the owner, occupier or
operator of such Mortgaged Property arising under any Governmental Requirements
relating to Hazardous Materials. The Site Assessments may be performed at any
time or times, upon reasonable notice, and under reasonable conditions
established by Grantor which do not impede the performance of the Site
Assessments. Site Assessments shall be conducted in accordance with
Governmental Requirements. The Site Reviewers are hereby authorized to enter
upon any Mortgaged
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<PAGE> 256
Property for such purposes. The Site Reviewers are further authorized to
perform both above and below the ground testing for environmental damage or the
presence of Hazardous Materials on any Mortgaged Property and such other tests
on any Mortgaged Property as may be necessary to conduct the Site Assessments
in the reasonable opinion of the Site Reviewers. Grantor will supply to the
Site Reviewers such historical and operational information regarding any
Mortgaged Property as may be reasonably requested by the Site Reviewers to
facilitate the Site Assessments and will make available for meeting with the
Site Reviewers appropriate personnel employed by Grantor having knowledge of
such matters. The costs of performing such Site Assessments, except during a
Default, shall be paid by the Collateral Agent. During a Default, the
reasonable cost of performing such Site Assessments after the occurrence and
during the continuance of a Default or Event of Default shall be paid by
Grantor upon demand of the Collateral Agent and any such expenses borne by the
Collateral Agent and not immediately reimbursed by Grantor shall be secured by
this Deed.
5.5. Indemnification. Regardless of whether any Site Assessments
are conducted hereunder, if any Default or Event of Default shall have occurred
and be continuing or any remedies in respect of any Mortgaged Property are
exercised by the Collateral Agent or any Lender, Grantor shall defend,
indemnify and hold harmless the Collateral Agent and Lenders from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys' fees
and expenses, and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future
(whether before or after the release of this Deed) be paid, incurred or
suffered by or asserted against the Collateral Agent or Lenders by any person
or entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from any Mortgaged Property of any
Hazardous Materials or any Hazardous Materials Contamination or arise out of or
result from the environmental condition of any Mortgaged Property or the
applicability of any Governmental Requirements relating to Hazardous Materials
(including, without limitation, CERCLA or any federal, state or local so-called
"superfund" or "superlien" laws, or any code, rule, regulation, order or decree
promulgated thereunder); provided, however, the indemnity provided above shall
not apply to any liabilities, actions, demands, penalties, losses, costs or
expenses, suits, costs of any settlement or judgment and claims of any and
every kind whatsoever which are determined in a final, non-appealable judgment
by a court of competent jurisdiction to have been (i) caused by or within the
control of the Collateral Agent and/or Lenders as a result of actions in their
capacities as beneficiaries of this Deed and not as a result of any
determination in such judgment or otherwise that any covenants, conditions or
provisions in any of the Loan Documents give or purport to give control over
Grantor or any of the Mortgaged Property or (ii) which are the result of an
event that occurs after foreclosure of the Mortgaged Property (or any portion
thereof) or the taking of a deed in lieu of foreclosure covering the Mortgaged
Property (or any portion thereof), unless such event occurs as a result of or
arises out of a Hazardous Materials Contamination or an environmental condition
of the Mortgaged Property that occurred or existed prior to such foreclosure or
such taking of a deed in lieu of foreclosure. The covenants, warranties and
indemnifications contained in this Section 5.5
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shall survive the release of this Deed to Secure Debt and termination of the
Credit Agreement. For the purposes of this Section 5.5, the term "Collateral
Agent" and "Lenders" shall include all subsequent owners or holders of any
obligations secured by this Deed, all directors, officers, employees and agents
of such entity and any persons or entities owned or controlled by or affiliated
with the Collateral Agent or any Lender, and their respective directors,
officers, employees and agents.
ARTICLE VI.
Miscellaneous
6.1. Release. Upon the Release Date, the Property shall become
wholly clear of the liens, security interests, conveyances and assignments
evidenced hereby, which shall be released by the Collateral Agent at Grantor's
cost.
6.2. Waiver by the Collateral Agent. The Collateral Agent may at
any time and from time to time in writing (a) waive compliance by Grantor with
any covenant herein made by Grantor to the extent and in the manner specified
in such writing; (b) consent to Grantor doing any act which Grantor hereunder
is prohibited from doing, or consent to Grantor failing to do any act which
Grantor hereunder is required to do, to the extent and in the manner specified
in such writing; (c) release any part of the Property, or any interest therein,
from the lien and security interest of this Deed, or (d) release any party
liable, either directly or indirectly, for the Secured Indebtedness or for any
covenant herein or in any other instrument now or hereafter securing the
payment of the Secured Indebtedness, without impairing or releasing the
liability of any other party. No such act shall in any way impair the rights
of the Collateral Agent hereunder except to the extent specifically agreed to
by the Collateral Agent in such writing.
6.3. Actions by the Collateral Agent. The lien, security interest
and other security rights of the Collateral Agent and Lenders hereunder shall
not be impaired by any indulgence, moratorium or release granted by the
Collateral Agent (except as provided in Section 6.1), including but not limited
to (a) any renewal, extension, increase or modification which the Collateral
Agent or any Lender may grant with respect to any Secured Indebtedness, (b) any
surrender, compromise, release, renewal, extension, exchange or substitution
which the Collateral Agent or any Lender may grant in respect of the Property,
or any part thereof or any interest therein (except to the extent specifically
surrendered, compromised, released, renewed, extended, exchanged or
substituted), or (c) any release or indulgence granted to any endorser,
guarantor or surety of any Secured Indebtedness. The taking of additional
security by the Collateral Agent or any Lender shall not release or impair the
lien, security interest or other security rights of the Collateral Agent
hereunder or affect the liability of Grantor or of any endorser or guarantor or
other surety or improve the right of any permitted junior lienholder in the
Property.
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6.4. Rights of the Collateral Agent. The Collateral Agent may,
subject to the Credit Agreements, waive any Default or other default without
waiving any other prior or subsequent Default or other default. the Collateral
Agent may remedy any Default or other default without waiving the Default or
other default remedied. Neither the failure by the Collateral Agent to
exercise, nor the delay by the Collateral Agent in exercising, any right, power
or remedy upon any Default or other default shall be construed as a waiver of
such Default or other default or as a waiver of the right to exercise any such
right, power or remedy at a later date. No single or partial exercise by the
Collateral Agent of any right, power or remedy hereunder shall exhaust the same
or shall preclude any other or further exercise thereof, and every such right,
power or remedy hereunder may be exercised at any time and from time to time.
No modification or waiver of any provision hereof or consent to any departure
by Grantor therefrom shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instances, for the purpose for which
given and to the extent therein specified. No notice to or demand on Grantor
in any case shall of itself entitle Grantor to any other or further notice or
demand in similar or other circumstances. Acceptance by the Collateral Agent
of any payment in an amount less than the amount then due on any Secured
Indebtedness shall be deemed an acceptance on account only and shall not in any
way affect the existence of a Default or other default hereunder.
6.5. Filing and Recordation. Grantor will cause this Deed and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as the Collateral
Agent shall reasonably request, and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
6.6. Dealing with Successor. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Grantor, the
Collateral Agent may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Deed and to the Secured
Indebtedness in the same manner as with Grantor, without in any way vitiating
or discharging Grantor's liability hereunder or for the payment of the Secured
Indebtedness. Except as agreed to in writing by all Lenders and the Collateral
Agent, no sale of the Property, no forbearance on the part of the Collateral
Agent or any Lender and no extension of the time for the payment of any of the
Secured Indebtedness given by the Collateral Agent or any Lender shall operate
to release, discharge, modify, change or affect, in whole or in part, the
liability of Grantor hereunder or for the payment of the Secured Indebtedness
or the liability of any other person hereunder or for the payment of the
Secured Indebtedness, except to the extent proceeds of any such sale are
applied as provided in Paragraph 3.7 hereof.
6.7. Place of Payment. All Secured Indebtedness which may be owing
hereunder at any time by Grantor shall be payable at the place designated in
the Loan Documents, or if no such designation is made, at the office of the
Collateral Agent at the address indicated in
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<PAGE> 259
this Deed, or at such other place in the continental United States as the
Collateral Agent may designate in writing.
6.8. Subrogation. To the extent that proceeds of the Secured
Indebtedness are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced by Lenders at Grantor's request and Lenders shall
be subrogated to any and all rights, security interests and liens owned or held
by any owner or holder of such outstanding liens, security interests, charges
or encumbrances, irrespective of whether said liens, security interests,
charges or encumbrances are released; provided, however, that the terms and
provisions of this Deed shall govern the rights and remedies of Lenders and
shall supersede the terms, provisions, rights and remedies under and pursuant
to the instruments creating the lien or liens to which Lenders are subrogated
hereunder.
6.9. Application of Indebtedness. If any part of the Secured
Indebtedness cannot be lawfully secured by this Deed or if any part of the
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied
on said indebtedness first in discharge of that portion thereof which is
unsecured by this Deed.
6.10. Usury. It is the intent of the Collateral Agent, the Lenders
and Grantor in the execution of the Credit Agreements, this Deed, the other
Loan Documents and all other instruments now or hereafter securing the Secured
Indebtedness or executed in connection therewith or under any other written or
oral agreement by the undersigned in favor of the Collateral Agent and/or
Lenders to contract in strict compliance with applicable usury law. In
furtherance thereof, the Collateral Agent, Lenders and Grantor stipulate and
agree that none of the terms and provisions contained in the Credit Agreements,
this Deed, the other Loan Documents or any other instrument securing the Notes
or executed in connection herewith, or in any other written or oral agreement
by Grantor in favor of Lenders and/or the Collateral Agent, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to
be charged by Applicable Laws. Neither Grantor nor any guarantors, endorsers,
sureties or other parties now or hereafter becoming liable for the Secured
Indebtedness, or any part thereof, shall ever be required to pay interest on
Secured Indebtedness, under any instrument securing the Secured Indebtedness or
under any of the other Loan Documents, or in any other written or oral
agreement by Grantor in favor of Lenders and/or the Collateral Agent, at a rate
in excess of the maximum interest that may be lawfully charged under Applicable
Laws, and the provisions of this Paragraph 6.14 shall control over all other
provisions of the Credit Agreements, this Deed, the other Loan Documents and
any other instruments now or hereafter securing the Secured Indebtedness or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. All interest paid or agreed to be paid
to Lenders and/or the Collateral Agent shall, to the extent permitted by
Applicable Laws, be amortized, prorated, allocated and spread throughout the
full period until payment in full of the principal of the
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<PAGE> 260
Secured Indebtedness so that the interest thereon for such full period shall
not exceed the maximum amount permitted by Applicable Laws. Lenders and/or the
Collateral Agent expressly disavow any intention to charge or collect excessive
unearned interest or finance charges in the event the maturity of the Secured
Indebtedness is accelerated. If the maturity of the Secured Indebtedness shall
be accelerated for any reason or if the principal of the Secured Indebtedness
is paid prior to the end of the term of the Secured Indebtedness, and as a
result thereof the interest received for the actual period of existence of the
loans evidenced by the Secured Indebtedness exceeds the applicable maximum
lawful rate, Lenders and/or the Collateral Agent shall refund to Grantor the
amount of such excess or shall credit the amount of such excess against the
principal balance of the Secured Indebtedness then outstanding. In the event
that Lenders and/or the Collateral Agent shall collect monies and/or any other
thing of value which are deemed to constitute interest which would increase the
effective interest rate on the Secured Indebtedness to a rate in excess of that
permitted to be charged by Applicable Laws, an amount equal to interest in
excess of the lawful rate shall, upon such determination, at the option of
Lenders and/or the Collateral Agent, be either immediately returned to Grantor
or credited against the principal balance of the other Secured Indebtedness,
without further penalty to such holder. By execution of this Deed, Grantor
acknowledges that it believes the loan to be non-usurious and agrees that if,
at any time, Grantor should have reason to believe that such loan is in fact
usurious, it will give Lenders and/or the Collateral Agent notice of such
condition, and Grantor agrees that Lenders and/or the Collateral Agent shall
have 90 days after receipt of such notice in which to make appropriate refund
or other adjustment in order to correct such condition if in fact such
condition exists. As used in this Paragraph 6.14, "interest" means any sum
that must be treated as interest under Applicable Laws in determining whether a
loan is usurious. THE TERM "APPLICABLE LAWS" AS USED IN THIS PARAGRAPH 6.14
SHALL MEAN THE LAWS OF THE STATE OF TEXAS OR THE LAWS OF THE UNITED STATES,
WHICHEVER LAWS ALLOW THE GREATER RATE OF INTEREST, AS SUCH LAWS NOW EXIST OR
MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE.
6.11. Notice. Any notice, request, demand or other communication
required or permitted hereunder, or under the Loan Documents, or under any
other instrument securing the payment of the Loan Documents (unless otherwise
expressly provided therein) shall be given in the same manner as set forth in
Section 11.1(a) of the Credit Agreements.
6.12. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the representatives,
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Property, and shall inure to the
benefit of the Collateral Agent and the Lenders, and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the land. All references in this Deed to Grantor, the Collateral Agent or
Lenders shall be deemed to include all such heirs, devisees, representatives,
successors, substitutes and assigns.
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<PAGE> 261
6.13. Severability. A determination that any provision of this Deed
is unenforceable or invalid shall not affect the enforceability or validity of
any other provision and any determination that the application of any provision
of this Deed to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.
6.14. Gender and Number. Within this Deed, words of any gender
shall be held and construed to include any other gender, and words in the
singular and plural number shall be held and construed to include the other
number, unless the context otherwise requires.
6.15. Counterparts. This Deed may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall
constitute one instrument.
6.16. Reporting Requirements. Grantor agrees to comply with any and
all reporting requirements applicable to the transaction secured by this Deed
which are set forth in any law, statute, ordinance, rule, regulation, order or
determination of any governmental authority, and further agrees upon request of
the Collateral Agent to furnish the Collateral Agent with evidence of such
compliance.
6.17. Headings. The paragraph headings contained in this Deed are
for convenience only and shall in no way enlarge or limit the scope or meaning
of the various and several paragraphs hereof.
6.18. Consent of the Collateral Agent. Except where otherwise
provided herein or in any of the other Loan Documents, in any instance
hereunder where the approval, consent or the exercise of judgment of the
Collateral Agent is required, the granting or denial of such approval or
consent and the exercise of such judgment shall be within the sole discretion
of the Collateral Agent, and the Collateral Agent shall not, for any reason or
to any extent, be required to grant such approval or consent or exercise such
judgment in any particular manner, regardless of the reasonableness of either
the request or the Collateral Agent's judgment.
6.19. Modification or Termination. The Loan Documents may only be
modified or terminated by a written instrument or instruments executed by the
party against whom enforcement of the modification or termination is asserted.
Any alleged modification or termination which is not so documented shall not be
effective as to any party.
6.20. ENTIRE AGREEMENT. THIS DEED, TOGETHER WITH THE CREDIT
AGREEMENTS, AND ALL OTHER LOAN DOCUMENTS (ALL AS IN EFFECT ON THE DATE HEREOF
AND AS THE SAME MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED
HEREAFTER FROM TIME TO TIME) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
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<PAGE> 262
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
6.21. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE REAL PROPERTY
LAWS OF ANY STATE IN WHICH ANY OF THE MORTGAGED PROPERTY MAY BE LOCATED MAY
CONTROL, THIS DEED SHALL BE CONSTRUED, INTERPRETED, AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES APPLICABLE TO TRANSACTIONS WITHIN SUCH STATE; PROVIDED, HOWEVER, THIS
DEED SHALL BE ENFORCED UNDER AND PURSUANT TO THE LAWS OF THE STATE OF GEORGIA
AND THE LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS WITHIN
SUCH STATE.
6.22. Multiple Advance Loan. This Deed is given to secure, among
other things, a multiple advance loan and shall secure not only presently
existing indebtedness but also future advances, whether such advances are
obligatory or to be made at the option of the Collateral Agent or any Lender or
otherwise, to the same extent as if such future advances were made on the date
of execution of this Deed. The lien of this Deed shall be valid as to all
indebtedness hereby secured, including future advances, from the time of its
filing for record in the recorder's or registrar's office of the county in
which the Mortgaged Property is located.
6.23. Credit Agreements Control. In the event of any conflict or
inconsistency between any of the terms and provisions of the Credit Agreements
or any other Loan Documents (other than this Deed) and any of the terms and
provisions of this Deed, the terms and provisions of the Credit Agreements and
such other Loan Documents shall control.
IN WITNESS WHEREOF, Grantor has executed this Deed, Assignment of
Leases and Rents and Security Agreement as of the __ day of _________, ______.
------------------------------
a corporation
-----------
By:
---------------------------
Name:
----------------------
Title:
---------------------
Address:
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<PAGE> 263
SIGNED, SEALED AND DELIVERED
in the presence of:
- --------------------------------
Unofficial Witness
- --------------------------------
Notary Public
[Notary Stamp]
[Notary Seal]
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<PAGE> 264
EXHIBIT "A"
[Description of Property]
<PAGE> 265
EXHIBIT "B"
[Description of Permitted Encumbrances]
<PAGE> 266
EXHIBIT I-1
LANDLORD'S AGREEMENT
THIS LANDLORD'S AGREEMENT ("Agreement") is executed as of the ____ day
of _______________, 1997, by and among NATIONSBANK OF TEXAS, N.A., as
Collateral Agent for the benefit of the Lenders defined below ("Collateral
Agent"), ____________________________, a _________________________, together
with its predecessors and successors, ("Lessee") and _________________________
("Landlord").
W I T N E S S E T H :
WHEREAS, Landlord and Lessee, have entered into that certain Lease
Agreement dated ___________________, 1997 (as amended, modified and
supplemented, the "Lease"), covering certain real property situated in
________________ County, _______________, more particularly described in
Exhibit A attached to this Agreement (the "Property"); and
WHEREAS, [Lessee] [PILLOWTEX CORPORATION (THE "BORROWER")] is a party
to that certain Amended and Restated Credit Agreement and that certain Term
Credit Agreement, among [Lessee] [THE BORROWER], certain lenders party thereto
(the "Lenders"), and NationsBank of Texas, N.A., as Administrative Agent (said
Credit Agreements, as amended, modified, supplemented, renewed, extended or
restated, the "Credit Agreements"), pursuant to which Lenders have agreed,
among other things, to make loans ("Advances") to [Lessee] [the Borrower];
WHEREAS, Lessee, in consideration of, among other things, the Advances
made or to be made to Lessee by Lenders pursuant to the Credit Agreements, has
executed an agreement in favor of a trustee (the "Trustee") covering Lessee's
interest in the Lease and the Property (such agreement, as amended, modified,
supplemented, renewed or extended, whether titled as a mortgage, a deed of
trust or other agreement shall be referred to herein as the "Deed of Trust")
and a Security Agreement in favor of Collateral Agent on behalf of Lenders
covering Lessee's interest in certain assets of Lessee (as amended, modified,
supplemented, the "Security Agreement"); and
WHEREAS, Collateral Agent and Lessee desire that Landlord acknowledge
the Lease and the Deed of Trust and Lessee's, Collateral Agent's and Lenders'
rights under the Lease, the Deed of Trust and the Security Agreement;
NOW, THEREFORE, in consideration of the premises, the covenants,
conditions, provisions and agreements set forth in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Collateral Agent, Lessee and Landlord hereby represent,
acknowledge, covenant and agree as follows:
<PAGE> 267
1. Non-Disturbance. Landlord hereby agrees that (a) as long as no
default exists under the Lease which has not been cured or waived and (b) as
long as no event has occurred which, with the lapse of time or the giving of
notice or both, would entitle Landlord to dispossess Lessee, the Lease shall
not be terminated prior to the expiration date of the term thereof, nor shall
Lessee's possession or enjoyment of the Property be interfered with in the
event that Trustee or Collateral Agent or any successor-in-interest thereto
takes possession of any part of the Property or Excluded Property (as herein
defined) pursuant to the Deed of Trust, Security Agreement or otherwise,
provided that such Trustee, Collateral Agent or successor-in-interest agrees to
assume all obligations thereafter accruing under and to be bound by the terms
of the Lease. If any part of the Property is acquired by Trustee, Collateral
Agent or any successor-in-interest thereto by foreclosure or otherwise,
Trustee, Collateral Agent or such successor shall take title to Lessee's
interest in the Property or any part thereof subject to the terms of the Lease
and this Agreement, and Lessee's occupancy of the Property in accordance with
the terms of the Lease shall not be disturbed or otherwise affected except in
accordance with the terms of the Lease and this Agreement, provided that such
Trustee, Collateral Agent or successor-in-interest agrees to assume all
obligations thereafter accruing under and to be bound by the terms of the
Lease.
2. Attornment. If any proceedings are brought for the foreclosure of
Trustee's or Collateral Agent's deed of trust lien, mortgage lien, security
interest or other encumbrance on the Lease or the Property, Landlord agrees
that the substitution as lessee under the Lease of Trustee, Collateral Agent,
any successor-in-interest to Trustee or Collateral Agent, or purchaser at the
foreclosure sale, shall not constitute a default or event of default under the
Lease, and Landlord further agrees to recognize Trustee, Collateral Agent, any
successor-in-interest to Trustee, Collateral Agent or purchaser at the
foreclosure sale, as the lessee under the Lease with all rights and privileges
as are held by Lessee, provided that such Trustee, Collateral Agent or
successor-in-interest agrees to assume all obligations thereafter accruing
under and to be bound by the terms of the Lease. Such attornment shall be
effective and self-operative without the execution of any further instrument
on the part of any of the parties hereto. Landlord agrees, however, to execute
and deliver at any time, and from time to time, upon the request of Trustee,
Collateral Agent or of any other holder(s) of any of the indebtedness or any
such nominee or purchaser, any instrument or certificate which, in its sole
judgment, Trustee, Collateral Agent, such other holder(s), or such nominee or
purchaser, as the case may be, deems to be necessary or appropriate in any such
foreclosure proceeding or conveyance in lieu of foreclosure or otherwise to
evidence such attornment, provided that the rights of Lessee under the Lease
shall not be impaired or Lessee's obligations increased, as a result thereof.
3. Acknowledgment and Agreement by Landlord. Landlord acknowledges and
agrees that:
(a) This Agreement shall constitute written consent of the
Landlord to the encumbrance of the Lease to Collateral Agent and Lenders under
the Deed of Trust and Security Agreement and the subsequent assignment of the
Lease to any successor-in-interest to Trustee, Collateral Agent or purchaser at
the foreclosure sale and shall constitute a waiver of (i) all restrictions to
such encumbrance and assignment in the Lease, including notice requirements,
<PAGE> 268
and (ii) events of default created by such encumbrance and assignment under the
terms of the Lease.
(b) From and after the date hereof, in the event of any act or
omission by Lessee which would give Landlord the right, either immediately or
after the lapse of time or the giving of notice, to terminate the Lease or to
claim a partial or total eviction, Landlord will not exercise any such right;
(i) Until it has given written notice of such act or
omission to Collateral Agent; and
(ii) Until the longer of (A) thirty days, or (B) the same
period of time as is given to Lessee under the Lease to cure such act
or omission, shall have elapsed following receipt of such notice by
Collateral Agent and following the time when Collateral Agent or
Trustee shall have become entitled under the Deed of Trust or the
Security Agreement to remedy such act or omission;
(c) From and after the date hereof, Landlord will not materially
modify or amend the Lease without the prior written consent of Collateral
Agent, which consent will not be unreasonably withheld, and, in the event of
any material modification or amendment of the Lease without the prior written
consent of Collateral Agent, such modification or amendment shall be voidable
at any time at the option of Collateral Agent, in its sole discretion;
(d) It has notice that the Lease and all sums, if any, due to
Lessee thereunder have been assigned or are to be assigned to Collateral Agent
as security for the obligations secured by the Deed of Trust and the Security
Agreement. In the event that Collateral Agent notifies Landlord of a default
under the Deed of Trust or the Security Agreement and demands that Landlord pay
all sums due Lessee under the Lease (if any) to Collateral Agent, Landlord
shall honor such demand and pay all sums due Lessee under the Lease (if any)
directly to Collateral Agent or as otherwise required pursuant to such notice;
(e) It shall use its reasonable efforts to send a copy of any
notice or statement under the Lease to Collateral Agent at the same time such
notice or statement is sent to Lessee; and
(f) This Agreement satisfies any condition or requirement in the
Lease relating to the granting of a non-disturbance agreement.
4. No Obligation of Collateral Agent. Collateral Agent and Lenders have
no obligation and will not incur any liability hereunder or under the Lease
until such time as Collateral Agent takes possession of the Property or
otherwise acquires Lessee's interest in the Lease, whereupon Collateral Agent
and the Lenders shall be deemed to have assumed all obligations of Lessee
thereafter accruing or arising under the Lease.
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<PAGE> 269
5. Landlord's Agreement. Landlord hereby:
(a) Waives each and every right which Landlord now has, or may
hereafter have, by contract, statute or otherwise, or by virtue of the Lease
now in effect or any other lease related to the Property hereafter executed by
Lessee, to levy or distrain upon for rent, in arrears, in advance, or both, or
for any other claim of Landlord against Lessee or to claim or assert any title
or interest or lien in and to the following described property (hereinafter
called the "Excluded Property"):
All of Lessee's property now or hereafter located on or in the
Property, including but not limited to, all inventory now owned or
hereafter acquired by Lessee, including all goods, merchandise, raw
materials, goods in process, supplies or other personal property held
for sale or lease or furnished or to be furnished under contracts of
service or used or consumed in Lessee's business, all fixtures, all
furnishings, all general intangibles, all equipment (wherever located)
and all substitutions and accessions thereto, now or hereafter
existing, all parts thereof and all accessions and all proceeds and
products thereof
which are already on the Property, or may hereafter be delivered or installed
thereon, and are or may hereafter become subject to the Security Agreement or
the Deed of Trust granting any interest in the Excluded Property, or any of
same, in favor of Trustee or Collateral Agent;
(b) Recognizes and acknowledges that any claim or claims that
Trustee or Collateral Agent or any Lender has or may hereafter have against the
Excluded Property by virtue of the Security Agreement or the Deed of Trust is
senior and superior to any lien or claim of any nature which the Landlord now
has or may hereafter have to the Excluded Property by constitution, statute,
agreement or otherwise;
(c) Agrees that in the event of default by Lessee in the payment
of any indebtedness or other obligation to Collateral Agent or any Lender, or
in the performance of any of the terms and conditions of the Credit Agreement,
the Security Agreement, the Deed of Trust, Trustee or Collateral Agent or its
agent may remove the Excluded Property or any part thereof from the Property,
in accordance with the terms and conditions of the Security Agreement or the
Deed of Trust and Landlord covenants and agrees that Landlord will make no
claim whatsoever to the Excluded Property and will not attempt in any way to
impede such removal of the Excluded Property by Trustee, Collateral Agent or
their agent; and
(d) Agrees that Lenders at any time and from time to time, may,
without affecting the validity of this Agreement, renew, extend or otherwise
modify the terms of payment of any indebtedness of Lessee to Lenders or the
performance of any of the terms and conditions of the Security Agreement, Deed
of Trust, or other agreement with Lessee or Lenders or any other person or
entity now or hereinafter liable for or whose property secure the obligation of
Lessor to Lenders, without the consent of Landlord and without giving notice
thereof to Landlord.
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<PAGE> 270
(e) Represents and warrants that, to the best of its knowledge,
the Property is free and clear of any mortgage, deed of trust, deed to secure
debt or similar encumbrance ("Mortgage") or that, to the best of its knowledge,
if the Property is subject to a Mortgage, the Lease is superior to such
Mortgage and would survive any foreclosure or exercise of a power of sale
contained in the Mortgage.
6. Inconsistent Provisions. This Agreement supersedes any inconsistent
provision of the Lease.
7. Notices. Any notice, demand or request permitted, required or desired
to be given in connection with this Agreement shall be in writing and shall be
deemed effective if hand delivered, or if sent by United States certified or
registered mail, return receipt requested, postage prepaid, or if sent by
private receipted courier guaranteeing same-day or next-day delivery,
addressed to the respective party at its address provided below.
If sent by U.S. certified mail in accordance with this Section 7, such
notices shall be deemed given and received on the earlier of (a) actual receipt
at the above specified address of the named addressee, or (b) on the third
business day after deposit with the United States Postal Service. Notice given
by any other means shall be deemed given and received only upon actual receipt
at the herein specified address of the named addressee.
8. Time. Time is of the essence in all matters pertaining to the
performance of this Agreement.
9. Authority. The parties to this Agreement warrant and represent to one
another that they have the power and authority to enter into and perform their
respective obligations under this Agreement in the names, titles and capacities
herein stated and on behalf of any entities, persons, estates or firms
represented or purported to be represented by such person, and that all formal
requirements necessary or required by any state and/or federal law or private
agreement in order for the parties to enter into and perform their respective
obligations under this Agreement have been fully complied with.
10. Entire Agreement. This Agreement represents the entire agreement
among Collateral Agent, Lessee and Landlord regarding the subject matter dealt
with herein, and it may not be modified, amended or discharged except by
written amendment executed by the party against whom enforcement of such
modification, amendment or discharge is sought.
11. Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
heirs, administrators, personal representatives, successors and assigns.
12. Governing Law. The terms, provisions and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
_____________ without reference to principles of conflicts of laws.
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<PAGE> 271
13. Attorneys' Fees. Should any litigation, administrative proceeding or
arbitration be commenced by any of the parties hereto or their representatives,
or should any party institute any proceeding in a court which has jurisdiction
over any other party hereto or any or all of its property or assets, or should
any litigation or proceeding be commenced concerning any provision of this
Agreement or the rights and duties of any person or entity in relation thereto,
then the party or parties prevailing in such litigation or proceeding shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for such prevailing party's attorneys' fees and court costs in such
litigation or proceeding, which shall be determined by the court (or presiding
official) in such litigation or proceeding or in a separate action brought for
that purpose.
14. Indemnity. Notwithstanding anything to the contrary provided herein,
Administrative Agent and Lenders shall (a) indemnify and hold harmless
Landlord for any damage to the Property or any Person caused by or as a result
of any removal of the Excluded Property from the Property by Collateral Agent
or any Lender or any of their representatives and (b) repair any damage caused
by or as a result of removal of the Excluded Property from the Property by
Collateral Agent or any Lender or any of their representatives.
15. Severability. If any provision of this Agreement shall, for any
reason, be held to be violative of any applicable law, and so much of this
Agreement is held to be unenforceable, then the invalidity of such specific
provision shall not be held to invalidate any other provision of this
Agreement, all of which other provisions shall remain in full force and effect.
16. Headings; Construction. The headings contained in this Agreement are
for reference purposes only and shall not modify or affect this Agreement in
any manner whatsoever. Wherever required by this context, any gender shall
include any other gender, the singular shall include the plural, and the plural
shall include the singular.
17. Counterparts. This Agreement may be executed in any number of
counterparts each of which, when so executed, shall be deemed an original and
all of which taken together shall constitute the Agreement.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 272
EXECUTED as of the date first written above.
COLLATERAL AGENT:
NATIONSBANK OF TEXAS, N.A.
Address:
NationsBank of Texas, N.A.
as Collateral Agent
901 Main Street, 13th Floor
Dallas, Texas 75202 By:
-----------------------------
Attention: Marie T. Lancaster Name:
------------------------
Title:
-----------------------
LANDLORD:
Address:
-------------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
LESSEE:
Address:
-------------------------------------
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- ----------------------------------
- ----------------------------------
By:
-----------------------------
Name:
------------------------
Title:
-----------------------
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<PAGE> 273
THE STATE OF TEXAS }
}
COUNTY OF DALLAS }
This instrument was acknowledged before me on the _____ day of
_________________, 1997, by __________________, ______________________ of
NationsBank of Texas, N.A., a national banking association.
-------------------------------------
Notary Public, State of Texas
My Commission Expires:
- ----------------------------------
THE STATE OF _____________ }
}
COUNTY OF ________________ }
This instrument was acknowledged before me on the _____ day of
__________, 1997, by ____________________, ____________________ of
______________________________, a ____________________ corporation, on behalf
of said corporation.
-------------------------------------
Notary Public, State of
--------------
My Commission Expires:
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<PAGE> 274
THE STATE OF _____________ }
}
COUNTY OF ________________ }
This instrument was acknowledged before me on the _____ day of
__________, 1997, by ____________________, ____________________ of
_____________________________, a ______________________, on behalf of said
_________________.
-------------------------------------
Notary Public, State of
--------------
My Commission Expires:
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<PAGE> 275
EXHIBIT "A"
Real property description:
Being ___________ square feet in a building located on the
following-described tract of real property in _______________, _____________
County, _______________________ (such real property being commonly referred to
as ________________________________________):
[LEGAL DESCRIPTION OF PROPERTY SUFFICIENT FOR CONVEYANCING PURPOSES]
Owner of Record:
----------------------------
<PAGE> 276
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SPACE ABOVE THIS LINE FOR RECORDER'S USE
EXHIBIT I-2
LANDLORD'S WAIVER AND CONSENT
STATE OF ___________________ (
( KNOW ALL MEN BY THESE PRESENTS
COUNTY OF __________________ (
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, _____ ________________ (the "Landlord")
hereby acknowledges, covenants and represents to NATIONS BANK OF TEXAS, N.A.,
in its capacity as the Collateral Agent for itself and certain other lenders
(collectively, "Lenders") as follows:
1. Landlord is the owner of certain real property (the
"Premises") described on Exhibit "A" attached hereto and incorporated herein by
reference for all purposes.
2. _____________________ (the "Tenant") has heretofore leased,
and is occupying, the Premises under a valid and enforceable Lease, dated
__________, 19__ (as amended, supplemented, restated, extended or otherwise
modified from time to time, the "Lease"), between Landlord and Tenant.
3. As of the date hereof, Tenant is not in default under the
Lease, nor has any event or circumstance occurred which, with the giving of
notice or lapse of time or both, would constitute such a default under the
Lease.
4. Landlord acknowledges that Tenant has granted, or may
hereafter grant, for the benefit of Lenders a security interest (the "Security
Interest") in the following described property now or hereafter owned by Tenant
which is or may hereafter from time to time be situated on or about the
Premises (the "Collateral"):
All present and future accounts, chattel paper, inventory, equipment,
contract rights, documents, instruments, deposit accounts, general
intangibles and other personal property and fixtures now or hereafter
owned, held or acquired by Tenant, together with any and all books of
account, customer lists and other records relating in any way to the
foregoing, and in any case where an account arises from the sale of
goods, the interest of Tenant in such goods, and, including, without
limitation, all of the following: All of Tenant's accounts
<PAGE> 277
receivable, including rights to payment for goods sold or services
rendered, whether or not earned by performance, and all other rights
to receive payments of money from any person; Tenant's inventory,
including raw materials, work in process, and finished goods, owned or
held on consignment, wherever located; all equipment owned by Tenant,
and all of Tenant's right, title and interest under equipment leases,
tools, parts and accessories; processes, plans, specifications, and
manuals; customer lists; computer hardware and all programs, disks,
software and manuals used or usable in connection therewith; Tenant's
rights under any computer service or consulting agreements;
trademarks, trade names and service marks; rights or claims under
contracts, income tax refunds, and all proceeds of the foregoing,
including, without limitation, insurance proceeds payable by reason of
loss or damage to any of the foregoing.
5. Landlord hereby waives, relinquishes and disclaims any and all
rights, if any, to maintain, obtain or enforce a landlord's lien (whether
contractual or statutory) or any other liens, encumbrances or claims which
Landlord has or may hereafter have against the Collateral or any interest
therein, and hereby releases the Collateral from any and all sales, process,
levy, execution, garnishment, attachment, judgment, or distraint and lien,
whether given by operation of law, by the Lease (or any amendments,
supplements, substitutions or renewals thereof), by agreement or otherwise, for
rent due or to become due, and for any and all other claims or demands, present
or future, which either Landlord may have therein.
6. Landlord will not, in any manner, hinder or prevent Lenders or
Lenders' agents from coming onto the Premises to inspect the Collateral, to
remove the Collateral from the Premises or to take possession and exhibit
and/or conduct a sale of the Collateral on the Premises, and Landlord does
hereby specifically consent to any and all such activity(ies). Lenders shall
(a) indemnify and hold harmless Landlord for any damage to the Premises or any
person caused by or as a result of any such activities by Lenders or Lenders'
agents and (b) repair any damage caused by or as a result of any such
activities by Lenders or Lenders' Agents.
7. Landlord shall immediately notify Lenders at the address for
Lenders set forth herein of the earlier to occur of (i) the retaking of
possession of the Premises by Landlord (whether by judicial process or
otherwise) or (ii) the giving or delivering of any notice or demand to Tenant
in connection with any default by Tenant or the intention of Landlord to retake
possession of the Premises. After any such retaking of possession of the
Premises (or any part thereof) by Landlord, or if for any other reason,
Landlord ever comes into possession or control of any of the Collateral or of
any of the proceeds of any of the Collateral, Landlord shall store, maintain
and protect any such Collateral or proceeds thereof then under Landlord's
possession or control. In the event Lenders have not reclaimed and/or removed
such Collateral or proceeds thereof within sixty (60) days after Lender
receives notice of the taking of possession or control of the Collateral or
proceeds thereof by Landlord, Lenders shall reimburse Landlord for the
reasonable costs incurred by Landlord in storing, maintaining and protecting
such Collateral. The address for notice to Lenders is as follows:
<PAGE> 278
NationsBank of Texas, N.A., as
Collateral Agent 901 Main
Street, 13th Floor Dallas,
Texas 75202 Attention: Marie
T. Lancaster
8. Landlord acknowledges that Lenders are relying on the
representations and covenants set forth herein and that, but for the execution
by Landlord of this Landlord's Waiver and Consent, Lenders would not make,
renew or extend the loan or loans to the Tenant, or any affiliate of the
Tenant, which are secured by the Security Interest.
9. This Landlord's Waiver and Consent shall bind Landlord, and
its successors and assigns, and shall inure to the benefit of Lenders, and
their respective successors and assigns.
EXECUTED this _____ day of _______________, 1997.
________________________________________
By:
______________________________
Name:_________________________
Title:________________________
STATE OF ___________ (
(
COUNTY OF __________ (
This instrument was acknowledged before me on the _____ day of
____________________, 1997, by _______________ , as the _____________________of
____________________________ on behalf of said corporation.
______________________________
NOTARY PUBLIC IN AND FOR THE
STATE OF ____________
My Commission Expires:
__________________________________
______________________________
(Printed Name of Notary)
<PAGE> 279
EXHIBIT "A"
Real property description:
Being ___________ square feet in a building located on the
following-described tract of real property in _______________, _____________
County, ___________ (such real property being commonly referred to as
________________________________________):
[LEGAL DESCRIPTION OF PROPERTY SUFFICIENT FOR CONVEYANCING PURPOSES]
Owner of Record: ________________________
<PAGE> 280
EXHIBIT J
SWING LINE NOTE
Dallas, Texas $15,000,000 December 19, 1997
PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), for value
received, promises to pay to the order of NationsBank of Texas, N.A. ("Lender")
or its registered assigns, at the principal office of NationsBank of Texas,
N.A., in lawful money of the United States of America, the principal sum of
Fifteen Million and No/100 Dollars ($15,000,000), or such lesser sum as shall
be due and payable from time to time hereunder, as hereinafter provided. All
capitalized terms used but not defined herein shall have the meanings set forth
in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Swing
Line Advances under this Swing Line Note (this "Note") from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Note is issued pursuant to and evidences Swing Line Advances
under an Amended and Restated Credit Agreement, dated as of December 19, 1997,
among the Borrower, NationsBank of Texas, N.A., as Administrative Agent, and
the lenders parties thereto (as amended, restated, supplemented, renewed,
extended or otherwise modified from time to time, "Credit Agreement"), to which
reference is made for a statement of the rights and obligations of the Lender
and the duties and obligations of the Borrower in relation thereto; but neither
this reference to the Credit Agreement nor any provision thereof shall affect
or impair the absolute and unconditional obligation of the Borrower to pay the
principal sum of and interest on this Note when due.
THIS NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF AMERICA. THE
BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS LOCATED IN DALLAS,
TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN CONNECTION WITH THIS NOTE
AND THE OTHER LOAN DOCUMENTS.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
PILLOWTEX CORPORATION
By:
-----------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE> 281
EXHIBIT K
NOTICE OF CONTINUATION/CONVERSION
NationsBank of Texas, N.A., as
the Administrative Agent
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Marie T. Lancaster
Re: Pillowtex Corporation
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Pillowtex Corporation,
pursuant to the Amended and Restated Credit Agreement, dated as of December 19,
1997, among the undersigned, the financial institutions party thereto and
NationsBank of Texas, N.A., as the Administrative Agent (said Agreement, as it
may be amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement" and capitalized terms not defined herein but defined therein
being used herein as therein defined), hereby gives you notice, irrevocably,
pursuant to Section 2.2 of the Credit Agreement, that the undersigned hereby
requests a [conversion] [continuation] on _____________, ____ of
$________________ in principal amount of presently outstanding Revolving Credit
Advances that are [Base Rate Advances] [LIBOR Advances having an Interest
Period ending on ____________, ______] [to] [as] [Base Rate] [LIBOR] Advances.
[The Interest Period for such amount requested to be [converted to] [continued
as] LIBOR Advances is [1] [2] [3] [6] months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the [conversion]
[continuation], before and after giving effect thereto:
(A) the representations and warranties of the Borrower contained
in Article 4 of the Credit Agreement and in each of the other Loan
Documents to which it is a party (other than those representations and
warranties that specifically relate to an earlier date) are true and
correct as though made on and as of such date, except as otherwise
expressly provided in Section 4.2 of the Credit Agreement; and
<PAGE> 282
(B) no Default or Event of Default is continuing, or will result
from the [continuation] [conversion].
Very truly yours,
PILLOWTEX CORPORATION
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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<PAGE> 283
EXHIBIT L
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (as the same may from time to time be
amended, modified, supplemented or restated, this "Intercreditor Agreement")
dated as of December 19, 1997, is made by and among Pillowtex Corporation, a
Texas corporation (the "Borrower"), each of the Persons listed as Grantors on
the signature pages hereto (the "Grantors"), NationsBank of Texas, N.A., in its
capacity as Collateral Agent (the "Collateral Agent"), NationsBank of Texas,
N.A., as administrative agent (in such capacity, together with any successor
thereto, the "Revolving Administrative Agent") for itself and certain other
lenders (collectively, the "Revolving Lenders"), under the Revolving Credit
Agreement (as hereinafter defined), the Revolving Lenders, NationsBank of
Texas, N.A., as administrative agent (in such capacity, with any successor
thereto, the "Term Administrative Agent") for itself and certain other lenders
(collectively, the "Term Lenders") under the Term Credit Agreement (as
hereinafter defined), and the Term Lenders.
BACKGROUND.
The Borrower is a party to that certain Amended and Restated Credit
Agreement dated as of December 19, 1997 (as amended, modified, supplemented or
restated from time to time, the "Revolving Credit Agreement") with the
Revolving Lenders and the Revolving Administrative Agent.
The Borrower is a party to that certain Term Credit Agreement dated as
of December 19, 1997 (as amended, modified, supplemented or restated from time
to time, the "Term Credit Agreement") with the Term Lenders and the Term
Administrative Agent.
The parties hereto intend for (a) the rights of payment in respect of
the Advances and the Liens of the Revolving Lenders in the Collateral (as
hereinafter defined) to be pari passu with the rights of payment in respect of
the Advances and the Liens of the Term Lenders in the Collateral, and (b) the
voting rights with respect to the Revolving Credit Agreement and the Term
Credit Agreement be set forth in this Agreement.
It is a requirement of the Revolving Credit Agreement and the Term
Credit Agreement that the Borrower, the Grantors and the Secured Parties (as
hereinafter defined) execute and deliver to the Collateral Agent, for the
benefit of the Secured Parties, this Intercreditor Agreement in order to
further define the rights and obligations of the parties hereto.
<PAGE> 284
AGREEMENT.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Borrower, the Grantors, the
Revolving Administrative Agent, the Term Administrative Agent, the Revolving
Lenders, and the Term Lenders agree with the Collateral Agent as follows:
I. DEFINED TERMS
1.1 Defined Terms. Except as otherwise defined below, as used in
this Intercreditor Agreement defined and capitalized terms shall have the
meanings set forth in the Revolving Credit Agreement and the Term Credit
Agreement.
"Assignment Agreement" means an Assignment Agreement under the
Revolving Credit Agreement or the Term Credit Agreement.
"Collateral" means, collectively, any and all of the property in which
the Collateral Agent, the Revolving Administrative Agent, any Revolving Lender,
the Term Administrative Agent or any Term Lender has a Lien pursuant to any
Loan Document.
"Commitments" means, collectively, the Commitment (as defined in the
Revolving Credit Agreement) and the Commitments (as defined in the Term Credit
Agreement).
"Credit Agreements" means, collectively, the Revolving Credit
Agreement and the Term Credit Agreement.
"Distribution Date" means each date established by the Collateral
Agent as a date for the distribution of amounts on deposit in the Collateral
Account, as defined in Section 4.1.
"Event of Default" means an Event of Default under the Revolving
Credit Agreement or the Term Credit Agreement.
"Loan Document" means a Loan Document under the Revolving Credit
Agreement or the Term Credit Agreement.
"Obligations" means all Obligations (collectively, as defined in each
of the Revolving Credit Agreement and the Term Credit Agreement).
"Proceeds" has the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrower or any
Grantor from time to time with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable to
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<PAGE> 285
the Borrower or any Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Tribunal and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral.
"Pro Rata" means for any Person a fraction (a) the numerator of which
is the amount of unpaid principal and face amount of the Revolving Obligations
and the Term Obligations owing to such Person, and (b) the denominator of which
is the aggregate amount of unpaid principal and face amount of the Revolving
Obligations and the Term Obligations owing to the Revolving Lenders and the
Term Lenders.
"Revolving Loan Documents" means Loan Documents as defined in the
Revolving Credit Agreement.
"Required Lenders" means any combination of Revolving Lenders and Term
Lenders whose Voting Specified Percentages aggregate more than 50%; provided,
however, in the event that all of the Commitments have been terminated,
"Required Lender" means, on any date of determination, any combination of
Lenders having more than 50% of the Revolving Advances and Term Advances then
outstanding.
"Revolving Obligations" means Obligations as defined in the Revolving
Credit Agreement.
"Secured Party" means each of, and "Secured Parties" means all of, the
Collateral Agent, the Revolving Administrative Agent, the Revolving Lenders,
the Term Administrative Agent and the Term Lenders.
"Term Loan Documents" means Loan Documents as defined in the Term
Credit Agreement.
"Term Obligations" means Obligations as defined in the Term Credit
Agreement.
"Voting Specified Percentage" means, as to any Revolving Lender or
Term Lender, the percentage indicated beside its name on Schedule 1 hereto as
the Voting Specified Percentage, or as adjusted or specified in any Assignment
Agreement or any amendment to this Intercreditor Agreement [SUCH PERCENTAGE TO
BE EACH LENDER'S AGGREGATE COMMITMENT UNDER THE REVOLVING CREDIT AGREEMENT AND
THE TERM CREDIT AGREEMENT DIVIDED BY ALL COMMITMENTS UNDER THE REVOLVING CREDIT
AGREEMENT AND THE TERM CREDIT AGREEMENT].
1.2 Interpretation. For purposes of distributing proceeds of
Collateral and the definition of "Pro Rata" and "Secured Parties" (but not for
purposes of determining "Required Lenders", "Voting Specified Percentages" or
for purposes of Section 9.1 or 10.3 hereof), (a) "Revolving Lenders" shall
include any Person that is or was a Revolving Lender or an Affiliate of a
Revolving Lender now or at the time it entered into a Hedge Agreement with the
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<PAGE> 286
Borrower or any Grantor and (b) "Term Lenders" shall include any Person that is
or was a Term Lender or an Affiliate of a Term Lender now or at the time it
entered into an Interest Hedge Agreement with the Borrower or any Grantor.
II. AGREEMENT TO HOLD COLLATERAL
In reliance upon, and subject to, the provisions of Article VII, the
Collateral Agent will hold the Liens in the Collateral granted to the
Collateral Agent under the Collateral Documents and granted to the Revolving
Administrative Agent under the Revolving Credit Agreement in respect of the L/C
Cash Collateral Account on behalf of and for the ratable benefit of the
Collateral Agent, the Revolving Administrative Agent, the Revolving Lenders,
the Term Administrative Agent and the Term Lenders on the terms and conditions
set forth in this Intercreditor Agreement.
III. ACCELERATION
3.1 Exercise of Rights and Remedies. Upon the occurrence and
during the continuance of an Event of Default, with the consent of or at the
request of the Required Lenders, the Collateral Agent shall exercise the rights
and remedies provided in this Intercreditor Agreement, the Collateral Documents
and the Revolving Credit Agreement in respect of the L/C Cash Collateral
Account. If the Revolving Administrative Agent, the Term Administrative Agent
and the Collateral Agent are not the same Person, the Revolving Administrative
Agent and the Term Administrative Agent shall give the Collateral Agent notice
of such Event of Default under the Revolving Credit Agreement and the Term
Credit Agreement, respectively.
3.2 Right to Initiate Judicial Proceedings. If an Event of
Default shall occur and be continuing, the Collateral Agent, with the consent
of or at the request of the Required Lenders, (a) shall have the right and
power to institute and maintain such suits and proceedings as it may deem
appropriate and permitted under any Collateral Document and the Revolving
Credit Agreement in respect of the L/C Cash Collateral Account to protect and
enforce the rights vested in it or any Secured Party by this Intercreditor
Agreement, each Collateral Document and the Revolving Credit Agreement in
respect of the L/C Cash Collateral Account and (b) may either after entry, or
without entry, proceed by suit or suits at law or in equity to enforce such
rights and to foreclose upon the Collateral and to sell all or, from time to
time, any of the Collateral under the judgment or decree of a court of
competent jurisdiction, all in accordance with the Collateral Documents and the
Revolving Credit Agreement in respect of the L/C Cash Collateral Account.
3.3 Remedies Not Exclusive.
(a) No remedy conferred upon or reserved to the Collateral Agent
herein or to any Secured Party in the Collateral Documents, the Revolving Loan
Documents or the Term Loan
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<PAGE> 287
Documents is intended to be exclusive of any other remedy or remedies, but
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or in any Collateral Document, the Revolving Loan
Documents or the Term Loan Documents or now or hereafter existing at Law or in
equity; provided, however, any exercise of any rights or remedies by the
Collateral Agent or any other Secured Party shall be subject to the terms of
this Intercreditor Agreement.
(b) If the Collateral Agent shall have proceeded to enforce any
right, remedy or power under this Intercreditor Agreement, any Collateral
Document or under the Revolving Credit Agreement in respect of the L/C Cash
Collateral Account and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then the Borrower, the Grantors, the
Collateral Agent and the other Secured Parties shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder or thereunder with respect to the
Collateral and in all other respects, and thereafter all rights, remedies and
powers of the Collateral Agent and the other Secured Parties shall continue as
though no such proceeding had been taken.
(c) All rights of action and of asserting claims upon or under
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account may be enforced by the
Collateral Agent without the possession of any Collateral Document, any
Revolving Loan Document, any Term Loan Document or other instrument evidencing
any Revolving Obligations or Term Obligations or the production thereof at any
trial or other proceeding relative thereto, and any suit or proceeding
instituted by the Collateral Agent shall be brought in its name as the
Collateral Agent and any recovery or judgment shall be held as part of the
Collateral on behalf of and for the ratable benefit of the Collateral Agent,
the Term Lenders, the Term Administrative Agent, the Revolving Lenders, and the
Revolving Administrative Agent and distributed as provided in Section 4.4.
3.4 Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of Law, and all the provisions hereof are
intended to be subject to all applicable mandatory provisions of Law which may
be controlling and to be limited to the extent necessary so that they will not
render this Intercreditor Agreement or any Collateral Document invalid,
unenforceable in whole or in part.
IV. COLLATERAL ACCOUNT; DISTRIBUTIONS
4.1 The Collateral Account. During the continuance of an Event of
Default, with the consent of or at the request of the Required Lenders, all
moneys which are required by this Intercreditor Agreement or any Collateral
Document or the Revolving Credit Agreement in respect of the L/C Cash
Collateral Account to be delivered to the Collateral Agent or any other Secured
Party or which are received by the Collateral Agent or any agent or nominee of
the
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<PAGE> 288
Collateral Agent or any other Secured Party in respect of the Collateral shall
be deposited in an account established at the principal office of the
Collateral Agent (the "Collateral Account") and held by the Collateral Agent
for the benefit of the Secured Parties and applied in accordance with the terms
of this Intercreditor Agreement.
4.2 Control of Collateral Account. Subject to the terms of this
Intercreditor Agreement, all right, title and interest in and to the Collateral
Account shall vest in the Collateral Agent, and the Collateral Account shall be
subject to the exclusive dominion and control of the Collateral Agent.
4.3 Investment of Funds Deposited in Collateral Account. The
Collateral Agent shall use reasonable efforts to invest and reinvest moneys on
deposit in the Collateral Account at any time in:
(a) marketable obligations of the United States having a
maturity of not more than six months from the date of acquisition;
(b) marketable obligations directly and fully guaranteed
by the United States having a maturity of not more than one year from
the date of acquisition;
(c) bankers' acceptances and certificates of deposit and
other interest-bearing obligations issued by the Collateral Agent or
any bank organized under the Laws of the United States or any state
thereof with capital, surplus and undivided profits aggregating at
least $500,000,000, in each case having a maturity of not more than
six months from the date of acquisition;
(d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clauses
(a), (b) and (c) entered into with the Collateral Agent or any bank
meeting the qualifications specified in clause (c) above; and
(e) commercial paper rated at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation, or P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and maturing within three months after
the date of acquisition.
All such investments and the interest and income received thereon and the net
proceeds realized on the sale or redemption thereof shall be held in the
Collateral Account as part of the Collateral. Except for gross negligence or
wilful misconduct, the Collateral Agent shall not be liable for any investment,
for any failure to invest hereunder, or for any performance of any such
investment or any loss or penalty resulting therefrom.
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<PAGE> 289
4.4 Application of Moneys.
(a) The Collateral Agent shall have the right, upon an Event of
Default, to apply moneys held by it in the Collateral Account to the payment of
due and unpaid fees and expenses owing to it pursuant to Section 5.3. If the
Collateral Agent exercises its rights pursuant to the preceding sentence, all
remaining moneys held by the Collateral Agent in the Collateral Account or
received by the Collateral Agent shall, to the extent available for
distribution (it being understood that the Collateral Agent may liquidate
investments prior to maturity in order to make a distribution pursuant to this
Section 4.4), be distributed by the Collateral Agent on each Distribution Date
in the following order of priority:
First: to the Collateral Agent for any unpaid expenses owing
to it pursuant to Section 5.3;
Second: to any Revolving Lender and any Term Lender which has
theretofore advanced or paid any expenses of the Collateral Agent, Pro
Rata an amount equal to the amount thereof so advanced or paid by such
Revolving Lender or such Term Lender and for which such Revolving
Lender or such Term Lender has not been reimbursed prior to such
Distribution Date;
Third: to the Revolving Lenders and the Term Lenders, Pro
Rata an amount equal to the unpaid amount of the Revolving Obligations
and Term Obligations which are due and owing under the relative
Collateral Documents and which constitute the Revolving Obligations
and the Term Obligations as of the Distribution Date;
Fourth: to the Revolving Lenders and the Term Lenders, Pro
Rata amounts equal to all other sums which constitute the Revolving
Obligations and the Term Obligations; and
Fifth: any surplus then remaining shall be paid to the
Borrower and/or the Grantors or their respective successors or assigns
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
(b) The term "unpaid" as used in clause Third of Section 4.4(a)
refers:
(i) in the absence of a bankruptcy proceeding with
respect to the Borrower or any Grantor, to all amounts of the
Revolving Obligations and the Term Obligations outstanding as of a
Distribution Date, and
(ii) during the pendency of a bankruptcy proceeding with
respect to the Borrower or any Grantor, to all amounts allowed by the
bankruptcy court in respect of the Revolving Obligations and the Term
Obligations as a basis for distribution (including estimated amounts,
if any, allowed in respect of contingent claims), to the extent that
prior distributions have not been made in respect thereof.
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(c) The Collateral Agent shall make all payments and distributions
under this Section 4.4 on account of the Revolving Obligations to the Revolving
Administrative Agent for redistribution to the Revolving Lenders in accordance
with the provisions of the Revolving Credit Agreement. The Collateral Agent
shall make all payments and distributions under this Section 4.4 on account of
the Term Obligations to the Term Administrative Agent for redistribution to the
Term Lenders in accordance with the provisions of the Term Credit Agreement.
(d) If any Revolving Lender or any Term Lender has advanced or
paid any expenses of the Collateral Agent in excess of its Pro Rata Share
hereunder and is not paid or reimbursed in full for the amount of such advances
or payments, such Revolving Lender or Term Lender shall have a claim against
any Revolving Lender or Term Lender which has not paid its Pro Rata Share of
such expenses of the Collateral Agent.
4.5 The Collateral Agent's Calculations. In making the
determinations and allocations required by Section 4.4, the Collateral Agent
may rely upon information supplied by the Revolving Administrative Agent as to
the amounts payable with respect to the Revolving Obligations and by the Term
Administrative Agent as to amounts payable with respect to the Term
Obligations, and the Collateral Agent shall have no liability to any of the
Revolving Lenders or the Term Lenders for actions taken in reliance on such
information. All distributions made by the Collateral Agent pursuant to
Section 4.4 shall be (subject to any decree of any court of competent
jurisdiction) final, and the Collateral Agent shall have no duty to inquire as
to the application by the Revolving Administrative Agent or the Term
Administrative Agent of any amounts distributed to them.
V. AGREEMENTS WITH THE COLLATERAL AGENT
5.1 Delivery of Collateral Documents. The Revolving
Administrative Agent and the Term Administrative Agent have delivered to the
Collateral Agent true and complete copies of all Loan Documents as in effect on
the date hereof. The Revolving Administrative Agent and the Term
Administrative Agent, as the case may be, shall deliver to the Collateral
Agent, promptly upon the execution thereof, a true and complete copy of all
amendments, modifications or supplements to any Loan Document entered into
after the date hereof.
5.2 Certain Information. In the event the Revolving
Administrative Agent, the Term Administrative Agent and the Collateral Agent
are not the same Person, the Revolving Administrative Agent and the Term
Administrative shall deliver to the Collateral Agent, between May 1 and May 15
and between November 1 and November 15 in each year, and from time to time upon
request of the Collateral Agent, a list setting forth as of a date not more
than 10 days prior to the date of such delivery, the aggregate unpaid principal
and interest on the Revolving Obligations and the Term Obligations,
respectively, and the name and address of each holder thereof.
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5.3 Compensation and Expenses. The Borrower agrees to pay to the
Collateral Agent, from time to time upon demand, all of the reasonable
our-of-pocket costs and expenses of the Collateral Agent (including, without
limitation, the reasonable fees and disbursements of its counsel and such
special counsel as the Collateral Agent reasonably elects to retain) (a)
arising in connection with the preparation, execution, delivery, modification,
and termination of this Intercreditor Agreement, or the enforcement against the
Borrower or any Guarantor of any of the provisions hereof, (b) incurred or
required to be advanced in connection with the preservation, protection or
defense of the Collateral Agent's rights or any rights of the other Secured
Parties under this Intercreditor Agreement, or (c) incurred by the Collateral
Agent in connection with the resignation of the Collateral Agent pursuant to
Section 7.6. The obligations of the Borrower under this Section 5.3 shall
survive the termination of the other provisions of this Intercreditor
Agreement.
5.4 STAMP AND OTHER SIMILAR TAXES. THE BORROWER AGREES TO
INDEMNIFY AND HOLD HARMLESS THE COLLATERAL AGENT, THE REVOLVING ADMINISTRATIVE
AGENT, THE TERM ADMINISTRATIVE AGENT, EACH REVOLVING LENDER AND EACH TERM
LENDER FROM ANY PRESENT OR FUTURE CLAIM FOR LIABILITY FOR ANY STAMP OR ANY
OTHER SIMILAR TAX AND ANY PENALTIES OR INTEREST WITH RESPECT THERETO, WHICH MAY
BE ASSESSED, LEVIED OR COLLECTED BY ANY JURISDICTION IN CONNECTION WITH THIS
INTERCREDITOR AGREEMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OTHER THAN
TAXES, PENALTIES AND INTEREST WHICH ARE FINALLY JUDICIALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION TO HAVE ARISEN AS A RESULT OF GROSS NEGLIGENCE
OR WILFUL MISCONDUCT ON THE PART OF THE COLLATERAL AGENT, THE REVOLVING
ADMINISTRATIVE AGENT, THE TERM ADMINISTRATIVE AGENT, ANY REVOLVING LENDER OR
ANY TERM LENDER. THIS INDEMNIFICATION SHALL BE MADE WITHIN 30 DAYS FROM THE
DATE THE APPLICABLE PARTY MAKES WRITTEN DEMAND THEREFOR. THE OBLIGATIONS OF
THE BORROWER UNDER THIS SECTION 5.4 SHALL SURVIVE THE TERMINATION OF THE OTHER
PROVISIONS OF THIS INTERCREDITOR AGREEMENT.
5.5 Filing Fees, Excise Taxes, Etc. The Borrower agrees to pay or
to reimburse the Collateral Agent for any and all reasonable payments made by
the Collateral Agent in respect of all search, filing, recording and
registration fees, taxes, excise taxes and other similar imposts which may be
payable or determined to be payable in respect to the execution and delivery of
this Intercreditor Agreement and each Collateral Document. The obligations of
the Borrower under this Section 5.5 shall survive the termination of the other
provisions of this Intercreditor Agreement.
5.6 INDEMNIFICATION. THE BORROWER AGREES TO INDEMNIFY, AND HOLD
THE COLLATERAL AGENT, ITS REPRESENTATIVES, OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, AND ATTORNEYS (COLLECTIVELY, THE "INDEMNITEES") HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES,
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OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, REASONABLE
COSTS, REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING, WITHOUT LIMITATION, THE
REASONABLE FEES AND EXPENSES OF COUNSEL) AND REASONABLE DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST ANY OF THE INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT
OF ANY OF THIS INTERCREDITOR AGREEMENT OR ANY DOCUMENTS CONTEMPLATED BY OR
REFERRED TO HEREIN OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR
TRANSACTION RELATING THERETO (INCLUDING IN CONNECTION WITH OR AS A RESULT OF,
IN WHOLE OR IN PART, THE ORDINARY OR MERE NEGLIGENCE OF ANY INDEMNITEE, TO THE
EXTENT THAT ANY OF THE SAME RESULTS, DIRECTLY OR INDIRECTLY, FROM ANY CLAIMS
MADE OR ACTIONS, SUITS OR PROCEEDINGS COMMENCED BY OR ON BEHALF OF ANY PERSON
OR ENTITY, OTHER THAN THE REVOLVING ADMINISTRATIVE AGENT, THE TERM
ADMINISTRATIVE AGENT, THE REVOLVING LENDERS OR THE TERM LENDERS. IN ANY SUIT,
PROCEEDING OR ACTION BROUGHT BY THE COLLATERAL AGENT UNDER OR WITH RESPECT TO
ANY CONTRACT, AGREEMENT, INTEREST OR OBLIGATION CONSTITUTING PART OF THE
COLLATERAL FOR ANY SUM OWING THEREUNDER, OR TO ENFORCE ANY PROVISIONS THEREOF,
THE BORROWER WILL SAVE, INDEMNIFY AND KEEP THE INDEMNITEES HARMLESS FROM AND
AGAINST ALL EXPENSE, LOSS OR DAMAGE SUFFERED BY REASON OF ANY DEFENSE, SETOFF,
COUNTERCLAIM, RECOUPMENT OR REDUCTION OF LIABILITY WHATSOEVER OF THE OBLIGOR
THEREUNDER (INCLUDING IN CONNECTION WITH OR AS A RESULT OF, IN WHOLE OR IN
PART, THE MERE NEGLIGENCE OF ANY INDEMNITEE, ARISING OUT OF A BREACH BY THE
BORROWER OR ANY GRANTOR OF ANY OBLIGATION THEREUNDER OR ARISING OUT OF ANY
OTHER AGREEMENT, INDEBTEDNESS OR LIABILITY AT ANY TIME OWING TO OR IN FAVOR OF
SUCH OBLIGOR OR ITS SUCCESSORS FROM THE BORROWER OR SUCH GRANTOR, AND ALL SUCH
OBLIGATIONS OF THE BORROWER AND THE GRANTORS SHALL BE AND REMAIN ENFORCEABLE
AGAINST AND ONLY AGAINST THE BORROWER OR SUCH GRANTOR AND SHALL NOT BE
ENFORCEABLE AGAINST ANY INDEMNITEE OR ANY SECURED PARTY. THE AGREEMENTS IN
THIS SECTION 5.6 SHALL SURVIVE THE PAYMENT OF THE REVOLVING OBLIGATIONS, THE
TERM OBLIGATIONS AND TERMINATION OF THE OTHER PROVISIONS OF THIS INTERCREDITOR
AGREEMENT. THE INDEMNITEES SHALL NOT BE SO INDEMNIFIED AND HELD HARMLESS FOR
ANY (i) LOSSES OR DAMAGES WHICH THE BORROWER PROVES WERE CAUSED BY INDEMNITEES'
WILFUL MISCONDUCT OR GROSS NEGLIGENCE, (ii) ANY CLAIM OR LIABILITY THAT ARISES
AS THE DIRECT RESULT OF THE OPERATION OF THE PROPERTY OF THE BORROWER OR ANY
GRANTOR BY ANY INDEMNITEE AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING
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ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), AND
(iii) MATTERS CAUSED BY A SECURED PARTY AGAINST AN INDEMNITEE OR ITS
MANAGEMENT.
5.7 Additional Collateral. It is expressly understood that in no
event shall the Revolving Administrative Agent, the Term Administrative Agent,
any Revolving Lender or any Term Lender be entitled to a grant of a Lien in any
Collateral in which the Collateral Agent is not granted a Lien that is pari
passu with such Lien and subject to this Intercreditor Agreement.
VI. POSSESSION AND USE OF COLLATERAL; PARTIAL RELEASES
6.1 Use of Collateral. The rights of the Borrower and the
Grantors in and to the Collateral are set forth in the Revolving Credit
Agreement, the Term Credit Agreement and the Collateral Documents.
6.2 Releases. Releases and dispositions of all or substantially
all of the Collateral (other than sales, releases and dispositions of
Collateral pursuant to the exercise of remedies as provided in this
Intercreditor Agreement or which are expressly permitted by the terms and
provisions of the Revolving Credit Agreement, the Term Credit Agreement and the
Collateral Documents) may be made by the Collateral Agent, only at the
direction of all Revolving Lenders and all Term Lenders. Releases and
dispositions of less than all or substantially all of the Collateral (other
than sales, releases and dispositions of Collateral pursuant to the exercise of
remedies as provided in this Intercreditor Agreement or which are expressly
permitted by the terms and provisions of the Revolving Credit Agreement, the
Term Credit Agreement and the Collateral Documents) may be made by the
Collateral Agent, only at the discretion of the Required Lenders. Sales,
releases or other dispositions of Collateral which are permitted by the terms
and provisions of the Revolving Credit Agreement, the Term Credit Agreement and
the Collateral Documents shall not require any written or oral authorization or
consent of the Collateral Agent, the Revolving Lenders or the Term Lenders.
Sales or other dispositions of Collateral which are pursuant to the exercise of
remedies hereunder or under any Collateral Document shall not require any
written or oral authorization or consent of the Revolving Administrative Agent,
the Term Administrative Agent, any Revolving Lender or any Term Lender.
Nevertheless, the Borrower may request that the Collateral Agent execute and
deliver to the Borrower, any Grantor or any purchaser of Collateral a written
release, disclaimer or quitclaim of the Collateral Agent's, the Revolving
Administrative Agent's, the Term Administrative Agent's, the Revolving Lenders'
or the Term Lenders' interest in any Collateral under the Collateral Documents,
and such purchaser shall be entitled to rely conclusively on such release,
disclaimer or quitclaim. Unless requested by the Borrower, it shall not be
necessary for any Revolving Lender, any Term Lender, the Revolving
Administrative Agent or the Term Administrative Agent to sign such release.
Such request shall be in writing, shall describe the property to be released in
reasonable detail, and, shall state that such release is or will be in
accordance with the Revolving Credit Agreement, the Term Credit Agreement and
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the Collateral Documents. The Collateral Agent shall send a copy of all
releases to the Revolving Administrative Agent and the Term Administrative
Agent.
VII. THE COLLATERAL AGENT
7.1 Appointment. The Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders irrevocably
designate and appoint NationsBank of Texas, N.A. as the Collateral Agent under
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account as attorney-in-fact
with full power and authority in the name of the Revolving Administrative
Agent, the Term Administrative Agent, each Revolving Lender or each Term Lender
or in the Collateral Agent's name to take such action under the provisions of
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account and to exercise such
powers and perform such duties as are expressly delegated to the Collateral
Agent and/or the Revolving Administrative Agent, the Term Administrative Agent,
the Revolving Lenders and the Term Lenders by the terms hereof and thereof,
together with such other powers as are reasonably incidental thereto. Without
limiting the generality of the foregoing, each of the Revolving Administrative
Agent, the Term Administrative Agent, the Revolving Lenders and the Term
Lenders hereby gives the Collateral Agent the power and rights on behalf of
each of the Revolving Administrative Agent, the Term Administrative Agent, the
Revolving Lenders and the Term Lenders, without notice to or further assent by
each of the Revolving Administrative Agent, the Term Administrative Agent, the
Revolving Lenders and the Term Lenders to do the following:
(a) to ask for, demand, sue for, collect, receive and
give acquittance for any and all moneys due or to become due upon, or
in connection with, the Collateral;
(b) to receive, take, endorse, assign and deliver any and
all checks, notes, drafts, acceptances, documents and other negotiable
and non-negotiable instruments taken or received by the Collateral
Agent as, or in connection with, the Collateral;
(c) to commence, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to, or in
connection with, the Collateral;
(d) to sell, transfer, release, assign or otherwise deal
in or with the Collateral or any part thereof as fully and effectively
as if the Collateral Agent were the absolute owner thereof; and
(e) to do, at its option, at any time or from time to
time, all acts and things which the Collateral Agent deems necessary
to protect or preserve the Collateral and to realize upon the
Collateral.
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Said attorney, the Collateral Agent, is hereby granted and given full
power and authority to do and perform every act necessary and proper to be done
in the exercise of any of the foregoing powers. Understanding that powers of
attorney are strictly construed, each of the Revolving Administrative Agent,
the Term Administrative Agent, the Revolving Lenders and the Term Lenders
declares that it is its expressed intention that this power of attorney shall
be liberally construed to give the fullest effect to the powers granted herein.
7.2 Exculpatory Provisions.
(a) The Collateral Agent shall not be responsible in any manner
whatsoever for the correctness of any recitals, statements, representations or
warranties in this Intercreditor Agreement, the Revolving Loan Documents or the
Term Loan Documents. The Collateral Agent makes no representations as to the
value or condition of the Collateral or any part thereof, or as to the title of
the Borrower or any Grantor thereto or as to the security, perfection or
priority afforded by this Intercreditor Agreement, any Collateral Document or
the Revolving Credit Agreement in respect of the L/C Cash Collateral Account,
or as to the validity, execution, enforceability, legality or sufficiency of
this Intercreditor Agreement, the Revolving Loan Documents, the Term Loan
Documents, the Revolving Obligations or the Term Obligations, and the
Collateral Agent shall incur no liability or responsibility in respect of any
such matters. The Collateral Agent shall not be responsible for insuring the
Collateral or for the payment of taxes, charges or assessments or discharging
of any Liens upon the Collateral or otherwise as to the maintenance of the
Collateral, except that the Collateral shall be accorded treatment
substantially equal to that which the Collateral Agent accords to collateral
held generally by the Collateral Agent for its sole benefit.
(b) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by the Borrower or any Grantor of any of the
covenants or agreements contained herein or in any Revolving Loan Document or
Term Loan Document. Whenever it is necessary, or in the opinion of the
Collateral Agent advisable, for the Collateral Agent to ascertain the amount of
the Revolving Obligations or the Term Obligations, then held by the Revolving
Lenders or the Term Lenders, as the case may be, the Collateral Agent may rely
on a certificate of the Revolving Administrative Agent, in the case of the
Revolving Obligations, or of the Term Administrative Agent, in the case of the
Term Obligations.
(c) Unless the Collateral Agent receives security or indemnity
satisfactory to it, the Collateral Agent shall be under no obligation or duty
to take any action under this Intercreditor Agreement, any Collateral Document
or the Revolving Credit Agreement in respect of the L/C Cash Collateral Account
if taking such action (i) would subject the Collateral Agent to a tax in any
jurisdiction where it is not then subject to a tax or (ii) would require the
Collateral Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
(d) Notwithstanding any other provision of this Intercreditor
Agreement, the Collateral Agent shall not be liable for any action taken or
omitted to be taken by it in accordance with this Intercreditor Agreement, the
Collateral Documents or the Revolving Credit
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Agreement in respect of the L/C Cash Collateral Account, except to the extent
that taking such action or omitting to take such action is finally determined
by a court of competent jurisdiction to constitute gross negligence or wilful
misconduct by the Collateral Agent.
(e) The Collateral Agent shall have the same rights with respect
to any Revolving Obligations or Term Obligations held by it as any Secured
Party and may exercise such rights as though it were not the Collateral Agent
hereunder, and may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Grantor as if it were not the
Collateral Agent.
7.3 Delegation of Duties. The Collateral Agent may execute any of
the powers hereof and perform any duty hereunder either directly or by or
through agents or attorneys-in-fact. The Collateral Agent shall be entitled to
advice of counsel concerning all matters pertaining to such powers and duties.
The Collateral Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it in good faith.
7.4 Reliance by the Collateral Agent.
(a) The Collateral Agent may consult with counsel, and any advice
or statements of legal counsel (including, without limitation, counsel to the
Borrower or any Grantor) shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder or under
any Collateral Document in accordance therewith.
(b) The Collateral Agent may conclusively rely, and shall be fully
protected in acting, upon any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties or, in the case of cables, telecopies and telexes,
to have been sent by the proper party or parties, except to the extent that
such reliance or action is finally determined by a court of competent
jurisdiction to constitute gross negligence or wilful misconduct of the
Collateral Agent. The Collateral Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Collateral Agent and conforming
to the requirements of this Intercreditor Agreement, except to the extent that
such reliance is finally determined by a court of competent jurisdiction to
constitute gross negligence or wilful misconduct of the Collateral Agent.
(c) The Collateral Agent shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Agent by this
Intercreditor Agreement or the Collateral Documents, at the request or
direction of the Required Lenders pursuant to this Intercreditor Agreement, or
otherwise, unless the Collateral Agent shall have been provided security or
indemnity to its satisfaction against the fees, costs, expenses and liabilities
which may be incurred by it, including such reasonable advances as may be
requested by the Collateral Agent.
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7.5 Limitations on Duties of the Collateral Agent.
(a) The Collateral Agent shall be obligated to perform such duties
and only such duties as are specifically set forth in this Intercreditor
Agreement, the Collateral Documents and the Revolving Credit Agreement in
respect of the L/C Cash Collateral Account, and no implied covenants or
obligations shall be read into this Intercreditor Agreement, any Collateral
Document or the Revolving Credit Agreement against the Collateral Agent. The
Collateral Agent may exercise the rights and powers vested in it and the
Revolving Administrative Agent by this Intercreditor Agreement, the Collateral
Documents and the Credit Agreement in respect of the L/C Cash Collateral
Account, and shall not be liable with respect to any action taken by it, or
omitted to be taken by it.
(b) The Collateral Agent shall not be under any obligation to take
any action which is discretionary with the Collateral Agent under the
provisions hereto, any Collateral Document or the Revolving Credit Agreement in
respect of the L/C Cash Collateral Account, except upon the written request of
the Required Lenders and subject to the terms of this Intercreditor Agreement.
7.6 Resignation of the Collateral Agent. Should the Collateral
Agent ever cease to be either the Revolving Administrative Agent or the Term
Administrative Agent, or should the Collateral Agent ever resign as the
Collateral Agent, or should the Collateral Agent ever be removed with cause by
the Required Lenders (other than the Lender then acting as the Collateral
Agent), then the Revolving Administrative Agent or the Term Administrative
Agent appointed by the Required Lenders (other than the Lenders then acting as
the Collateral Agent) shall forthwith become the Collateral Agent, and the
Borrower, each Grantor, the Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders shall execute
such documents as any Revolving Lender or Term Lender may reasonably request to
reflect such change. Any resignation or removal of the Collateral Agent shall
become effective upon the appointment by the Required Lenders (other than the
Lender then acting as the Collateral Agent) of a successor Collateral Agent;
provided, however, that if the Required Lenders fail for any reason to appoint
a successor within 60 days after such removal or resignation, the Collateral
Agent shall thereafter have no obligation to act as the Collateral Agent
hereunder.
7.7 Status of Successor. Every successor Collateral Agent
appointed pursuant to Section 7.6 shall be a commercial bank in good standing
and having power to act as the Collateral Agent hereunder, incorporated under
the laws of the United States of America or any State thereof or the District
of Columbia, and borrowing a combined capital and surplus of at least
$500,000,000.
7.8 Merger of the Collateral Agent. Any corporation into which
the Collateral Agent may be merged, or with which it may be consolidated, or
any corporation resulting from any merger or consolidation to which the
Collateral Agent shall be a party, shall be the Collateral Agent under this
Intercreditor Agreement, the Collateral Documents and the Revolving Credit
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Agreement in respect of the L/C Cash Collateral Account without the execution
or filing of any paper or any further act on the part of the parties hereto,
provided that such corporation meets the requirements of Section 7.7.
7.9 Treatment of Payee or Endorsee by the Collateral Agent;
Representatives of the Revolving Lenders and the Term Lenders. The Collateral
Agent may treat the registered holder or, if none, the payee or endorsee of any
promissory note evidencing the Revolving Obligations or the Term Obligations as
the absolute owner thereof for all purposes and shall not be affected by any
notice to the contrary.
7.10 Non-Reliance on the Collateral Agent. Each Revolving Lender
and Term Lender expressly acknowledges that neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys, attorneys-in-fact
or affiliates has made any representations or warranties to them. Each
Revolving Lender and Term Lender represents to the Collateral Agent that such
Revolving Lender or Term Lender independently and without reliance upon the
Collateral Agent, and based on such documents and information as they have
deemed or will deem appropriate, has made and will make its own appraisal of
and investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and each other Grantor, and has
made and will make their own decision to extend credit to the Borrower. Each
Revolving Lender and Term Lender also represents that it will, independently
and without reliance upon the Collateral Agent, and based on such documents and
information as they shall deem appropriate at the time continue to make its own
creditor analysis, appraisals and decisions in taking or not taking action
under this Intercreditor Agreement, any Revolving Loan Document or any Term
Loan Document, and to make such investigation as they deem necessary to inform
themselves as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and each Grantor. Except for
notices, reports and other documents expressly required to be furnished to the
Revolving Lenders and the Term Lenders by the Collateral Agent hereunder or
other documentation or information about the Borrower in the possession of the
Collateral Agent which is specifically requested, the Collateral Agent shall
not have any duty or responsibility to provide any Revolving Lender or Term
Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower or any Grantor which may come into its possession or the possession of
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates. Each Revolving Lender and Term Lender acknowledges that the
Collateral Agent and its affiliates may exercise all contractual and legal
rights and remedies which may exist from time to time with respect to other
existing and future relationships with the Borrower or any Grantor without any
duty to account therefor to such Revolving Lender or Term Lender.
7.11 INDEMNIFICATION. THE REVOLVING LENDERS AND THE TERM LENDERS
AGREE TO INDEMNIFY THE COLLATERAL AGENT (IN ITS CAPACITY AS SUCH), WITHOUT
LIMITING THE OBLIGATION OF THE BORROWER AND EACH GRANTOR TO DO SO, PRO RATA
ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE REVOLVING OBLIGATIONS AND
THE TERM
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OBLIGATIONS HELD BY THE REVOLVING LENDERS AND THE TERM LENDERS AT THE DATE OF
ANY CLAIM BY THE COLLATERAL AGENT FOR INDEMNITY UNDER THIS SECTION 7.11, FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND EXPENSES OF COUNSEL) OR DISBURSEMENTS OF
ANY KIND WHATSOEVER WHICH ANY AT ANY TIME BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE COLLATERAL AGENT IN ANY WAY RELATING TO OR ARISING OUT OF
THIS INTERCREDITOR AGREEMENT, THE REVOLVING LOAN DOCUMENTS, THE TERM LOAN
DOCUMENTS OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY OR THEREBY OR REFERRED TO
HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY
ACTION TAKEN OR OMITTED BY THE COLLATERAL AGENT HEREUNDER OR THEREUNDER OR IN
CONNECTION THEREWITH, INCLUDING THE MERE NEGLIGENCE OF THE COLLATERAL AGENT,
BUT EXCLUDING ANY CLAIM OR LIABILITY THAT IS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION TO HAVE ARISEN AS A RESULT OF THE GROSS NEGLIGENCE OR
WILFUL MISCONDUCT OF THE COLLATERAL AGENT. THE REVOLVING LENDERS AND THE TERM
LENDERS AGREE TO REIMBURSE THE COLLATERAL AGENT (TO THE EXTENT NOT REIMBURSED
BY THE BORROWER AND THE GRANTORS), PRO RATA, PROMPTLY UPON DEMAND FOR ANY
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
INCURRED BY THE COLLATERAL AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER
THROUGH LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER THIS INTERCREDITOR AGREEMENT, THE REVOLVING
CREDIT AGREEMENT, THE TERM CREDIT AGREEMENT, THE COLLATERAL DOCUMENTS, OR ANY
OTHER DOCUMENTS CONTEMPLATED HEREBY OR THEREBY. THE AGREEMENTS IN THIS SECTION
7.11 SHALL SURVIVE THE PAYMENT OF THE REVOLVING OBLIGATIONS, THE TERM
OBLIGATIONS AND THE TERMINATION OF THE OTHER PROVISIONS OF THIS INTERCREDITOR
AGREEMENT.
7.11 Benefits of Article. None of the provisions of this Article
VII shall inure to the benefit of any Person other than the Revolving Lenders,
the Revolving Administrative Agent, the Term Lenders, the Term Administrative
Agent and the Collateral Agent; consequently, no such other Person shall be
entitled to rely upon, or to raise as a defense in any manner whatsoever, the
failure of the Collateral Agent or any of the Revolving Lenders, the Revolving
Administrative Agent, the Term Lenders or the Term Administrative Agent to
comply with such provisions.
- 17 -
<PAGE> 300
VIII. COLLATERAL AGENT PROVISIONS
8.1 Agreement. The Revolving Lenders, the Revolving
Administrative Agent, the Borrower, the Grantors, the Term Lenders and the Term
Administrative Agent agree that all Liens of the Collateral Agent in the
Collateral are on behalf of and for the ratable benefit of the Secured Parties.
In the event that the Revolving Administrative Agent, the Term Administrative
Agent, any Term Lender or any Revolving Lender at any time obtains possession
of any of the Collateral, it shall promptly deliver such Collateral to the
Collateral Agent, unless precluded by Law or judicial order.
8.2 Obligations Hereunder Not Affected. All rights and interests
of the Collateral Agent, the Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders hereunder, and
all agreements and obligations of the Borrower and the Grantors under this
Intercreditor Agreement, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of the
Revolving Credit Agreement, this Intercreditor Agreement, the Term
Credit Agreement, the Collateral Documents, or any other Revolving
Loan Documents or Term Loan Documents.
(b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Revolving Obligations
or the Term Obligations, or any other amendment or waiver of or any
consent to departure from the Revolving Credit Agreement, this
Intercreditor Agreement, the Term Credit Agreement, the Collateral
Documents or any other Revolving Loan Documents or Term Loan
Documents.
(c) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Revolving
Obligations or the Term Obligations.
(d) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Borrower or
any Grantor in respect of the Revolving Obligations or the Term
Obligations. This Intercreditor Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any
payment of any of the Revolving Obligations or the Term Obligations is
rescinded or must otherwise be returned by the Collateral Agent upon
the insolvency, bankruptcy or reorganization of any of the Grantors or
otherwise, all as though such payment had not been made.
IX. VOTING
9.1 Amendment and Waivers. Notwithstanding anything in Section
11.11 of the Revolving Credit Agreement or the Term Credit Agreement to the
contrary, the provisions of the Revolving Credit Agreement or the Term Credit
Agreement may not be amended, modified
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<PAGE> 301
or waived except by the written agreement of the Borrower and the Required
Lenders; provided, however, that no such amendment, modification or waiver
shall be made (a) without the consent of all Revolving Lenders and Term
Lenders, if it would (i) increase or release the Specified Percentage, Facility
A Term Loan Specified Percentage, Facility B Term Loan Specified Percentage, or
Total Specified Percentage of any Lender, (ii) increase any of the Commitments,
(iii) extend or postpone the date of maturity of, extend the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal of or interest on, or reduce the rate of interest on, any Advance,
the Reimbursement Obligations, any fee paid under the Credit Agreements, or any
other amount owing under any of the Revolving Loan Documents or the Term Loan
Documents to which the Revolving Lenders or the Term Lenders are entitled, (iv)
release any guaranty of the Revolving Obligations or the Term Obligations (v)
release all or substantially all of the Collateral (except as otherwise
provided in Section 10.3), (vi) waive or extend the date for payment or
prepayment of any principal, interest or fees under either Credit Agreement,
(vii) amend the definition of "Determining Lenders" under either Credit
Agreement, "Specified Percentage", "Facility A Term Loan Specified Percentage",
"Facility B Term Loan Specified Percentage" or "Total Specified Percentage", or
(viii) amend Section 4.4 or this Section 9.1, (b) without the consent of the
Revolving Administrative Agent or the Term Administrative Agent, if it would
alter the rights, duties or obligations of the Revolving Administrative Agent
or the Term Administrative Agent, as the case may be, (c) without the consent
of the Issuing Bank, if it would alter the rights, duties or obligations of the
Issuing Bank, or (d) without the consent of the Swing Line Bank, if it would
alter the rights, duties or obligations of the Swing Line Bank.
Notwithstanding anything in this Intercreditor Agreement or the Term Credit
Agreement to the contrary, no amendment, waiver or consent that changes the
allocations of payments between the Facility A Term Loan Advances and the
Facility B Term Loan Advances may be made without the express written consent
of the Lenders holding more than 50% of all outstanding Facility A Term
Advances and the Lenders holding more than 50% of all outstanding Facility B
Term Loan Advances. No Affiliate of a Revolving Lender or a Term Lender shall
have any voting rights hereunder solely by reason of such Affiliate being a
party to a Hedge Agreement with the Borrower or any Grantor.
9.2 Acceleration of Advances. Notwithstanding anything in Section
8.2(a) of the Revolving Credit Agreement or the Term Credit Agreement to the
contrary, Revolving Advances and Term Loan Advances and all other amounts owed
under the Revolving Loan Documents and Term Loan Documents may not be declared
due and payable without the prior consent of the Required Lenders.
X. MISCELLANEOUS
10.1 Notices.
(a) All notices and other communications under this Intercreditor
Agreement shall be in writing (except in those cases where giving notice by
telephone is expressly permitted) and shall be deemed to have been given on the
date personally delivered or sent by telecopy (answer
- 19 -
<PAGE> 302
back received), or three days after deposit in the mail, designated as
certified mail, return receipt requested, postage-prepaid, or one day after
being entrusted to a reputable commercial overnight delivery service, addressed
to the party to which such notice is directed at its address determined as
provided in this Section. All notices and other communications under this
Intercreditor Agreement shall be given to the parties hereto at the following
addresses:
(i) If to the Borrower, at:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Chief Financial Officer
Telephone: (214) 333-3225
Telecopier: (214) 330-6016
(ii) If to the Collateral Agent, at:
NationsBank of Texas, N.A.
901 Main Street, 13th Floor
Dallas, Texas 75202-3714
Attention: Marie T. Lancaster
Telephone: (214) 508-2158
Telecopier: (214) 508-2515
(iii) If to the Revolving Administrative Agent, the
Revolving Lenders, the Term Administrative Agent or
the Term Lenders, at their addresses set forth in the
Revolving Credit Agreement or the Term Credit
Agreement, as appropriate, or if applicable, set
forth in the appropriate Assignment Agreement.
(b) The Term Administrative Agent and the Revolving Administrative
Agent, may from time to time, make requests of the Collateral Agent with
respect to notices or documents which the Term Administrative Agent or the
Revolving Administrative Agent seeks to receive and which the Term
Administrative Agent or the Revolving Administrative Agent is not already
entitled to receive and, subject to the confidentiality provisions of the
Revolving Loan Documents and the Term Loan Documents which the Collateral Agent
has received from the Borrower or any of the Grantors, and the Collateral Agent
shall provide such notices or copies of documents to the Revolving
Administrative Agent or the Term Administrative Agent upon request.
10.2 No Waivers. No failure on the part of the Collateral Agent,
the Revolving Administrative Agent, the Term Administrative Agent, any
Revolving Lender or any Term Lender to exercise, no course of dealing with
respect to, and no delay in exercising, any right, power or privilege under
this Intercreditor Agreement operate as a waiver thereof nor shall any
- 20 -
<PAGE> 303
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
10.3 Amendments, Supplements and Waivers. The provisions of this
Intercreditor Agreement may not be amended, modified or waived except by the
written agreement of the Term Administrative Agent, the Revolving
Administrative Agent, the Borrower, each Grantor, the Collateral Agent and
(except as otherwise required by Section 9.1) Required Lenders. The provisions
of each Collateral Document may not be amended, modified or waived except by
the written agreement of the Borrower or the Grantor who is a party to such
Collateral Document, the Revolving Administrative Agent or the Term
Administrative Agent, as the case may be, the Collateral Agent and the Required
Lenders; provided however, that no such amendment, modification or waiver shall
be contrary to Section 6.2 hereof or shall adversely affect the interest of the
Term Lenders or the Revolving Lenders or release any Lien except (a) as
otherwise permitted by this Intercreditor Agreement, (b) with respect to
property being disposed of as permitted under any Revolving Loan Document or
Term Loan Document, (c) with respect to Collateral consisting of an instrument
evidencing debt, if the underlying debt has been paid in full or (d) if
approved by each of the Revolving Lenders and the Term Lenders, in the case of
a release of Lien in all or substantially all of the Collateral, or by the
Required Lenders, in the case of a release of Lien on less than all or
substantially all of the Collateral.
10.4 Headings. The headings of Sections and subsections have been
included herein for convenience only and should not be considered in
interpreting this Intercreditor Agreement.
10.5 Severability. Any provision of this Intercreditor Agreement
which is prohibited or unenforceable in any jurisdiction shall not invalidate
the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
10.6 Successors and Assigns. This Intercreditor Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and each
other Person who may become an Obligor, Revolving Lender or Term Lender after
the date of this Intercreditor Agreement and their respective successors and
assigns, and nothing herein is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Intercreditor
Agreement or any Collateral.
10.7 GOVERNING LAW. THIS INTERCREDITOR AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.
10.8 Counterparts. This Intercreditor Agreement may be signed in
any number of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
- 21 -
<PAGE> 304
10.9 Termination. Upon (a) the earlier of the Release Dates set
forth in the Credit Agreements and (b) payment in full of all fees and expenses
owing to the Collateral Agent hereunder, this Intercreditor Agreement shall
terminate.
10.10 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER
DOCUMENTS REFERENCED HEREIN OR CONTEMPLATED HEREBY REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- 22 -
<PAGE> 305
IN WITNESS WHEREOF, the parties hereto have caused this Intercreditor
Agreement to be duly executed by their respective authorized officers as of the
day and year first written above.
BORROWER: PILLOWTEX CORPORATION, a Texas
corporation
By:
----------------------------
J. Mark Kirkpatrick
Vice President & Treasurer
- 23 -
<PAGE> 306
GRANTORS: [ALL SUBSIDIARIES EXECUTING
COLLATERAL DOCUMENTS]
- 24 -
<PAGE> 307
THE COLLATERAL AGENT: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
REVOLVING ADMINISTRATIVE
AGENT: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
REVOLVING LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
- 25 -
<PAGE> 308
BANK OF AMERICA NT&SA
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 26 -
<PAGE> 309
THE BANK OF NOVA SCOTIA
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 27 -
<PAGE> 310
THE FIRST NATIONAL BANK OF CHICAGO
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 28 -
<PAGE> 311
COMERICA BANK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 29 -
<PAGE> 312
CREDIT LYONNAIS NEW YORK BRANCH
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 30 -
<PAGE> 313
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 31 -
<PAGE> 314
THE BANK OF TOKYO-MITSUBISHI, LTD
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 32 -
<PAGE> 315
BANK ONE, TEXAS, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 33 -
<PAGE> 316
BANKBOSTON, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 34 -
<PAGE> 317
BHF-BANK AKTIENGESELLSCHAFT
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 35 -
<PAGE> 318
FIRST UNION NATIONAL BANK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 36 -
<PAGE> 319
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 37 -
<PAGE> 320
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 38 -
<PAGE> 321
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 39 -
<PAGE> 322
THE BANK OF NEW YORK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 40 -
<PAGE> 323
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 41 -
<PAGE> 324
CREDITANSTALT BANKVEREIN
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 42 -
<PAGE> 325
FLEET BANK, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 43 -
<PAGE> 326
THE FUJI BANK, LIMITED - HOUSTON AGENCY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 44 -
<PAGE> 327
NATIONAL BANK OF CANADA
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 45 -
<PAGE> 328
NATIONAL CITY BANK OF KENTUCKY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 46 -
<PAGE> 329
TERM ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
FACILITY A TERM LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
- 47 -
<PAGE> 330
BANK OF AMERICA NT&SA
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 48 -
<PAGE> 331
THE BANK OF NOVA SCOTIA ATLANTA AGENCY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 49 -
<PAGE> 332
THE FIRST NATIONAL BANK OF CHICAGO
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 50 -
<PAGE> 333
COMERICA BANK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 51 -
<PAGE> 334
CREDIT LYONNAIS NEW YORK BRANCH
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 52 -
<PAGE> 335
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 53 -
<PAGE> 336
THE BANK OF TOKYO-MITSUBISHI, LTD
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 54 -
<PAGE> 337
BANK ONE, TEXAS, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 55 -
<PAGE> 338
BANKBOSTON, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 56 -
<PAGE> 339
BHF-BANK AKTIENGESELLSCHAFT
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 57 -
<PAGE> 340
FIRST UNION NATIONAL BANK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 58 -
<PAGE> 341
GENERAL ELECTRIC CAPITAL CORPORATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 59 -
<PAGE> 342
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 60 -
<PAGE> 343
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 61 -
<PAGE> 344
THE BANK OF NEW YORK
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 62 -
<PAGE> 345
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 63 -
<PAGE> 346
CREDITANSTALT BANKVEREIN
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 64 -
<PAGE> 347
FLEET BANK, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 65 -
<PAGE> 348
THE FUJI BANK, LIMITED - HOUSTON AGENCY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 66 -
<PAGE> 349
NATIONAL BANK OF CANADA
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 67 -
<PAGE> 350
NATIONAL CITY BANK OF KENTUCKY
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 68 -
<PAGE> 351
FACILITY B TERM LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
----------------------------
Suzanne B. Smith
Vice President
- 69 -
<PAGE> 352
BANKBOSTON, N.A.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 70 -
<PAGE> 353
CREDITANSTALT BANKVEREIN
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 71 -
<PAGE> 354
THOROUGHBRED LIMITED PARTNERSHIP I
By: Appaloosa Management L.P.
its General Partner
By: Appaloosa Partners Inc.
its General Partner
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 72 -
<PAGE> 355
KZH HOLDING CORPORATION III
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 73 -
<PAGE> 356
PRIME INCOME TRUST
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 74 -
<PAGE> 357
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 75 -
<PAGE> 358
CREDIT AGRICOLE INDOSUEZ
By:
----------------------------
Name:
-----------------------
Title:
----------------------
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 76 -
<PAGE> 359
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 77 -
<PAGE> 360
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 78 -
<PAGE> 361
KZH-CRESCENT CORPORATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
- 79 -
<PAGE> 362
SCHEDULE I
VOTING SPECIFIED PERCENTAGES
<TABLE>
<S> <C>
NATIONSBANK OF TEXAS, N.A. 19.7500%
BANK OF AMERICA NT&SA 6.6667%
THE BANK OF NOVA SCOTIA 6.6667%
THE FIRST NATIONAL BANK OF CHICAGO 6.6667%
COMERICA BANK 5.0000%
CREDIT LYONNAIS NEW YORK BRANCH 5.000%
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION 5.0000%
THE BANK OF TOKYO-MITSUBISHI, LTD. 4.1667%
BANK ONE, TEXAS, N.A. 3.3333%
BANKBOSTON, N.A. 3.3333%
BHF-BANK AKTIENGESELLSCHAFT 2.5000%
FIRST UNION NATIONAL BANK 3.3333%
GENERAL ELECTRIC CAPITAL CORPORATION 3.3333%
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH 3.3333%
SOCIETE GENERALE, SOUTHWEST AGENCY 3.3333%
THE BANK OF NEW YORK 1.6667%
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE 1.6667%
CREDITANSTALT BANKVEREIN 1.6667%
</TABLE>
- 80 -
<PAGE> 363
<TABLE>
<S> <C>
FLEET BANK, N.A. 1.6667%
THE FUJI BANK, LIMITED - HOUSTON AGENCY 1.6667%
NATIONAL BANK OF CANADA 1.6667%
NATIONAL CITY BANK OF KENTUCKY 1.6667%
THOROUGHBRED LIMITED PARTNERSHIP I 1.3333%
KZH HOLDING CORPORATION III 0.6667%
PRIME INCOME TRUST 1.3333%
DEEPROCK & COMPANY 0.2500%
CREDIT AGRICOLE INDOSUEZ 1.3333%
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. 0.6667%
CRESCENT/MACH I PARTNERS, L.P. 0.6667%
KZH-CRESCENT CORPORATION 0.6667%
</TABLE>
- 81 -
<PAGE> 1
EXHIBIT 10.2
================================================================================
$250,000,000
TERM CREDIT AGREEMENT
AMONG
PILLOWTEX CORPORATION
CERTAIN LENDERS NAMED HEREIN
AND
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT
NATIONSBANC MONTGOMERY SECURITIES, INC., AS ARRANGER
December 19, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
Definitions
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Amendments and Renewals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 1.3 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 2
Advances
Section 2.1 The Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.2 Manner of Borrowing and Disbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.5 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.6 Non-Receipt of Funds by the Administrative Agent . . . . . . . . . . . . . . . . . . . . . 31
Section 2.7 Payment of Principal of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.8 Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.9 Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.10 LIBOR Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.11 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.12 Calculation of LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.2 Conditions Precedent to All Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.3 Conditions Precedent to Conversions and Continuations . . . . . . . . . . . . . . . . . . . 43
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 4.2 Survival of Representations and Warranties, etc . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 5
General Covenants
Section 5.1 Preservation of Existence and Similar Matters . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.2 Business; Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 5.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.4 Accounting Methods and Financial Records . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.6 Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.7 Visits and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 5.8 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 5.9 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.10 Environmental Law Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 6
Information Covenants
Section 6.1 Quarterly Financial Statements and Information . . . . . . . . . . . . . . . . . . . . . . 56
Section 6.2 Annual Financial Statements and Information; Certificate of No Default . . . . . . . . . . 57
Section 6.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.4 Copies of Other Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.5 Notice of Litigation, Default and Other Matters . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.6 ERISA Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 7
Negative Covenants
Section 7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.3 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 7.4 Liquidation, Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.5 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.6 Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.7 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.8 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.9 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.11 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C>
Section 7.12 Minimum Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.13 Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.14 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.15 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.16 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.17 Amendment of Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.18 Amendments and Waivers of Institutional Debt . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.19 Foreign Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE 8
Default
Section 8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9.3 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.4 Effect On Base Rate Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.5 Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 9.6 Replacement Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.7 Replacement by the Borrower of a Lender . . . . . . . . . . . . . . . . . . . . . . . . . . 75
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 10.2 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 10.3 Benefits of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE 11
Miscellaneous
Section 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 11.4 Calculation by the Lenders Conclusive and Binding . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<CAPTION>
<S> <C>
Section 11.5 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.9 Interest and Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.11 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.12 Exception to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 11.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 11.14 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 11.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
- iv -
<PAGE> 6
Schedules and Exhibits
Schedule 1: Commitments and Specified Percentages
Schedule 2: LIBOR Lending Offices
Schedule 3: Existing Liens
Schedule 4: Existing Litigation
Schedule 5: Subsidiaries
Schedule 6: Existing Investments
Schedule 7: Existing Indebtedness
Schedule 8: Qualification and Good Standing
Schedule 9: Labor Relations
Schedule 10: Fieldcrest Cannon Assets
Exhibit A: Facility A Term Loan Note
Exhibit B: Facility B Term Loan Note
Exhibit C: General Security Agreement
Exhibit D: Intellectual Property Security Agreement and Assignment
Exhibit E: Compliance Certificate
Exhibit F: Assignment Agreement
Exhibit G: Subsidiary Guaranty
Exhibit H: Notice of Borrowing
Exhibit I-1: Leasehold Deed of Trust
Exhibit I-2: Fee Simple Deed of Trust
Exhibit J-1: Landlord's Agreement
Exhibit J-2: Landlord's Waiver
Exhibit K: Notice of Continuation/Conversion
Exhibit L: Intercreditor Agreement
- v -
<PAGE> 7
TERM CREDIT AGREEMENT
THIS TERM CREDIT AGREEMENT is dated as of December 19, 1997, among
PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), the Lenders from
time to time party hereto, and NATIONSBANK OF TEXAS, N.A., a national banking
association, as administrative agent for the Lenders.
BACKGROUND
The Lenders have been requested to provide the Borrower funds to (a)
consummate the Fieldcrest Cannon Transaction (as hereinafter defined), (b)
refinance a portion of the existing debt of the Borrower and Fieldcrest Cannon
(as hereinafter defined) and its subsidiaries, including, but not limited to,
the debt of the Borrower outstanding pursuant to the terms of that certain
Restated Credit Agreement, dated as of November 12, 1996, among the Borrower,
the lenders party thereto, and NationsBank of Texas, N.A., as the Agent, as
amended (the "Existing Credit Agreement"), (c) pay certain fees and expenses
related to the Fieldcrest Cannon Transaction, and (d) finance the ongoing
working capital and general corporate requirements of the Borrower and its
Subsidiaries (as hereinafter defined). The Lenders have agreed to provide a
portion of such financing, subject to the terms and conditions set forth below.
In consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1 Defined Terms. For purposes of this Agreement:
"Acquisition" means any transaction pursuant to which the Borrower or
any of its Subsidiaries, (a) whether by means of a capital contribution or
purchase or other acquisition of stock or other securities or other equity
participation or interest, (i) acquires more than 50% of the equity interest in
any Person pursuant to a solicitation by the Borrower or such Subsidiary of
tenders of equity securities of such Person, or through one or more negotiated
block, market, private or other transactions, or a combination of any of the
foregoing, or (ii) makes any existing corporation a Subsidiary of the Borrower
or such Subsidiary, or causes any corporation, other than a Subsidiary of the
Borrower or such Subsidiary, to be merged into the Borrower or such Subsidiary
(or agrees to be merged into any other corporation other than a wholly-owned
Subsidiary (excluding directors' qualifying shares) of the Borrower or such
Subsidiary), or (b) purchases all or more than 50% of the business or assets of
any Person or of any operating division, facility or group of facilities of any
Person.
<PAGE> 8
"Additional Costs" has the meaning specified in Section 9.5 hereof.
"Adjusted LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the LIBOR Rate for such LIBOR Advance for
any Interest Period by (b) 1 minus the Reserve Requirement for such LIBOR
Advance for any Interest Period.
"Administrative Agent" means NationsBank of Texas, N.A., a national
banking association, as administrative agent for Lenders, or such successor
administrative agent appointed pursuant to Section 10.1(b) hereof.
"Administrative Agent Fee Letter" has the meaning specified in Section
2.4(a) hereof.
"Advance" means any amount advanced by the Lenders to the Borrower
pursuant to Article 2 hereof on the occasion of any borrowing.
"Affiliate" means, as applied to any Person, any other Person that,
directly or indirectly, through one or more Persons, Controls or is Controlled
By or Under Common Control with, such Person, or in the case of any Lender
which is an investment fund, the investment advisor thereof and any investment
fund having the same investment advisor or an Affiliate thereof.
"Agreement" means this Term Credit Agreement, as amended, modified,
supplemented or restated from time to time to the extent permitted pursuant
hereto and pursuant to the Intercreditor Agreement.
"Agreement Date" means the date of this Agreement.
"Amended and Restated Credit Agreement" means that certain Amended and
Restated Credit Agreement, dated as of the Agreement Date, among the Borrower,
NationsBank of Texas, N.A., as administrative agent, and the lenders party
thereto, as amended, modified, supplemented or restated from time to time to
the extent permitted pursuant thereto and pursuant to the Intercreditor
Agreement.
"Applicable Base Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Facility A Facility B
------------- Term Loan Term Loan
Advances Advances
----------- ----------
<S> <C> <C> <C>
(a) Initial Pricing Period 0.500% 1.000%
</TABLE>
- 2 -
<PAGE> 9
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or 0.750% 1.250%
equal to 5.50 to 1
(2) The Leverage Ratio is less than 5.50 to 0.500% 1.000%
1 but greater than or equal to 5.00 to
1
(3) The Leverage Ratio is less than 5.00 to 0.250% 0.750%
1 but greater than or equal to 4.50 to
1
(4) The Leverage Ratio is less than 4.50 to 0.000% 0.500%
1
</TABLE>
During the Subsequent Pricing Period, the Applicable Base Rate Margin payable
by the Borrower on the Base Rate Advances outstanding hereunder shall be
subject to reduction or increase, as applicable and as set forth in the table
above, according to the performance of the Borrower as tested quarterly by
using the Leverage Ratio calculated as of the end of each fiscal quarter;
provided, that each adjustment in the Base Rate Basis as a result of a change
in the Applicable Base Rate Margin shall be effective on the date which is two
Business Days following receipt by the Administrative Agent of the financial
statements required to be delivered pursuant to Section 6.1 or 6.2 hereof, as
applicable, and the corresponding Compliance Certificate required pursuant to
Section 6.3 hereof. If such financial statements and Compliance Certificate
are not received by the Administrative Agent by the date required, the
Applicable Base Rate Margin shall be increased to the Applicable Base Rate
Margin next higher than the Applicable Base Rate Margin currently in effect
until such time as such financial statements and Compliance Certificate are
received.
"Applicable Environmental Laws" means applicable Laws pertaining to
the regulation or protection of human health or the environment, including
without limitation, CERCLA and RCRA.
"Applicable Law" means (a) in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and final orders of governmental
bodies or regulatory agencies applicable to such Person and its properties,
including, without limiting the foregoing, all orders and decrees of all
Tribunals in proceedings or actions to which the Person in question is a party,
and (b) in respect of contracts relating to interest or finance charges that
are made or performed in the State of Texas, "Applicable Law" shall mean the
laws of the United States of America, including without limitation 12 USC
Sections 85 and 86(a), as amended from time to time, and any other statute of
the United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the laws of
the State of Texas, including, without limitation, Art. 1H, if applicable, and
if Art. 1H is not applicable, Art. 1D, and any other statute of the State of
Texas prescribing maximum rates of interest and extensions of credit; provided
that the parties hereto agree that the provisions of Chapter 15, Title 79,
- 3 -
<PAGE> 10
Revised Civil Statutes of Texas, 1925, amended, shall not apply to Advances,
this Agreement, the Notes or any other Loan Documents.
"Applicable LIBOR Rate Margin" means the following per annum
percentages, applicable in the following situations:
<TABLE>
<CAPTION>
Applicability Facility A Facility B
Term Loan Term Loan
Advances Advances
--------- ---------
<S> <C> <C> <C>
(a) Initial Pricing Period 2.000% 2.500%
(b) Subsequent Pricing Period
(1) The Leverage Ratio is greater than or equal to 2.250% 2.750%
5.50 to 1
(2) The Leverage Ratio is less than 5.50 to 1 but 2.000% 2.500%
greater than or equal to 5.00 to 1
(3) The Leverage Ratio is less than 5.00 to 1 but 1.750% 2.250%
greater than or equal to 4.50 to 1
(4) The Leverage Ratio is less than 4.50 to 1 but 1.500% 2.000%
greater than or equal to 4.00 to 1
(5) The Leverage Ratio is less than 4.00 to 1 but 1.250% 2.000%
greater than or equal to 3.50 to 1
(6) The Leverage Ratio is less than 3.50 to 1 but 1.000% 2.000%
greater than or equal to 3.00 to 1
(7) The Leverage Ratio is less than 3.00 to 1 0.750% 2.000%
</TABLE>
During the Subsequent Pricing Period, the Applicable LIBOR Rate Margin payable
by the Borrower on the LIBOR Advances outstanding hereunder shall be subject to
reduction or increase, as applicable and as set forth in the table above,
according to the performance of the Borrower as tested quarterly by using the
Leverage Ratio calculated as of the end of each fiscal quarter; provided, that
each adjustment in the LIBOR Basis as a result of a change in the Applicable
LIBOR Rate Margin shall be effective on the date which is two Business Days
following receipt by the Administrative Agent of the financial statements
required to be delivered pursuant to Section 6.1 or 6.2 hereof, as applicable,
and the corresponding Compliance Certificate required pursuant to Section 6.3
hereof. If such financial statements and Compliance Certificate are not
received by the Administrative Agent by the date required, the Applicable LIBOR
Rate Margin shall be increased to the Applicable Base Rate Margin next higher
than the Applicable Base Rate Margin currently in effect until such time as
such financial statements and Compliance Certificate are received.
- 4 -
<PAGE> 11
"Applicable Specified Percentage" means the Facility A Term Loan
Specified Percentage, the Facility B Term Loan Specified Percentage or the
Total Specified Percentage, as applicable in the context used.
"Art. 1D" means Article 5069-1D, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.
"Art. 1H" means Article 5069-1H, Title 79, Revised Civil Statutes of
Texas, 1925, as amended.
"Assignment Agreement" has the meaning specified in Section 11.6(d)
hereof.
"Authorized Signatory" means such senior personnel of the Borrower as
may be duly authorized and designated in writing by the Borrower to execute
documents, agreements and instruments on behalf of the Borrower, and to request
Advances and Letters of Credit hereunder.
"Base Rate Advance" means any Advance bearing interest at the Base
Rate Basis.
"Base Rate Basis" means, for any day, a per annum interest rate equal
to the higher of (a) the sum of (i) 0.50% plus (ii) the Federal Funds Rate on
such day plus (iii) the Applicable Base Rate Margin or (b) the sum of (i) the
Prime Rate on such day plus (ii) the Applicable Base Rate Margin. The Base
Rate Basis shall be adjusted automatically without notice as of the opening of
business on the effective date of each change in the Prime Rate or Federal
Funds Rate, as applicable, to account for such change.
"Borrower Preferred Stock" means that certain Series A Redeemable
Convertible Preferred Stock issued by the Borrower in connection with
Fieldcrest Cannon Transaction.
"Bridge Notes" means those certain notes of the Borrower to be issued
in connection with the Fieldcrest Cannon Transaction (but only in the event
that the aggregate principal amount of the 1997 Senior Subordinated Notes does
not equal or exceed $135,000,000) not to exceed $150,000,000.
"Business Day" means a day on which commercial banks are open (a) for
the transaction of commercial banking business in Dallas, Texas, and (b) with
respect to any LIBOR Advance, for the transaction of international commercial
banking business (including dealings in Dollar deposits) in London, England.
"Capital Expenditures" means, for any period, expenditures made by the
Borrower and its Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements during such period
and the aggregate amount of items leased or acquired under Capitalized Lease
Obligations at the capitalized cost of the item) computed in accordance with
GAAP.
- 5 -
<PAGE> 12
"Capitalized Lease Obligations" means that portion of any obligation
of the Borrower or any of its Subsidiaries as lessee under a lease which at the
time would be required to be capitalized on a balance sheet of the Borrower or
such Subsidiary prepared in accordance with GAAP.
"Capital Stock" means, as to any Person, the equity interests in such
Person, including, without limitation, the shares of each class of capital
stock in any Person that is a corporation, and each class of partnership
interest (including, without limitation, general, limited and preference units)
in any Person that is a partnership, and each class of member interest in any
Person that is a limited liability company.
"Cash and Cash Equivalents" means with respect to the Borrower and
each of its Subsidiaries
(a) cash,
(b) money market funds that invest only in debt securities
(including, without limitation, banker's acceptance, bearer deposit notes, loan
participations, promissory notes and medium-term notes) which
(i) for any such investment issued by a financial
institution, the issuer (A) maintains a long-term debt rating of at
least "BBB" (or its then equivalent) according to Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc. or a Thompson Bankwatch
rating of at least "C" and (B) has combined capital and surplus of not
less than $100,000,000, or any other financial institution if the
amount on deposit is fully insured by the Federal Deposit Insurance
Corporation, and
(ii) for any corporate issuer, such investment is rated
"P-2" (or its then equivalent) according to Moody's Investors Service,
Inc., "A-2" (or its then equivalent) according to Standard & Poor's
Ratings Group, a Division of McGraw-Hill, Inc., "F-2" (or its then
equivalent) according to Fitch's Investors Service, Inc. or "D-2" (or
its then equivalent) according to Duff & Phelps, or a better rating,
or, which if unrated, are determined by the fund to be of comparable
quality to debt securities which have such ratings, and
(c) investments (directly or through a money market mutual fund) in
(i) certificates of deposit, eurodollar time deposits,
repurchase agreements, bankers' acceptances and other interest bearing
deposits or accounts with any Lender or with any United States
commercial bank having a combined capital and surplus of at least
$100,000,000, which certificates, time deposits, repurchase
agreements, bankers' acceptances, deposits and accounts mature within
one year from the date of investment,
- 6 -
<PAGE> 13
(ii) obligations issued or unconditionally guaranteed by
the United States government, or issued by any agency or
instrumentality thereof and backed by the full faith and credit of the
United States government,
(iii) direct obligations issued by any state or political
subdivision of the United States, which have the highest rating
obtainable from Standard & Poor's Ratings Group, a Division of
McGraw-Hill, Inc. or Moody's Investors Service, Inc. on the date of
investment, and
(iv) commercial paper issued by any Lender or any
Affiliate of any Lender, and commercial paper which has one of the
highest ratings obtainable from Standard & Poor's Ratings Group, a
Division of McGraw- Hill, Inc. or Moody's Investors Service, Inc.
"CERCLA" means the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 as amended from time to time.
"Change of Control" means the occurrence of any of the following
events after the Agreement Date: (a) any Person or Group shall beneficially
own (as defined in Rule 13d-3 of the Securities and Exchange Commission under
the Exchange Act or any successor provision thereto) more than 50% of the
aggregate Voting Power of the Borrower (other than ownership by (A) any Person
or Group who beneficially own in excess of 10% of the aggregate Voting Power of
the Borrower on the Agreement Date or (B) Charles M. Hansen, Jr., any Person
under the Control of Charles M. Hansen, Jr., any trusts established by or for
the benefit of Charles M. Hansen, Jr. or any of his lineal descendants or any
family member of Charles M. Hansen, Jr.); (b) during any period of twenty-four
consecutive months, individuals who at the beginning of such period constituted
the Board of Directors of the Borrower (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Borrower was approved by a vote of a majority of the
directors of the Borrower then still in office who were either 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
Board of Directors of the Borrower then in office; or (c) any "Change of
Control", "Change in Control" or similar event or circumstance, however defined
or designated, under any agreement or document governing any Institutional
Debt.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means any collateral hereafter granted by any Person to
the Administrative Agent for the benefit of the Lenders to secure the
Obligations.
"Collateral Agent" means NationsBank of Texas, N.A., in its capacity
as Collateral Agent under the Intercreditor Agreement.
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<PAGE> 14
"Collateral Document" means any document under which Collateral is
granted and any document related thereto.
"Commitments" means, collectively, the Facility A Term Loan Commitment
and the Facility B Term Loan Commitment.
"Compliance Certificate" means a certificate, signed by an Authorized
Signatory, in substantially the form of Exhibit E, appropriately completed.
"Control" or "Controlled By" or "Under Common Control" means
possession, directly or indirectly, of power to direct or cause the direction
of management or policies (whether through ownership of voting securities, by
contract or otherwise, but not solely by being an officer or director of that
Person); provided, however, that in any event any Person which beneficially
owns, directly or indirectly, 10% or more (in number of votes) of the
securities having ordinary Voting Power with respect to a corporation shall be
conclusively presumed to control such corporation.
"Controlled Group" means as of the applicable date, as to any Person
not an individual, all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) which are under common
control with such Person and which, together with such Person, are treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code; provided,
however, that the Subsidiaries of the Borrower shall be deemed to be members of
the Borrower's Controlled Group.
"Creditor" means a creditor of the Borrower or any of its Subsidiaries
and shall not include any Affiliate of any such creditor.
"Debtor Relief Laws" means any applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, insolvency,
reorganization or similar debtor relief Laws affecting the rights of creditors
generally from time to time in effect.
"Deed of Trust" means any leasehold or fee simple Deed of Trust or
Mortgage, as applicable, relating to the certain property and improvements
leased or owned by the Borrower or its Domestic Subsidiaries, in substantially
the form set forth in Exhibit I-1 and Exhibit I-2, as amended, modified,
renewed, supplemented or restated from time to time.
"Default" means an Event of Default and/or any of the events specified
in Section 8.1, hereto regardless of whether there shall have occurred any
passage of time or giving of notice that would be necessary in order to
constitute such event an Event of Default.
"Default Rate" means a simple per annum interest rate equal to (a)
with respect to Base Rate Advances the lesser of (i) the Highest Lawful Rate or
(ii) the Base Rate Basis then in effect plus 2.00% or (b) with respect to LIBOR
Advances, the lesser of (i) the Highest Lawful Rate or (ii) the LIBOR Basis
then in effect plus 2.00%.
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<PAGE> 15
"Determining Lenders" means, on any date of determination, any
combination of Lenders whose Total Specified Percentages aggregate more than
50%; provided, however, in the event that the Commitments have been terminated,
"Determining Lenders" means, on any date of determination, any combination of
Lenders having more than 50% of Advances then outstanding.
"Dividend" means, as to any Person, (a) any declaration or payment of
any dividend (other than a dividend in stock or in the right to acquire stock)
on, or the making of any distribution on account of, any Equity Interests of
such Person and (b) any purchase, redemption, or other acquisition or
retirement for value of any Capital Stock of such Person.
"Dollar" or "$" means the lawful currency of the United States of
America.
"Domestic Subsidiary" means any Subsidiary of the Borrower other than
a Foreign Subsidiary.
"Earnings From Operations" has the meaning given to such term pursuant
to GAAP.
"EBITDA" means, for any period, determined in accordance with GAAP on
a consolidated basis for the Borrower and its Subsidiaries, the sum of (a)
Earnings From Operations plus (b) depreciation, amortization and other non-cash
charges (to the extent included in determining Earnings From Operations). For
purposes hereof, EBITDA shall be adjusted on a pro forma basis to exclude from
any period under consideration personnel costs that have been eliminated
concurrent with, or during the twelve-month period subsequent to, the Agreement
Date.
"Eligible Assignee" means (a) any Lender; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and having
total assets in excess of $1,000,000,000; (c) a savings and loan association or
savings bank organized under the laws of the United States, or any state
thereof, having total assets in excess of $500,000,000, and not in receivership
or conservatorship; (d) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, and having total
assets in excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or another
country which is described in this clause; and (e) the central bank of any
country which is a member of the Organization for Economic Cooperation and
Development; (f) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial
loans in the ordinary course of its business and having a combined capital and
surplus or total assets of at least $100,000,000, (g) any other entity (other
than a natural person) that is an "accredited investor" (as defined in
Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses, and (h) any other entity approved by both the
Borrower and the Administrative Agent, provided that no Affiliate of the
Borrower shall qualify as an Eligible Assignee.
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<PAGE> 16
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulation promulgated thereunder.
"ERISA Event" means, with respect to the Borrower and its
Subsidiaries, (a) a Reportable Event (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC pursuant to regulations issued
under Section 4043 of ERISA), (b) the withdrawal of any such Person or any
member of its Controlled Group from a Plan subject to Title IV of ERISA during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate under
Section 4041(c) of ERISA, (d) the institution of proceedings to terminate a
Plan by the PBGC, (e) the failure to make required contributions which could
result in the imposition of a lien under Section 412 of the Code or Section 302
of ERISA, or (f) any other event or condition which could reasonably be
expected to constitute grounds under Section 4042 (other than Section
4042(a)(3)) of ERISA for the termination by the PBGC of, or the appointment by
the appropriate United States District Court of a trustee to administer, any
Plan or the imposition of any liability under Title IV of ERISA other than PBGC
premiums due but not delinquent under Section 4007 of ERISA.
"Event of Default" means any of the events specified in Section 8.1
hereof, provided that any requirement for notice or lapse of time has been
satisfied.
"Excess Cash Flow" means, with respect to the Borrower and its
Subsidiaries on a consolidated basis, the remainder of (i) Net Operating Cash
Flow, minus (ii) voluntary prepayments of Indebtedness which cannot be
reborrowed, in each case for the four fiscal quarters immediately preceding the
date of calculation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Matters" has the meaning specified in Section 5.9(a) hereof.
"Existing Credit Agreement" has the meaning specified in the
Background provision of this Agreement.
"Facility A Term Loan Advance" means an Advance made pursuant to
Section 2.1(a) hereof.
"Facility A Term Loan Commitment" means the commitment of the Lenders,
subject to the terms and conditions hereof, to make Facility A Term Loan
Advances up to an aggregate principal amount of $125,000,000, as terminated
pursuant to Section 2.1(a) hereof.
"Facility A Term Loan Maturity Date" means December 31, 2003, or the
earlier date of acceleration of the Facility A Term Loan Advances pursuant to
Section 8.2 hereof.
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<PAGE> 17
"Facility A Term Loan Notes" means the promissory notes of the
Borrower evidencing Facility A Term Loan Advances hereunder, substantially in
the form of Exhibit A hereto, together with any extension, renewal or amendment
thereof, or substitution therefor.
"Facility A Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1 hereto as its Facility A
Term Loan Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Facility B Term Loan Advance" means an Advance made pursuant to
Section 2.1(b) hereof.
"Facility B Term Loan Commitment" means commitment of the Lenders,
subject to the terms and conditions hereof, to make Facility B Term Loan
Advances up to an aggregate principal amount of $125,000,000, as terminated
pursuant to Section 2.1(b) hereof.
"Facility B Term Loan Maturity Date" means December 31, 2004, or the
earlier date of acceleration of the Facility B Term Loan Advances pursuant to
Section 8.2 hereof.
"Facility B Term Loan Notes" means the promissory notes of the
Borrower evidencing Facility B Term Loan Advances hereunder, substantially in
the form of Exhibit B hereto, together with any extension, renewal or amendment
thereof, or substitution therefor.
"Facility B Term Loan Specified Percentage" means, as to any Lender,
the percentage indicated beside its name on Schedule 1 hereto as its Facility B
Term Loan Specified Percentage, or as adjusted or specified in any amendment to
this Agreement or in any Assignment Agreement.
"Federal Funds Rate" means, for any day, the rate per annum equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of Dallas on the Business Day
next succeeding such day, provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average of the quotations
for the day for such transactions received by the Administrative Agent from
three Federal funds brokers of recognized standing selected by it.
"Fieldcrest Cannon" means Fieldcrest Cannon, Inc., a Delaware
corporation, which upon completion of the Fieldcrest Cannon Merger will be a
wholly-owned subsidiary of the Borrower.
"Fieldcrest Cannon Merger" means the merger of Pegasus, a wholly-owned
Subsidiary of the Borrower, with and into Fieldcrest Cannon with Fieldcrest
Cannon as the surviving
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<PAGE> 18
corporation, pursuant to the terms of that certain Agreement and Plan of Merger
among the Borrower, Pegasus and Fieldcrest Cannon, dated as of September 10,
1997, as amended, or modified with the consent of the Administrative Agent,
which consent shall not be unreasonably withheld.
"Fieldcrest Cannon Subordinated Debentures" means those certain 6%
Convertible Subordinated Debentures of Fieldcrest Cannon due 2012 in aggregate
outstanding principal amount of $116,500,000.
"Fieldcrest Cannon Transaction" means, collectively, (a) the
Fieldcrest Cannon Merger, (b) the issuance by the Borrower of (i) the 1997
Senior Subordinated Notes, (ii) the Bridge Notes, but only to the extent that
1997 Senior Subordinated Notes in an aggregate principal amount at least equal
to $135,000,000 are not issued by the Borrower, (iii) the Borrower Preferred
Stock, and (iv) the common Capital Stock of the Borrower for an amount not less
than the sum of (A) 20.58% of the aggregate value of all Capital Stock of
Fieldcrest Cannon plus (B) 20.58% of all conversion consideration requested by
the holders of the Fieldcrest Cannon Subordinated Debentures, and (c) the
refinancing of certain existing Indebtedness of Fieldcrest Cannon and the
Borrower.
"Fieldcrest Cannon Transaction Documents" means all agreements,
documents and instruments executed in connection with or related to the
Fieldcrest Cannon Transaction.
"Financial Statements" has the meaning specified in Section 4.1(j)
hereof.
"Fiscal Month" means a period of four, five, or six weeks having seven
days in each week ending on a Saturday and that otherwise approximates a
calendar-monthly period. Reference to a Fiscal Month by the name of a calendar
month means the fiscal month that encompasses the most of that calendar month
(e.g., the Fiscal Month of January 1998 ends on January 31, 1998).
"Fiscal Quarter" means any quarter of a fiscal year ending on the last
day of a Fiscal Month (e.g., the third Fiscal Quarter in 1998 ends on September
26, 1998).
"Fiscal Year" means the Borrower's fiscal year for accounting and tax
purposes, which consists of a 52- or 53- week period beginning on the first day
after the end of the immediately preceding fiscal year and ending on the
Saturday nearest December 31 following that first day. Reference to a Fiscal
Year with a number corresponding to any calendar year means the Fiscal Year
ending on the Saturday nearest to December 31 during that calendar year (e.g.,
Fiscal Year 1999 ends on January 1, 2000).
"Fixed Charges" means, for any date of calculation, calculated for
Borrower and its Subsidiaries on a consolidated basis, the sum of, without
duplication, (a) scheduled principal payments in respect of Indebtedness, plus
(b) cash interest expense (including interest expense pursuant to Capitalized
Lease Obligations), plus (c) cash Dividends paid.
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<PAGE> 19
"Fixed Charge Coverage Ratio" means the ratio of Pretax Cash Flow to
Fixed Charges, calculated (a) with respect to Pretax Cash Flow, for the four
consecutive Fiscal Quarters ending on the date of calculation and (b) with
respect to Fixed Charges (i) for the first three Fiscal Quarters of Fiscal Year
1998, on an annualized basis and (ii) for each Fiscal Quarter thereafter, for
the four consecutive Fiscal Quarters ending on the date of calculation.
"Foreign Subsidiary" means any Subsidiary of the Borrower which is not
organized under the laws of any state of the United States of America or the
District of Columbia.
"Form 1001" has the meaning specified in Section 2.13(e)(i)(B) hereof.
"Form 4224" has the meaning specified in Section 2.13(e)(i)(A) hereof.
"GAAP" means generally accepted accounting principles applied on a
consistent basis, set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants, or their successors
which are applicable in the circumstances as of the date in question. The
requirement that such principles be applied on a consistent basis shall mean
that the accounting principles applied in a current period are comparable in
all material respects to those applied in a preceding period.
"General Security Agreement" means a security agreement relating to
all personal property assets of the Borrower and its Domestic Subsidiaries,
substantially in the form of Exhibit C hereto, as amended, modified, renewed,
supplemented or restated from time to time.
"Group" means any Persons acting together which would constitute a
"group" for purposes of Section 13(d) of the Exchange Act or any successor
provision thereto.
"Guarantor" means each direct and indirect Subsidiary of the Borrower,
other than any Foreign Subsidiary.
"Guaranty" or "Guaranteed", means (a) as applied to an obligation of
another Person, (i) a guaranty, direct or indirect, in any manner, of any part
or all of such obligation, and (ii) an agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including, without
limiting the foregoing, any reimbursement obligations with respect to amounts
which may be drawn by beneficiaries of outstanding letters of credit and (b) an
agreement, direct or indirect, contingent or otherwise, to maintain the net
worth, working capital, earnings or other financial performance of another
Person; provided, however, Guaranty does not mean (y) the endorsement of
instruments for collection or deposit in the ordinary course of business and
(z) customary indemnities given in connection with asset sales in the ordinary
course of business.
"Hedge Agreements" means any and all agreements, devices or
arrangements designed to protect at least one of the parties thereto from the
fluctuations of interest rates, currency
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<PAGE> 20
exchange rates, forward rates applicable to such party's assets, commodity
prices (including commodity hedging agreements), liabilities or exchange
transactions, including, but not limited to, dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap, swap or collar protection agreements, and
forward rate currency or interest rate options, as the same may be amended or
modified and in effect from time to time, and any and all cancellations, buy
backs, reversals, terminations or assignments of any of the foregoing.
"Highest Lawful Rate" means at the particular time in question the
maximum rate of interest which, under Applicable Law, the Lenders are then
permitted to charge on the Obligations. If the maximum rate of interest which,
under Applicable Law, the Lenders are permitted to charge on the Obligations
shall change after the date hereof, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, from time to time as
of the effective time of each change in the Highest Lawful Rate without notice
to the Borrower. For purposes of determining the Highest Lawful Rate under the
Applicable Law of the State of Texas, the applicable rate ceiling shall be (a)
the weekly rate ceiling described in and computed in accordance with the
provisions of Art. 1H, or (b) either the quarterly ceiling or the annualized
ceiling computed pursuant to Art. 5069-1D.008, Title 79, Revised Civil Statutes
of Texas, as amended; provided, however, that at any time the weekly rate
ceiling, the quarterly ceiling or the annualized ceiling shall be less than 18%
per annum or more than 24% per annum, the provisions of Art. 5069-1D.009(a) and
(b), Title 79, Revised Civil Statutes of Texas, as amended, shall control for
purposes of such determination, as applicable.
"Increased Advance Costs" has the meaning specified in Section 9.3
hereof.
"Increased Advance Costs Retroactive Effective Date" has the meaning
specified in Section 9.3 hereof.
"Increased Advance Costs Set Date" has the meaning specified in
Section 9.3 hereof.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all obligations for borrowed money, (b) all obligations evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations under conditional
sale or other title retention agreements relating to property or assets
purchased by such Person, (d) all obligations issued or assumed as the deferred
purchase price of property or services (excluding trade accounts payable in the
ordinary course of business), (e) all obligations secured by any Lien on any
property or asset owned by such Person, whether or not the obligation secured
thereby shall have been assumed, (f) to the extent not otherwise included, all
Capitalized Lease Obligations of such Person, all obligations in respect of
letters of credit, bankers' acceptances and similar instruments, and all
obligations under Hedge Agreements, (g) any "withdrawal liability" of such
Person as such term is defined under Part I of Subtitle E of Title IV or ERISA,
(h) all preferred stock issued by such Person and required by the terms thereof
to be redeemed, or for which mandatory sinking fund payments are due, by a
fixed date, (i) the principal portion of all obligations of such Person
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<PAGE> 21
under any Synthetic Lease, and (j) any Guaranty of such Person of any
obligation of another Person constituting obligations of a type set forth
above.
"Indemnified Matters" has the meaning specified in Section 5.9(a)
hereof.
"Indemnitees" has the meaning specified in Section 5.9(a) hereof.
"Indentures" means the 1996 Senior Subordinated Notes Indenture, the
1997 Senior Subordinated Notes Indenture and any other indenture providing for
the issuance of any other Subordinated Debt.
"Initial Pricing Period" means the period from and including the
Agreement Date to and including the Rate Adjustment Date.
"Institutional Debt" means unsecured Indebtedness for borrowed money
which may be raised by the Borrower in the private placement or public debt
markets on terms reasonably satisfactory to the Determining Lenders, and shall
include Subordinated Debt, with only such changes or amendments which are not
prohibited by Section 7.18 hereof.
"Intellectual Property Security Agreement" means a security agreement
and assignment relating to all intellectual property of the Borrower and its
Domestic Subsidiaries substantially in the form of Exhibit D hereto, as
amended, modified, renewed, supplemented or restated from time to time.
"Intercreditor Agreement" means that certain Intercreditor Agreement
dated as of the Agreement Date, among the Borrower, the Administrative Agent,
the Lenders hereunder, the administrative agent under the Amended and Restated
Credit Agreement, the lenders under the Amended and Restated Credit Agreement,
and the Collateral Agent, in substantially the form of Exhibit L hereto, as
amended, modified, renewed, supplemented or restated from time to time to the
extent permitted pursuant thereto.
"Interest Period" means the period beginning on the day any LIBOR
Advance is made and ending one, two, three or six months thereafter (as the
Borrower shall select); provided, however, that:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day, unless the result of such extension
would be to extend such Interest Period into another calendar month,
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar
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<PAGE> 22
month at the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(iii) there shall be outstanding at any one time no more
than eight Interest Periods in the aggregate; and
(iv) Interest Periods shall be selected so that, at all
times, an amount not less than the next scheduled principal payment(s)
hereunder with respect to Facility A Term Loan Advances and Facility B
Term Loan Advances are subject to Interest Periods which end on or
before the date(s) for such payments.
"Investment" means any direct or indirect purchase or other
acquisition of capital stock or other securities of, or beneficial interest in,
any other Person, or any direct or indirect loan, advance (other than loans or
advances to employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital
contribution to, or investment in any other Person, including without
limitation the purchase of accounts receivable of any other Person that are not
current assets or do not arise in the ordinary course of business.
"Landlord's Agreement" means that Landlord's Agreement substantially
in the form of Exhibit J-1 hereto.
"Landlord's Waiver" means that Landlord's Waiver substantially in the
form of Exhibit J-2 hereto.
"Law" means any statute, law, ordinance, regulation, rule, order,
writ, injunction, or decree of any Tribunal.
"Lender" means each financial institution shown on the signature pages
hereof so long as such financial institution maintains a portion of the
Commitments or is owed any part of the Obligations (including the
Administrative Agent in its individual capacity), and each Eligible Assignee
that hereafter becomes a party hereto pursuant to Section 11.6 hereof, subject
to the limitations set forth therein (but not any Participant).
"Leverage Ratio" means, for any date of calculation, the ratio of
Total Debt as of the date of determination to EBITDA calculated for the four
consecutive Fiscal Quarters ending on the date of calculation. For purpose of
calculation of the Leverage Ratio only, with respect to assets not owned at all
times during the four Fiscal Quarters immediately preceding the date of
calculation of EBITDA, there shall be (i) included in EBITDA the proforma
EBITDA of any assets acquired during any such four Fiscal Quarters for the
twelve months preceding the date of calculation and (ii) excluded from EBITDA
the EBITDA of any assets disposed of during any of such Fiscal Quarters for the
twelve months preceding the date of calculation.
"LIBOR Advance" means any Advance bearing interest at the LIBOR Basis.
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<PAGE> 23
"LIBOR Basis" means, with respect to any LIBOR Advance, a simple per
annum interest rate equal to the lesser of (a) the Highest Lawful Rate, or (b)
the sum of the Adjusted LIBOR Rate applicable to such LIBOR Advance plus the
Applicable LIBOR Rate Margin.
"LIBOR Lending Office" means, with respect to a Lender, the office
designated as its LIBOR Lending Office on Schedule 2 attached hereto, and such
other office of the Lender or any of its Affiliates hereafter designated by
written notice to the Borrower and the Administrative Agent.
"LIBOR Rate" means, for any LIBOR Advance for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any reason such
rate is not available, the term "LIBOR Rate" shall mean, for any LIBOR Advance
for any Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as
the London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Lien" means, with respect to any property, any mortgage, lien,
pledge, collateral assignment, hypothecation, charge, security interest, title
retention agreement, levy, execution, seizure, attachment, garnishment or other
similar encumbrance of any kind in respect of such property, whether or not
choate, vested or perfected.
"Litigation" means any proceeding, claim, lawsuit, arbitration, and/or
investigation by or before any Tribunal, including, without limitation,
proceedings, claims, lawsuits, and/or investigations under or pursuant to any
environmental, occupational, safety and health, antitrust, unfair competition,
securities, Tax or other Law, or under or pursuant to any contract, agreement
or other instrument.
"Loan Documents" means this Agreement, the Notes, the Security
Agreements, the Deeds of Trust, any other Collateral Document, any Subsidiary
Guaranty, the Underwriting Fee Letter, the Administrative Agent Fee Letter, any
Hedge Agreements entered into with any Person that is or was a Lender or an
Affiliate of a Lender at the time of entering into such Hedge Agreements, and
any other document or agreement executed or delivered from time to time by the
Borrower and any of its Subsidiaries or any other Person in connection herewith
or as security for the Obligations.
"Material Adverse Effect" means any act or circumstance or event that
(a) could reasonably be expected to be material and adverse to the business,
financial condition or results of operations of the Borrower and its
Subsidiaries taken as a whole, or (b) in any manner
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<PAGE> 24
whatsoever does or could reasonably be expected to materially and adversely
affect (i) the validity or enforceability of any Loan Document, (ii) any
material Collateral, (iii) the ability of the Borrower and its Subsidiaries
taken as a whole to perform their respective Obligations under the Loan
Documents, or (iv) the Rights of the Lenders or the Administrative Agent under
any of the Loan Documents.
"Multiemployer Plan" means, as to any Person, at any time, a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA and to
which such Person or any member of its Controlled Group is making, or is
obligated to make contributions or has made, or been obligated to make,
contributions.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association, in its capacity as a Lender.
"Necessary Authorization" means any right, franchise, license, permit,
consent, approval or authorization from, or any filing or registration with,
any Tribunal or any Person necessary to enable the Borrower or any of its
Subsidiaries to maintain and operate its business and properties.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer
or other disposition of any asset by or of, or the issuance of Capital Stock or
Institutional Debt to, any Person, the amount of cash received by such Person
in connection with such transaction (including cash proceeds of any property
received in consideration of any such sale, lease, transfer or other
disposition) after deducting therefrom the aggregate, without duplication, of
the following amounts to the extent properly attributable to such transaction
or to any asset that may be the subject thereof: (i) reasonable brokerage
commissions, legal fees, finder's fees, financial advisory fees, fees for
solvency opinions, accounting fees, underwriting fees, investment banking fees
and other similar commissions and fees, and expenses, in each case, to the
extent paid or payable by such Person; (ii) filing, recording or registration
fees or charges or similar fees or charges paid by such Person; (iii) taxes
paid or payable by such Person or any shareholder, partner or member of such
Person to governmental taxing authorities as a result of such sale or other
disposition (after taking into account any available tax credits or deductions
and any tax sharing arrangements); (iv) payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Indebtedness that is
secured by a Lien on the asset in question and that is required to be repaid
under the terms thereof as a result of such asset sale; and (v) any reserve for
adjustment in respect of the price of any such sale, lease, transfer or other
disposition of such asset or assets established in accordance with GAAP.
"Net Income" means net earnings (or deficit) after taxes of the
Borrower and its Subsidiaries, on a consolidated basis, determined in
accordance with GAAP.
"Net Operating Cash Flow" means, for any period, determined in
accordance with GAAP on a consolidated basis for the Borrower and its
Subsidiaries the remainder of (i)(a) Net Income, plus (b) depreciation,
amortization and other non-cash charges (to the extent included in
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determining Net Income), plus (c) net losses on sale of assets and non-cash
write down of assets (to the extent included in determining Net Income), minus
(ii) Capital Expenditures, minus (iii) scheduled principal payments on
Indebtedness, minus (iv) net gains on sale of assets (to the extent included in
determining Net Income).
"Net Worth" means an amount equal to the sum of (a) the stockholders'
equity of the Borrower and its Subsidiaries, on a consolidated basis,
determined in accordance with GAAP, plus (b) the Borrower Preferred Stock.
"1996 Senior Subordinated Notes" means those Series A and Series B 10%
Senior Subordinated Notes due 2006 in the aggregate principal amount of
$125,000,000, which are subordinated to the Obligations on the terms set forth
in the 1996 Senior Subordinated Notes Indenture.
"1996 Senior Subordinated Notes Indenture" means that certain
Indenture, dated as of November 12, 1996, among the Borrower, the Subsidiaries
of the Borrower listed on a schedule thereto, and Bank One, Columbus, N.A., as
Trustee.
"1997 Senior Subordinated Notes" means those certain senior
subordinated notes of the Borrower due 2007 to be issued by the Borrower in
connection with the Fieldcrest Cannon Transaction not to exceed $185,000,000,
which shall be subordinated to the Obligations on the terms set forth in the
1997 Senior Subordinated Notes Indenture.
"1997 Senior Subordinated Notes Indenture" means that certain
Indenture, dated as of December 18, 1997, among the Borrower, the Subsidiaries
of the Borrower listed on a schedule thereto, and Norwest Bank, N.A., as
trustee.
"Notes" means, collectively, the Facility A Term Loan Notes and the
Facility B Term Loan Notes.
"Notice of Borrowing" has the meaning specified in Section 2.2(a)
hereof.
"Notice of Continuation/Conversion" has the meaning specified in
Section 2.2(c) hereof.
"Obligations" means (a) all obligations of any nature (whether matured
or unmatured, fixed or contingent) of the Borrower or any other Obligor to any
Lender or the Administrative Agent or any Affiliate of any Lender under any of
the Loan Documents as they may be amended from time to time, and (b) all
obligations of the Borrower or any other Obligor for losses, damages, expenses
or any other liabilities of any kind that any Lender, the Administrative Agent
or any Affiliate of any Lender may suffer by reason of a breach by the Borrower
or any other Obligor of any obligation, covenant or undertaking with respect to
any Loan Document payable by the Borrower or any other Obligor under any Loan
Document.
"Obligor" means the Borrower and each Guarantor.
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"Operating Lease" means any operating lease, as defined in the
Financial Accounting Standard Board Statement of Financial Accounting Standards
No. 13, dated November, 1976 or otherwise in accordance with GAAP.
"Other Taxes" has the meaning specified in Section 2.13(b) hereof.
"Ownership Information" has the meaning specified in Section 11.6(j)
hereof.
"Participants" has the meaning specified in Section 11.6(c) hereof.
"Participations" has the meaning specified in Section 11.6(c) hereof.
"Payment Date" means the last day of the Interest Period for any LIBOR
Advance.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Pegasus" means Pegasus Merger Sub, Inc., a Delaware corporation
which, upon the Fieldcrest Cannon Merger, will be merged with and into
Fieldcrest Cannon with Fieldcrest Cannon as the surviving corporation.
"Permitted Liens" means, as applied to any Person:
(a) Any Lien in favor of (i) the Collateral Agent, the
Administrative Agent or the Lenders or any Affiliate of any Lender (or former
Lender or Affiliate of a Lender still party to a Hedge Agreement with the
Borrower or any of its Subsidiaries) to secure the Obligations hereunder or
(ii) the Collateral Agent, the administrative agent or the lenders (or any
affiliate thereof) under the Amended and Restated Credit Agreement to secure
the Obligations (as defined in the Amended and Restated Credit Agreement)
thereunder;
(b) Liens for taxes, assessments, governmental charges, levies or
claims that are not yet delinquent or that are being diligently contested in
good faith by appropriate proceedings in accordance with Section 5.6 hereof and
for which adequate reserves shall have been set aside on such Person's books,
but only so long as no foreclosure, restraint, sale or similar proceedings have
been commenced with respect thereto;
(c) Liens of carriers, warehousemen, mechanics, laborers,
landlords and materialmen and other similar Liens incurred in the ordinary
course of business or by operation of Law for sums not yet due or being
contested in good faith, if such reserve or appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(d) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance,
pensions or other social security programs or similar legislation;
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(e) Easements, right-of-way, restrictions and other similar
encumbrances on the use of real property which do not interfere in any material
respect with the ordinary conduct of the business of such Person;
(f) Liens and negative pledges created to secure the purchase
price of assets acquired (or existing on property at the time such property is
acquired) by such Person or created to secure Indebtedness permitted by Section
7.1(c) or 7.1(h) hereof, which is incurred solely for the purpose of financing
the acquisition of such assets and incurred at the time of acquisition or which
exists against such assets at the time of acquisition thereof, so long as each
such Lien shall at all times be confined solely to the asset or assets so
acquired (and proceeds thereof), and refinancings thereof so long as any such
Lien remains solely on the asset or assets acquired (and the proceeds thereof)
and the amount of Indebtedness related thereto is not increased;
(g) Any Liens which are described on Schedule 3 hereto, and Liens
resulting from the refinancing of the related Indebtedness, provided that the
Indebtedness secured thereby shall not be increased and the Liens shall not
cover additional assets of the Borrower;
(h) Liens arising from filing Uniform Commercial Code financing
statements for precautionary purposes relating solely to operating leases of
personal property permitted by this Agreement under which the Borrower or any
of its Subsidiaries is a lessee;
(i) Any zoning or similar law or right reserved to or vested in
any Tribunal to control or regulate the use of any real property;
(j) Any other title or survey exception with respect to real
property assets disclosed by any preliminary title report, title commitment
report, survey or other search of title provided to the Administrative Agent in
accordance with this Agreement unless disapproved in writing by the
Administrative Agent prior to the Agreement Date;
(k) Liens incurred or deposits made to secure the performance of
bids, tenders, leases, trade contracts (other than for Indebtedness), statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business;
(l) Any leases or subleases currently in effect, entered into in
the ordinary course of business or entered into in compliance with the Loan
Documents; and
(m) Any replacements or renewals of Liens (but no increases in the
Indebtedness secured thereby) permitted by clauses (a)(ii), (f), (g), (h) and
(l) hereof.
"Person" means an individual, corporation, partnership, limited
liability company, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
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"Plan" means an employee benefit plan as defined in Section 3(3) of
ERISA (including a Multiemployer Plan) pursuant to which any employees of the
Borrower, its Subsidiaries or any member of their Controlled Group participate.
"Pretax Cash Flow" means, for any date of calculation, calculated for
the Borrower and its Subsidiaries on a consolidated basis (including Fieldcrest
Cannon and its Subsidiaries on a pro forma basis with respect to any period
prior to the Agreement Date), an amount equal to the sum of (a) EBITDA, minus
(b) Capital Expenditures, plus (c) cash proceeds received from the sale of
assets pursuant to Section 7.5(d) hereof.
"Prime Rate" means, at any time, the prime interest rate announced or
published by the Reference Lender from time to time as its reference rate for
the determination of interest rates for loans of varying maturities in United
States dollars to United States residents of varying degrees of
creditworthiness and being quoted at such time by the Reference Lender as its
"prime rate;" it being understood that such rate may not be the lowest rate of
interest charged by the Reference Lender.
"Quarterly Date" means the last day of each March, June, September and
December, beginning December 31, 1997.
"Rate Adjustment Date" means the date which is two Business Days
following the date that the Lenders receive the financial statements for the
first Fiscal Quarter for Fiscal Year 1998 required to be delivered pursuant to
Section 6.1 hereof.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984 as
amended from time to time.
"Reference Lender" means NationsBank; provided that if NationsBank
shall cease to be the Administrative Agent hereunder, NationsBank shall cease
to be the Reference Lender, and the new Administrative Agent (after
consultation with the Borrower) shall, with notice to the Borrower and the
Lenders, designate itself as the Reference Lender.
"Register" has the meaning specified in Section 11.6(j) hereof.
"Regulatory Modification" has the meaning specified in Section 9.5
hereof.
"Regulatory Modification Retroactive Effective Date" has the meaning
specified in Section 9.5 hereof.
"Regulatory Modification Set Date" has the meaning specified in
Section 9.5 hereof.
"Related Person" means (a) any Affiliate of the Borrower, (b) any
individual or entity who directly or indirectly holds 10% or more of any class
of Capital Stock of the Borrower,
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(c) any relative of such individual by blood, marriage or adoption not more
remote than first cousin and (d) any officer or director of the Borrower.
"Release Date" means the date on which the Notes have been paid in
full, all other Obligations due and owing have been paid and performed in full,
and the Commitments have been terminated.
"Reportable Event" has the meaning set forth in Section 4043(c) of
ERISA.
"Reserve Requirement " means, at any time, the maximum rate at which
reserves (including, without limitation, any marginal, special, supplemental or
emergency reserves) are required to be maintained under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the
effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by reference to which the
Adjusted LIBOR Rate is to be determined, or (ii) any category of extensions of
credit or other assets which include LIBOR Advances. The Adjusted LIBOR Rate
shall be adjusted automatically on and as of the effective date of any change
in the Reserve Requirement.
"Responsible Officer" means, of any Person, the President, chief
operating officer, chief executive officer, chief financial officer, chief
accounting officer or treasurer of such Person.
"Restricted Payments" means, collectively, (a) Dividends, and (b) any
(i) payment or prepayment of principal, premium (but not interest) or penalty
(but not liquidated damages in respect of the 1997 Senior Subordinated Notes)
on any Institutional Debt of the Borrower or any of its Subsidiaries or any
defeasance, redemption, purchase, repurchase or other acquisition or retirement
for value, in whole or in part, of any Institutional Debt (including, without
limitation, the setting aside of assets or the deposit of funds therefor), and
(ii) prepayment of interest on any Institutional Debt.
"Revolver Availability" has the meaning given to such term in the
Amended and Restated Credit Agreement.
"Rights" means rights, remedies, powers and privileges.
"Security Agreements" mean the General Security Agreements and the
Intellectual Property Security Agreements.
"Solvent" means, with respect to any Person, that as of the date of
determination, (a) the fair saleable value of the assets of such Person is
greater than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person, (b) such Person is able to pay the
probable liabilities on such Person's then existing debts as they become
absolute and matured
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considering all financing alternatives and potential asset sales reasonably
available to such Person, and (c) such Person does not have unreasonably small
capital with which to carry on its business. In computing the amount of
contingent or unliquidated liabilities at any time, such liabilities will be
computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability discounted to present value at rates
believed to be reasonable by such Person.
"Special Counsel" means the law firm of Donohoe, Jameson & Carroll,
P.C., or such other legal counsel as the Administrative Agent may select.
"Specified Percentage" means, as the context requires, the Facility A
Term Loan Specified Percentage or the Facility B Term Loan Specified
Percentage.
"Subordinated Debt" means (a) the subordinated Indebtedness existing
on the Agreement Date, and (b) any other Indebtedness of the Borrower or any of
its Subsidiaries having maturities and terms and which is subordinated to
payment of the Obligations in a manner approved in writing by the
Administrative Agent and the Determining Lenders in their reasonable
discretion, in each case with only such changes or amendments as are not
prohibited by Section 7.18 hereof.
"Subsequent Pricing Period" means the period from and including the
date which is the first day following the end of the Initial Pricing Period to
and including the Release Date.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate or other Person of which
(or in which) more than 50% of:
(a) the outstanding capital stock having Voting Power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have Voting Power upon the occurrence of any contingency),
(b) the interest in the capital or profits of such partnership or
joint venture,
(c) the beneficial interest of such trust or estate, or
(d) the equity interest of such other Person,
is at the time directly or indirectly owned by such Person, by such Person and
one or more of its Subsidiaries or by one or more of such Person's
Subsidiaries.
"Subsidiary Guaranty" means a guaranty, substantially in the form of
Exhibit G hereto, executed by each direct and indirect Domestic Subsidiary of
the Borrower, as amended, supplemented, modified, renewed or otherwise restated
from time to time.
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<PAGE> 31
"Synthetic Lease" means any synthetic lease, tax retention generating
lease, or off-balance sheet financing product where such transaction is
considered borrowed money indebtedness for tax purposes but which is classified
as an Operating Lease pursuant to GAAP.
"Taxes" has the meaning specified in Section 2.13(a) hereof.
"Total Debt" means, as of any date of determination, determined for
the Borrower and its Subsidiaries on a consolidated basis, to the extent that
the following would appear as a liability upon the consolidated balance sheet
of the Borrower and its Subsidiaries in accordance with GAAP: (i) indebtedness
for borrowed money, (ii) obligations evidenced by bonds, debentures, notes or
other similar instruments, (iii) non-contingent obligations to pay the deferred
purchase price of property or services other than trade payables incurred in
the ordinary course of business, and (iv) Capitalized Lease Obligations.
"Total Specified Percentage" means, as to any Lender, the percentage
indicated beside its name on Schedule 1 hereto as its Total Specified
Percentage, or as adjusted or specified in any amendment to this Agreement or
in any Assignment Agreement.
"Tribunal" means any (a) state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision, agency,
department, commission, board, bureau, or instrumentality of a governmental or
other regulatory or public body or authority or (b) private arbitration board
or panel.
"UCC" means the Uniform Commercial Code of Texas, as amended from time
to time, and the Uniform Commercial Code applicable in such other states as any
Collateral may be located.
"Underwriting Fee Letter" means that certain letter, dated September
10, 1997, from NationsBank of Texas, N.A., and NationsBanc Montgomery
Securities, Inc., providing an underwriting fee with respect to the Commitment.
"Voting Power" means, with respect to any Person, the power ordinarily
(without the occurrence of a contingency) to elect the members of the board of
directors (or persons performing similar functions).
Section 1.2 Amendments and Renewals. Each definition of an
agreement in this Article 1 shall include such agreement as amended to date,
and as amended or renewed from time to time in accordance with its terms, but
only with the prior written consent of the Determining Lenders or all the
Lenders as required pursuant to Section 11.11 hereof.
Section 1.3 Construction. The terms defined in this Article 1
(except as otherwise expressly provided in this Agreement) for all purposes
shall have the meanings set forth in Section 1.1 hereof, and the singular shall
include the plural, and vice versa, unless otherwise specifically required by
the context. All accounting terms used in this Agreement which are not
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otherwise defined herein shall be construed in accordance with GAAP on a
consolidated basis for the Borrower and its Subsidiaries, unless otherwise
expressly stated herein.
ARTICLE 2
Advances
Section 2.1 The Advances.
(a) Facility A Term Loan Advances. Each Lender severally agrees,
upon the terms and subject to the conditions of this Agreement, to make a
Facility A Term Loan Advance to the Borrower on the Agreement Date in an amount
not to exceed its Facility A Term Loan Specified Percentage of the Facility A
Term Loan Commitment for the purposes set forth in Section 5.8 hereof.
Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the principal amount of all outstanding Facility A Term Loan Advances
exceed the Facility A Term Loan Commitment. Immediately upon the making of the
Facility A Term Loan Advances, the Facility A Term Loan Commitment shall be
automatically terminated. Facility A Term Loan Advances may not be repaid and
then reborrowed.
(b) Facility B Term Loan Advances. Each Lender severally agrees,
upon the terms and subject to the conditions of this Agreement, to make a
Facility B Term Loan Advance to the Borrower on the Agreement Date in an amount
not to exceed its Facility B Term Loan Specified Percentage of the Facility B
Term Loan Commitment for the purposes set forth in Section 5.8 hereof.
Notwithstanding any provision in any Loan Document to the contrary, in no event
shall the principal amount of all outstanding Facility B Term Loan Advances
exceed the Facility B Term Loan Commitment. Immediately upon the making of the
Facility B Term Loan Advances, the Facility B Term Loan Commitment shall be
automatically terminated. Facility B Term Loan Advances may not be repaid and
then reborrowed.
(c) Any Advance shall, at the option of the Borrower as provided
in Section 2.2 hereof (and, in the case of LIBOR Advances, subject to the
provisions of Article 9 hereof), be made as a Base Rate Advance or a LIBOR
Advance; provided that there shall not be outstanding, at any one time, more
than eight LIBOR Advances.
Section 2.2 Manner of Borrowing and Disbursement.
(a) Base Rate Advances. In the case of Base Rate Advances, the
Borrower, through an Authorized Signatory, shall give the Administrative Agent
prior to 11:00 a.m., Dallas, Texas time, on the date of any proposed Base Rate
Advance irrevocable written notice, or irrevocable telephonic notice followed
immediately by written notice, in substantially the form of Exhibit H hereto (a
"Notice of Borrowing") (provided, however, that the Borrower's failure to
confirm any telephonic notice in writing shall not invalidate any notice so
given), of its intention to borrow a Base Rate Advance hereunder. Such notice
of borrowing shall specify the requested funding
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date, which shall be a Business Day, and the amount of the proposed aggregate
Base Rate Advances to be made by Lenders.
(b) LIBOR Advances. In the case of LIBOR Advances, the Borrower,
through an Authorized Signatory, shall give the Administrative Agent at least
three Business Days' irrevocable written notice, or irrevocable telephonic
notice followed immediately by written notice (provided, however, that the
Borrower's failure to confirm any telephonic notice in writing shall not
invalidate any notice so given) pursuant to a Notice of Borrowing, of its
intention to borrow a LIBOR Advance hereunder. Notice shall be given to the
Administrative Agent prior to 11:00 a.m., Dallas, Texas time, in order for such
Business Day to count toward the minimum number of Business Days required.
LIBOR Advances shall in all cases be subject to Article 9 hereof. For LIBOR
Advances, the notice of borrowing shall specify the requested funding date,
which shall be a Business Day, the amount of the proposed aggregate LIBOR
Advances to be made by Lenders and the Interest Period selected by the
Borrower, provided that no such Interest Period shall extend past the Facility
A Term Loan Maturity Date or the Facility B Term Loan Maturity Date, as
appropriate.
(c) Continuation/Conversion. Subject to Sections 2.1 and 2.8
hereof, the Borrower shall have the option (i) to convert at any time all or
any part of the outstanding Base Rate Advances to LIBOR Advances and all or any
part of the outstanding LIBOR Advances to Base Rate Advances or (ii) upon
expiration of any Interest Period applicable to a LIBOR Advance, to continue
all or any portion of such LIBOR Advance equal to $5,000,000 and integral
multiples of $500,000 in excess of that amount as a LIBOR Advance and the
succeeding Interest Period(s) of such continued LIBOR Advance shall commence on
the last day of the Interest Period of the LIBOR Advance to be continued;
provided, however, (A) LIBOR Advances may only be converted into Base Rate
Advances on the expiration date of the Interest Period applicable thereto and
(B) notwithstanding anything in this Agreement to the contrary, no outstanding
Advance may be continued as, or converted into, a LIBOR Advance when any
Default or Event of Default has occurred and is continuing. Not later than
11:00 a.m., Dallas, Texas time on the date of any proposed continuation of or
conversion to a Base Rate Advance and not later than 11:00 a.m., Dallas, Texas
time at least three Business Days prior to any proposed continuation of or
conversion to a LIBOR Advance, the Borrower, through an Authorized Signatory,
shall give the Administrative Agent irrevocable written notice, or irrevocable
telephonic notice followed immediately by written notice, in substantially the
form of Exhibit K hereto (a "Notice of Continuation/Conversion") (provided,
however, that the Borrower's failure to confirm any telephonic notice in
writing shall not invalidate any notice so given), stating (i) the proposed
conversion/continuation date (which shall be a Business Day), (ii) the amount
of the Advance to be converted/continued, (iii) in the case of a conversion to,
or a continuation of, a LIBOR Advance, the requested Interest Period, and (iv)
in the case of a conversion of a Base Rate Advance to a LIBOR Advance or
continuation of a LIBOR Advance, stating that no Default or Event of Default
has occurred and is continuing. If the Borrower shall fail to give any notice
in accordance with this Section 2.2(c) prior to the expiration of any
then-relevant Interest Period with respect to any LIBOR Advance, the
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Borrower shall be deemed irrevocably to have requested that such LIBOR Advance
be converted to a Base Rate Advance in the same principal amount.
(d) Minimum Amount. The aggregate amount of Base Rate Advances to
be made by the Lenders on any day shall be in a principal amount which is at
least $1,000,000 and which is an integral multiple of $100,000. The aggregate
amount of LIBOR Advances having the same Interest Period and to be made by the
Lenders on any day shall be in a principal amount which is at least $5,000,000
and which is an integral multiple of $500,000.
(e) Notice and Disbursement. The Administrative Agent shall
promptly notify the Lenders of each notice received from the Borrower pursuant
to this Section. Each Lender shall, not later than 2:00 p.m., Dallas, Texas
time, on the date of any Advance, deliver to the Administrative Agent, at its
address set forth herein, such Lender's Specified Percentage of such Advance in
immediately available funds in accordance with the Administrative Agent's
instructions. Prior to 2:30 p.m., Dallas, Texas time, on the date of any
Advance hereunder, the Administrative Agent shall, subject to satisfaction of
the conditions set forth in Article 3, disburse the amounts made available to
the Administrative Agent by the Lenders by (i) transferring such amounts by
wire transfer pursuant to the Borrower's instructions, or (ii) in the absence
of such instructions, crediting such amounts to the account of the Borrower
maintained with the Administrative Agent. All Facility A Term Loan Advances
shall be made by each Lender in accordance with its Facility A Term Loan
Specified Percentage. All Facility B Term Loan Advances shall be made by each
Lender in accordance with its Facility B Term Loan Specified Percentage.
Section 2.3 Interest.
(a) On Base Rate Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of each Base Rate Advance from the date such
Base Rate Advance is made, until such Base Rate Advance is due
(whether at maturity, by reason of acceleration, by scheduled
reduction, or otherwise) and repaid at a simple interest rate per
annum equal to the Base Rate Basis for the Base Rate Advances as in
effect from time to time. If at any time the Base Rate Basis would
exceed the Highest Lawful Rate, interest payable on the Base Rate
Advances shall be limited to the Highest Lawful Rate, but the Base
Rate Basis shall not thereafter be reduced below the Highest Lawful
Rate until the total amount of interest accrued on the Base Rate
Advances equals the amount of interest that would have accrued if the
Base Rate Basis had been in effect at all times.
(ii) Subject to Section 11.9 hereof, interest on the Base
Rate Advances shall be computed on the basis of a year of 365 or 366
days, as appropriate, for the actual number of days elapsed, and shall
be payable in arrears on each Quarterly Date and on the Facility A
Term Loan Maturity Date and the Facility B Term Loan Maturity Date, as
appropriate.
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(b) On LIBOR Advances.
(i) The Borrower shall pay interest on the outstanding
unpaid principal amount of each LIBOR Advance, from the date such
Advance is made until it is due (whether at maturity, by reason of
acceleration, by scheduled reduction, or otherwise) and repaid, at a
rate per annum equal to the LIBOR Basis for such LIBOR Advance. The
Administrative Agent, whose determination shall be controlling in the
absence of demonstrable error, shall determine the LIBOR Basis on the
second Business Day prior to the applicable funding, conversion or
continuation date and shall notify the Borrower and the Lenders of
such LIBOR Basis. The Administrative Agent shall, at the request of
the Borrower, furnish such information concerning the calculation of
the LIBOR Basis as the Borrower may reasonably request.
(ii) Subject to Section 11.9 hereof, interest on each
LIBOR Advance shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be payable in arrears on the
applicable Payment Date and on the Facility A Term Loan Maturity Date
and the Facility B Term Loan Maturity Date, as appropriate; provided,
however, that if the Interest Period for such LIBOR Advance exceeds
three months, interest shall also be due and payable in arrears on
each three-month anniversary of the commencement of such Interest
Period during such Interest Period.
(c) Interest After an Event of Default. (i) Subject to Section
11.9 hereof, after an Event of Default (other than an Event of Default
specified in Section 8.1(f) or (g) hereof) and during any continuance thereof,
at the option of the Determining Lenders and after written notice to the
Borrower by the Administrative Agent, and (ii) after an Event of Default
specified in Section 8.1(f) or (g) hereof and during any continuance thereof,
automatically and without any action by the Administrative Agent or any Lender,
the Obligations shall bear interest at a rate per annum equal to the Default
Rate. Such interest shall be payable on the earlier of demand or the Maturity
Date, and shall accrue until the earlier of (i) waiver or cure of the
applicable Event of Default, (ii) agreement by the Determining Lenders to
rescind the charging of interest at the Default Rate, or (iii) payment in full
of the Obligations. The Lenders shall not be required to accelerate the
maturity of the Advances or to exercise any other rights or remedies under the
Loan Documents to charge interest at the Default Rate. The Lenders shall not
be required to give notice to the Borrower of the decision to charge interest
at the Default Rate under the first clause (ii) above.
Section 2.4 Fees. Subject to Section 11.9 hereof, the Borrower
agrees to pay to the Administrative Agent, for the account of (a) the
Administrative Agent, the fees on the dates and in the amounts specified in the
letter agreement (the "Administrative Agent Fee Letter"), dated as of the
Agreement Date, between the Borrower and the Administrative Agent, and (b)
NationsBank of Texas, N.A. and NationsBanc Montgomery Securities, Inc.
(formerly known as NationsBanc Capital Markets, Inc.) the fees specified in the
Underwriting Fee Letter on the Agreement Date.
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Section 2.5 Prepayments.
(a) Voluntary Prepayments. Upon one Business Day's prior
telephonic notice (to be promptly followed by written notice) by an Authorized
Signatory to the Administrative Agent, Base Rate Advances may be voluntarily
prepaid without premium or penalty. Upon three Business Days' prior telephonic
notice (to be promptly followed by written notice) by an Authorized Signatory
to the Administrative Agent, LIBOR Advances may be voluntarily prepaid, without
premium or penalty, but only so long as the Borrower concurrently reimburses
the Lenders in accordance with Section 2.8 hereof. Any notice of prepayment
shall be irrevocable. Each such prepayment shall be applied pro rata to all of
the unpaid scheduled installment payments of the Facility A Term Loan Advances
and the Facility B Term Loan Advances, in each case pro rata based upon the
respective principal amounts of such installment payments then unpaid.
(b) Prepayments from Sales of Assets. Concurrently with the
receipt of Net Cash Proceeds from the sale or disposition by the Borrower or
any of its Subsidiaries of any assets (other than sales or dispositions of
assets (i) expressly permitted pursuant to clauses (a) through (e) of Section
7.5 hereof or (ii) the aggregate amount of Net Cash Proceeds of which during
any fiscal year do not exceed $5,000,000), the Borrower shall prepay Facility A
Term Loan Advances and Facility B Term Loan Advances in an amount equal to the
lesser of (a) 100% of such Net Cash Proceeds or (b) an amount, if any, which
would result in the Leverage Ratio being less than 4.00 to 1 after such
prepayment. Each such prepayment shall be applied pro rata to all of the
unpaid scheduled installment payments of the Facility A Term Loan Advances and
the Facility B Term Loan Advances, in each case pro rata based upon the
respective principal amounts of such installment payments then unpaid.
(c) Prepayments from Excess Cash Flow. Commencing on May 1, 1999
and on each May 1 thereafter, the Borrower shall prepay the Facility A Term
Loan Advances and the Facility B Term Loan Advances in an amount equal to the
lesser of (a) 75% of Excess Cash Flow, if any, for the Fiscal Year ending
immediately preceding each such May 1 or (b) an amount, if any, which would
result in the Leverage Ratio being less than 4.00 to 1 after such prepayment.
Each such prepayment shall be applied pro rata to all of the unpaid scheduled
installment payments of the Facility A Term Loan Advances and the Facility B
Term Loan Advances, in each case pro rata based upon the respective principal
amounts of such installment payments then unpaid.
(d) Prepayment from Sales of Capital Stock. Concurrently with
receipt of Net Cash Proceeds from the issuance by the Borrower to any Person of
any Capital Stock of the Borrower or any of its Subsidiaries after the
Agreement Date (other than the Net Cash Proceeds from any disposition of
Capital Stock which are used to repay the Bridge Notes or purchase the Borrower
Preferred Stock), the Borrower shall prepay the Facility A Term Loan Advances
and the Facility B Term Loan Advances in an amount equal to the lesser of (a)
50% of such Net Cash Proceeds or (b) an amount, if any, which would result in
the Leverage Ratio being less than 4.00 to 1 after such prepayment. Each such
prepayment shall be applied pro rata to all of the
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<PAGE> 37
unpaid scheduled installment payments of the Facility A Term Loan Advances and
the Facility B Term Loan Advances, in each case pro rata based upon the
respective principal amounts of such installment payments then unpaid.
(e) Prepayment from Issuance of Institutional Debt. Concurrently
with the receipt of Net Cash Proceeds from the issuance of Institutional Debt
by the Borrower after the Agreement Date of the Borrower (other than the Net
Cash Proceeds from the issuance of any Subordinated Debt which are used to
repay the Bridge Notes), the Borrower shall prepay the Facility A Term Loan
Advances and the Facility B Term Loan Advances in an amount equal to the lesser
of (a) 100% of such Net Cash Proceeds or (b) an amount, if any, which would
result in the Leverage Ratio being less than 4.00 to 1 after such prepayment.
Each such prepayment shall be applied pro rata to all of the unpaid scheduled
installment payments of the Facility A Term Loan Advances and the Facility B
Term Loan Advances, in each case pro rata based upon the respective principal
amounts of such installment payments then unpaid.
(f) Payments, Generally. Any prepayment of any Advance shall be
accompanied by interest accrued on the principal amount being prepaid. Any
voluntary partial payment of a Base Rate Advance shall be in a principal amount
which is at least $1,000,000 and which is an integral multiple of $500,000.
Any voluntary partial payment of a LIBOR Advance shall be in a principal amount
which is at least $5,000,000 and which is an integral multiple of $500,000, and
to the extent that any prepayment of a LIBOR Advance is made on a date other
than the last day of its Interest Period, the Borrower shall reimburse each
Lender in accordance with Section 2.9 hereof.
Section 2.6 Non-Receipt of Funds by the Administrative Agent.
Unless the Administrative Agent shall have been notified by a Lender prior to
the date of any proposed Advance (which notice shall be effective upon receipt)
that such Lender does not intend to make the proceeds of such Advance available
to the Administrative Agent, the Administrative Agent may assume that such
Lender has made such proceeds available to the Administrative Agent on such
date, and the Administrative Agent may in reliance upon such assumption (but
shall not be required to) make available to the Borrower a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender, the Administrative Agent shall be entitled
to recover such amount on demand from such Lender (or, if such Lender fails to
pay such amount forthwith upon such demand, from the Borrower) together with
interest thereon in respect of each day during the period commencing on the
date such amount was available to the Borrower and ending on (but excluding)
the date the Administrative Agent receives such amount from (a) the Lender, at
a per annum rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the
Federal Funds Rate, or (b) the Borrower, at the per annum rate applicable at
the time to such Advance. No Lender shall be liable for any other Lender's
failure to fund an Advance hereunder. The failure or refusal by any Lender to
make available to the Administrative Agent the proceeds of any Advance shall
not relieve any other Lender from its several obligation hereunder to make its
Specified Percentage of any requested Advance available to the Administrative
Agent.
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<PAGE> 38
Section 2.7 Payment of Principal of Advances.
(a) Facility A Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility A Term Loan Advances shall be repaid on each Quarterly Date and on the
Facility A Term Loan Maturity Date in such amounts as set forth next to each
such date below:
<TABLE>
<CAPTION>
Amount of Reduction of Facility A
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
<S> <C>
March 31, 1999 $1,250,000
June 30, 1999 $1,250,000
September 30, 1999 $1,250,000
December 31, 1999 $1,250,000
March 31, 2000 $3,750,000
June 30, 2000 $3,750,000
September 30, 2000 $3,750,000
December 31, 2000 $3,750,000
March 31, 2001 $6,250,000
June 30, 2001 $6,250,000
September 30, 2001 $6,250,000
December 31, 2001 $6,250,000
March 31, 2002 $8,750,000
June 30, 2002 $8,750,000
September 30, 2002 $8,750,000
December 31, 2002 $8,750,000
March 31, 2003 $11,250,000
June 30, 2003 $11,250,000
September 30, 2003 $11,250,000
December 31, 2003 $11,250,000
or such other amount of Facility A Term Loan
Advances then outstanding
</TABLE>
(b) Facility B Term Loan Advances. To the extent not otherwise
required to be paid earlier as provided herein, the principal amount of the
Facility B Term Loan Advances shall be
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<PAGE> 39
repaid on each Quarterly Date and on the Facility B Term Loan Maturity Date in
such amounts as set forth next to each such date below:
<TABLE>
<CAPTION>
Amount of Reduction of Facility B
Quarterly Date Term Loan Advances as of each Date
-------------- ----------------------------------
<S> <C>
March 31, 1998 $312,500
June 30, 1998 $312,500
September 30, 1998 $312,500
December 31, 1998 $312,500
March 31, 1999 $312,500
June 30, 1999 $312,500
September 30, 1999 $312,500
December 31, 1999 $312,500
February 29, 2000 $312,500
June 30, 2000 $312,500
September 30, 2000 $312,500
December 31, 2000 $312,500
March 31, 2001 $312,500
June 30, 2001 $312,500
September 30, 2001 $312,500
December 31, 2001 $312,500
March 31, 2002 $312,500
June 30, 2002 $312,500
September 30, 2002 $312,500
December 31, 2002 $312,500
March 31, 2003 $312,500
June 30, 2003 $312,500
September 30, 2003 $312,500
December 31, 2003 $312,500
March 31, 2004 $29,375,000
</TABLE>
- 33 -
<PAGE> 40
<TABLE>
<S> <C>
June 30, 2004 $29,375,000
September 30, 2004 $29,375,000
December 31, 2004 $29,375,000
or such other amount of Facility B Term Loan
Advances then outstanding
</TABLE>
Section 2.8 Reimbursement. Whenever any Lender shall sustain or
incur any losses or reasonable out-of- pocket expenses in connection with (a)
failure by the Borrower to borrow any LIBOR Advance after having given notice
of its intention to borrow in accordance with Section 2.2 hereof (whether by
reason of the Borrower's election not to proceed or the non-fulfillment of any
of the conditions set forth in Article 3 hereof), (b) any prepayment for any
reason of any LIBOR Advance in whole or in part (including, but not limited to,
a prepayment pursuant to Section 9.3(b) hereof) on other than the last day of
an Interest Period applicable to such LIBOR Advance or (c) any prepayment of
any of its LIBOR Advances that is not made on any date specified in a notice of
prepayment given by the Borrower, the Borrower agrees to pay to any such
Lender, within 30 days after demand by such Lender, an amount sufficient to
compensate such Lender for all such losses (excluding loss of anticipated
profits) and reasonable out-of-pocket expenses, subject to Section 11.9 hereof.
A certificate as to any amounts payable to any Lender under this Section 2.8
submitted to the Borrower by such Lender shall certify that such amounts were
actually incurred by such Lender and shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount and shall be conclusive absent demonstrable error.
Section 2.9 Manner of Payment.
(a) Each payment (including prepayments) by the Borrower of the
principal of or interest on the Advances, fees, and any other amount owed under
this Agreement or any other Loan Document shall be made not later than 12:00
noon (Dallas, Texas time) on the date specified for payment under this
Agreement to the Administrative Agent at the Administrative Agent's office, in
lawful money of the United States of America constituting immediately available
funds.
(b) If any payment under this Agreement or any other Loan Document
shall be specified to be made upon a day which is not a Business Day, it shall
be made on the next succeeding day which is a Business Day, unless, with
respect to a payment due in respect of a LIBOR Advance, such Business Day falls
in another calendar month, in which case payment shall be made on the preceding
Business Day. Any extension of time shall in such case be included in
computing interest and fees, if any, in connection with such payment.
(c) The Borrower agrees to pay principal, interest, fees and all
other amounts due under the Loan Documents without deduction for set-off or
counterclaim or any deduction whatsoever.
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<PAGE> 41
(d) Notwithstanding anything in this Agreement to the contrary but
subject to the Intercreditor Agreement, all payments received by the
Administrative Agent pursuant to the Loan Documents (other than from other
Lenders) shall be applied as follows:
(i) Prior to (A) the occurrence and continuance of an
Event of Default and (B) the delivery by the Determining Lenders of
the notice to the Administrative Agent referred to in Section
2.9(d)(ii)(B) below, the Administrative Agent shall apply all such
payments as between the Facility A Term Loan Advances and the Facility
B Term Loan Advances to the applicable Advances in accordance with the
applicable Specified Percentages.
(ii) If (A) there exists an Event of Default that has
occurred and is continuing and (B) the Determining Lenders shall have
delivered notice to the Administrative Agent to apply such payments as
provided in this Section 2.9(d)(ii), the Administrative Agent shall
apply all such payments to reduce the Facility A Term Loan Advances
and the Facility B Term Loan Advances in accordance with each Lender's
Total Specified Percentage.
Section 2.10 LIBOR Lending Offices. Each Lender's initial LIBOR
Lending Office is set forth opposite its name in Schedule 2 attached hereto.
Each Lender shall have the right at any time and from time to time to designate
a different office of itself or of any Affiliate of such Lender as such
Lender's LIBOR Lending Office, and to transfer any outstanding LIBOR Advance to
such LIBOR Lending Office. No such designation or transfer shall result in any
liability on the part of the Borrower for increased costs or expenses resulting
solely from such designation or transfer (except any such transfer which is
made by a Lender pursuant to Section 9.2 or 9.3 hereof, or otherwise for the
purpose of complying with Applicable Law). Increased costs for expenses
resulting from a change in law occurring subsequent to any such designation or
transfer shall be deemed not to result solely from such designation or
transfer.
Section 2.11 Sharing of Payments. Subject to the Intercreditor
Agreement, if any Lender shall obtain a payment (whether voluntary or
involuntary, due to the exercise of any right of set-off, or otherwise) on
account of its Advances (other than pursuant to Sections 2.4, 2.13, 9.3 or 9.5
hereof) in excess of (a) before the Lenders have delivered the notice to the
Administrative Agent referred to in Section 2.9(d)(ii)(B) above, its Applicable
Specified Percentage, and (b) after the occurrence and during the continuance
of an Event of Default and provided that the Determining Lenders have delivered
the notice to the Administrative Agent referred to Section 2.9(d)(ii)(B) above,
its Total Specified Percentage, then such Lender shall purchase from each other
Lender such participation in the Advances made by such other Lender as shall be
necessary to cause such purchasing Lender to share the excess payment pro rata
(based on its Applicable Specified Percentage so long as there does not exist
an Event of Default, and based on its Total Specified Percentage if there
exists an Event of Default); provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest. The Borrower agrees that any Lender so
- 35 -
<PAGE> 42
purchasing a participation from another Lender pursuant to this Section, to the
fullest extent permitted by law, may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation.
Section 2.12 Calculation of LIBOR Rate. The provisions of this
Agreement relating to calculation of the LIBOR Rate are included only for the
purpose of determining the rate of interest or other amounts to be paid
hereunder that are based upon such rate, it being understood that each Lender
shall be entitled to fund and maintain its funding of all or any part of a
LIBOR Advance as it sees fit.
Section 2.13 Taxes.
(a) Any and all payments by the Borrower hereunder shall be made,
in accordance with Section 2.9 hereof, free and clear of and without deduction
for any and all present or future taxes, levies, imposts, deductions, charges
and withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender and the Administrative Agent, (i) taxes imposed on, based
upon or measured by its overall net income, net worth or capital, and franchise
taxes, doing business taxes or minimum taxes imposed on it, by the jurisdiction
under the laws of which such Lender or the Administrative Agent (as the case
may be) is organized or in which it has its applicable lending office or any
political subdivision thereof; (ii) taxes imposed by reason of failure by the
Lender or the Administrative Agent to comply with the requirements of paragraph
(e) of this Section 2.13; (iii) in the case of any Lender, any taxes in the
nature of transfer, stamp, recording or documentary taxes resulting from a
transfer (other than as a result of foreclosure) by such Lender of all or any
portion of its interest in this Agreement, the Notes or any other Loan
Documents; and (iv) taxes, levies, imposts, deductions, charges, withholdings
and liabilities which are finally judicially determined by a court of competent
jurisdiction to have arisen as a result of gross negligence or wilful
misconduct of the Administrative Agent or any Lender (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by Law
to deduct or withhold any Taxes from or in respect of any sum payable hereunder
to any Lender or the Administrative Agent, to the extent not prohibited by
Applicable Law, (x) the sum payable shall be increased as may be necessary so
that after making all required deductions for Taxes (including deductions
applicable to additional sums payable under this Section 2.13) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (y) the Borrower
shall make such deductions and (z) the Borrower shall pay the full amount of
Taxes deducted to the relevant taxation authority or other authority in
accordance with Applicable Law.
(b) In addition, the Borrower agrees to pay any and all stamp and
documentary taxes and any and all other excise and property taxes, charges and
similar levies (other than those described in clauses (iii) and (iv) of the
first sentence of Section 2.13(a)) that arise from any payment made hereunder
or from the execution, delivery or registration of, or otherwise with
- 36 -
<PAGE> 43
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.13) paid by such Lender or the Administrative
Agent (as the case may be) and all liabilities (including penalties, additions
to tax, interest and reasonable expenses) arising therefrom or with respect
thereto whether or not such Taxes or Other Taxes were correctly or legally
asserted, other than penalties, additions to tax, interest and expenses which
are finally judicially determined by a court of competent jurisdiction to have
arisen as a result of gross negligence or wilful misconduct on the part of such
Lender or the Administrative Agent. This indemnification shall be made within
30 days from the date such Lender or the Administrative Agent (as the case may
be) makes written demand therefor.
(d) As soon as practicable after the date of any payment of Taxes,
the Borrower will furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof. For purposes of this
Section 2.13 the terms "United States" and "United States Person" shall have
the meanings set forth in Section 7701 of the Code.
(e) Each Lender which is not a United States Person hereby agrees
that:
(i) it shall, no later than the Agreement Date (or, in
the case of a Lender which becomes a party hereto pursuant to Section
11.6 after the Agreement Date, the date upon which such Lender becomes
a party hereto) and at such times as necessary in the reasonable
determination of the Borrower, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent:
(A) if any lending office is located in the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 4224 or
any successor form thereto ("Form 4224"),
(B) if any lending office is located outside the United
States, two (2) accurate and complete signed
originals of Internal Revenue Service Form 1001 or
any successor form thereto ("Form 1001"),
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such lending office or lending offices under
this Agreement or any other Loan Document free from deduction or
withholding of United States federal income tax;
(ii) if at any time such Lender changes its lending office
or lending offices or selects an additional lending office it shall,
at the same time or reasonably promptly thereafter, but only to the
extent the forms previously delivered by it hereunder are not
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<PAGE> 44
effective with respect to such changed or additional lending office or
lending offices, deliver to the Borrower through the Administrative
Agent, with a copy to the Administrative Agent, in replacement for the
forms previously delivered by it hereunder:
(A) if such changed or additional lending office is
located in the United States, two (2) accurate and
complete signed originals of Form 4224; or
(B) otherwise, two (2) accurate and complete signed
originals of Form 1001,
in each case establishing that such Lender is on the date of delivery
thereof entitled to receive payments of principal, interest, fees, or
other amounts payable at such changed or additional lending office
under this Agreement or any other Loan Document free from deduction of
withholding of United States federal income tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event
mentioned in clause (ii) above) requiring a change in the most recent
Form 4224 or Form 1001 previously delivered by such Lender and if the
delivery of the same be lawful, deliver to the Borrower through the
Administrative Agent, with a copy to the Administrative Agent, two (2)
accurate and complete original signed copies of Form 4224 or Form
1001, in each case establishing that such Lender is on the date of
delivery thereof entitled to receive payments of principal, interest,
fees, or other amounts payable under this Agreement or any other Loan
Document free from deduction or withholding of United States federal
income tax, in replacement for the forms previously delivered by such
Lender;
(iv) it shall, promptly upon the request of the Borrower
to that effect, deliver to the Borrower such other forms or similar
documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's
tax status for withholding purposes;
(v) it shall notify the Borrower promptly after any event
(including an amendment to or a change in any applicable law or
regulation or in the written interpretation thereof by any regulatory
authority or any judicial authority or by ruling applicable to such
Lender of any governmental authority charged with the interpretation
or administration of any law) shall occur that results in such Lender
no longer being capable of receiving payments under this Agreement
without any deduction or withholding of United States federal income
tax; and
(vi) if such Lender is not a "bank" or other person
described in Section 881(c)(3) of the Code and cannot deliver either
Form 4224 or Form 1001, a statement that such Lender is not a "bank"
under Section 881(c)(3)(A) of the Code and two original copies of
Internal Revenue Service Form W-8 (or any successor form), properly
completed and duly executed by such Lender.
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<PAGE> 45
(f) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 2.13 shall survive the payment in full of the
Obligations.
(g) Each Lender (and the Administrative Agent with respect to
payments to the Administrative Agent for its own account) agrees that (i) it
will take all reasonable actions by all usual means to maintain all exemptions,
if any, available to it from United States withholding taxes (whether available
by treaty, existing administrative waiver or by virtue of the location of any
Lender's lending office), and (ii) it will use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its lending office, if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and would not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender; provided, however, no Lender nor the
Administrative Agent shall be obligated by reason of this Section 2.13(g) to
(a) disclose any information regarding its tax affairs or tax computations or
reorder its tax or other affairs or tax or other planning or (b) contest the
payment of any Taxes or Other Taxes. Subject to the foregoing, to the extent
the Borrower pays sums pursuant to this Section 2.13 and the Lender or the
Administrative Agent receives a refund of any or all of such sums, the party
receiving such refund shall promptly pay over all such refunded sums to the
Borrower, provided that no Default or Event of Default is in existence at such
time. At such time, if any, that such Default or Event of Default is cured or
waived, the party receiving such refund shall promptly pay over all such
refunded sums to the Borrower.
(h) If the Borrower becomes obligated to pay additional amounts
described in this Section 2.13 to any Lender, the Borrower may designate a
financial institution reasonably acceptable to the Administrative Agent to
replace such Lender by purchasing for cash and receiving an assignment of such
Lender's pro rata share of the Commitment and the Rights of such Lender under
the Loan Documents without recourse to or warranty by, or expense to, such
Lender, for a purchase price equal to the outstanding amounts owed to such
Lender (including such additional amounts owing to such Lender pursuant to this
Section 2.13). Upon execution of an Assignment Agreement, such other financial
institution shall be deemed to be a "Lender" for all purposes of this Agreement
as set forth in Section 11.6 hereof.
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent to the Initial Advances. The
obligation of each Lender to make the initial Advance is subject to (i) receipt
by the Administrative Agent of the following items which are to be delivered,
in form and substance reasonably satisfactory to each Lender, with a copy
(except for the Notes and this Agreement) for each Lender, and (ii)
satisfaction of the following conditions which are to be satisfied:
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<PAGE> 46
(a) A loan certificate of each Obligor certifying as to the
accuracy of its representations and warranties in the Loan Documents,
certifying, in the case of any such Obligor, that no Default or Event of
Default has occurred, and including a certificate of incumbency with respect to
each Authorized Signatory, and including (i) a copy of the articles or
certificate of incorporation or other organizational documents of such Obligor,
certified to be true, complete and correct by the secretary of state of its
state of organization, (ii) a copy of a certificate of good standing and a
certificate of existence for its state of organization and, in the case of any
such Obligor, each state in which the nature of its business requires it to be
qualified to do business, (iii) a copy of such Obligor's bylaws, partnership
agreement or similar document, certified to be true, complete and correct by
its secretary or general partner, as the case may be, and (iv) a copy of
corporate or similar resolutions authorizing the execution, delivery and
performance of the Loan Documents to be executed by such Obligor;
(b) a duly executed Facility A Term Loan Note and Facility B Term
Loan Note, payable to the order of each Lender and in an amount for each Lender
equal to its Specified Percentage of each Commitment, respectively;
(c) UCC searches in appropriate jurisdictions where Collateral is
located;
(d) opinions of counsel to each Obligor addressed to the Lenders
and in form and substance reasonably satisfactory to the Administrative Agent
and Special Counsel, dated the Agreement Date, and covering certain of the
matters set forth in Sections 4.1(a), (b), (c), (h), (m), (n) and (p) and such
other matters incident to the transactions contemplated hereby as the
Administrative Agent or Special Counsel may reasonably request;
(e) reimbursement for the Administrative Agent for Special
Counsel's reasonable and customary fees (on an hourly basis) and expenses
rendered through the Agreement Date;
(f) evidence that all proceedings of each Obligor taken in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent and Special Counsel; and the Administrative Agent shall
have received copies of all documents or other evidence which the
Administrative Agent or Special Counsel may reasonably request in connection
with such transactions;
(g) any fees or any expenses required to be paid pursuant to the
Administrative Agent Fee Letter and the Underwriting Fee Letter;
(h) duly executed and completed Security Agreements, dated as of
the Agreement Date, granting a first priority Lien (subject to the
Intercreditor Agreement) in all Collateral covered thereby, together with
related financing statements, stock powers, stock certificates evidencing
ownership of (i) 100% of the issued and outstanding Capital Stock of each
Domestic Subsidiary and (ii) 65% of the issued and outstanding Capital Stock of
each direct Foreign
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<PAGE> 47
Subsidiary, and insurance certificates listing Administrative Agent as loss
payee and additional insured and otherwise in a form required by the Collateral
Documents.
(i) simultaneously with the making of the initial Advance,
executed UCC-3 Termination Statements to be filed in appropriate jurisdictions
to terminate all Liens against assets of the Borrower and its Domestic
Subsidiaries (including Fieldcrest Cannon and its Subsidiaries) other than
Permitted Liens (or written agreements from each holder of such Liens to
promptly execute such Termination Statements);
(j) all Fieldcrest Cannon Transaction Documents, which shall be in
substance and form reasonably satisfactory to the Administrative Agent and
Special Counsel;
(k) Deeds of Trust executed by the Borrower and dated as of the
Agreement Date, together with surveys, environmental reports and title
insurance policies or commitments in form and substance reasonably satisfactory
to the Administrative Agent and Special Counsel;
(l) evidence satisfactory to the Administrative Agent that (i) the
Fieldcrest Cannon Transaction shall have been consummated (or shall be
consummated simultaneously with the initial Advance hereunder) on terms
reasonably satisfactory to the Administrative Agent and Special Counsel, (ii)
the Borrower shall have received at least (A) $135,000,000 in gross proceeds
from the sale of the 1997 Senior Subordinated Notes and the Bridge Notes, (B)
$62,750,000 in Net Cash Proceeds from the issuance of the Borrower Preferred
Stock, and, (iii) after giving effect to the Fieldcrest Cannon Transaction, the
Revolver Availability shall be at least equal to the sum of (A) $40,000,000
plus (B) an amount equal to 79.42% of all conversion consideration which may be
requested by the holders of the Fieldcrest Cannon Subordinated Debentures.
(m) a pro forma balance sheet of the Borrower and its Subsidiaries
taking into account the Fieldcrest Cannon Transaction and reflecting estimated
purchase price accounting and such other information relating to the Fieldcrest
Cannon Transaction as the Administrative Agent may reasonably require;
(n) after giving effect to the Fieldcrest Cannon Transaction,
there shall have occurred no material adverse change in the business, assets,
operations, prospects or condition (financial or otherwise) of the Borrower and
its Subsidiaries (including Fieldcrest Cannon and its Subsidiaries), taken as a
whole, since December 31, 1996;
(o) all Indebtedness of the Borrower under the Existing Credit
Agreement and all other Indebtedness by the Borrower, Fieldcrest Cannon and its
Subsidiaries not otherwise permitted pursuant to Section 7.1 hereof shall have
been (or shall be consummated simultaneously with the initial Advance
hereunder) refinanced or repaid in full and all obligations of the Borrower
under the Existing Credit Agreement or such other Indebtedness shall terminate;
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(p) all conditions precedent to the Amended and Restated Credit
Agreement shall have been (or shall be simultaneously with the initial Advance
hereunder) be satisfied;
(q) the duly executed and completed Intercreditor Agreement; and
(r) in form and substance reasonably satisfactory to the
Administrative Agent and Special Counsel, such other documents, instruments and
certificates as the Administrative Agent or any Lender may reasonably require
in connection with the transactions contemplated hereby.
Section 3.2 Conditions Precedent to All Advances. The obligation
of each Lender to make each Advance hereunder (including the initial Advance)
is subject to fulfillment of the following conditions immediately prior to or
contemporaneously with each such Advance:
(a) With respect to each Advance, all of the representations and
warranties of the Borrower under this Agreement, which, pursuant to Section 4.2
hereof, are made at and as of the time of each such Advance or issuance, shall
be true and correct, both before and after giving effect to the application of
the proceeds of the Advance, except as otherwise expressly provided in said
Section 4.2 hereof.
(b) The incumbency of the Authorized Signatories shall be as
stated in the certificate of incumbency delivered in the Borrower's loan
certificate pursuant to Section 3.1(a) or as subsequently modified and
reflected in a certificate of incumbency delivered to the Administrative Agent.
The Lenders may, without waiving this condition, consider it fulfilled and a
representation by the Borrower made to such effect if no written notice to the
contrary, dated on or before the date of such Advance, is received by the
Administrative Agent from the Borrower prior to the making of such Advance;
(c) There shall not exist a Default or Event of Default hereunder;
(d) The aggregate Advances, after giving effect to such proposed
Advance, shall not exceed the maximum principal amount then permitted to be
outstanding hereunder;
(e) No order, judgment, injunction or decree of any Tribunal shall
purport to enjoin or restrain any Lender from making any Advance;
(f) Except as set forth on Schedule 4 hereto, there shall be no
Litigation pending against, or, to the Borrower's knowledge, threatened against
the Borrower or any of its Subsidiaries, or in any other manner relating
directly and adversely to the Borrower or any of its Subsidiaries, or any of
their respective properties, in any court or before any arbitrator of any kind
or before or by any governmental body which could reasonably be expected to
have a Material Adverse Effect;
(g) As of the making of such Advances, the Borrower shall be
deemed to represent and warrant as of such date as follows:
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(i) such requested Advances are permitted "Indebtedness"
or "Debt" (as such terms are defined in the Indentures) or such other
similar term howsoever defined or designated therein;
(ii) upon the making of each requested Advance, no Event
of Default (as defined in the Indentures) shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such Advance; and
(iii) all Advances under this Agreement are "Senior
Indebtedness" (as defined in the Indentures) or such other similar
term howsoever defined or designated therein.
Section 3.3 Conditions Precedent to Conversions and
Continuations. The obligation of the Lenders to convert any existing Base Rate
Advance into a LIBOR Advance or to continue any existing LIBOR Advance is
subject to the condition precedent that on the date of such conversion or
continuation no Default or Event of Default shall have occurred and be
continuing or would result from the making of such conversion or continuation.
The acceptance of the benefits of each such conversion and continuation shall
constitute a representation and warranty by the Borrower to each of the Lenders
that no Default or Event of Default shall have occurred and be continuing or
would result from the making of such conversion or continuation.
ARTICLE 4
Representations and Warranties
Section 4.1 Representations and Warranties. The Borrower hereby
represents and warrants to each Lender as follows:
(a) Organization; Power; Qualification. As of the Agreement Date,
the respective jurisdiction of organization or incorporation of the Borrower
and its Subsidiaries and the percentage ownership by the Borrower and its
Subsidiaries of any Subsidiary listed on Schedule 5 are true and correct, after
giving effect to the Fieldcrest Cannon Transaction. As of the Agreement Date
and after giving effect to the Fieldcrest Cannon Transaction, Schedule 5 is a
complete and accurate listing, showing with respect to the Borrower and each
Subsidiary of the Borrower (a) its mailing address, which is its principal
place of business, (b) the classes of its Capital Stock and the number of
amount of its Capital Stock authorized and outstanding, (c) each record and
beneficial owner of outstanding Capital Stock of each Subsidiary, and (d) all
outstanding options, rights, rights of conversion, redemption, purchase or
repurchase, rights of first refusal and similar rights relating to such Capital
Stock. All of the outstanding Capital Stock of the Borrower and its
Subsidiaries is validly issued, fully paid and non-assessable. Each of the
Borrower and its Subsidiaries is a corporation or other legal Person duly
organized, validly existing and in good standing under the laws of its state of
incorporation or organization. Each of the Borrower and its Subsidiaries has
the legal power and authority to own its properties and to carry on its
business as now being and hereafter proposed to be conducted, except where
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the failure to have such power and authority could not reasonably be expected
to have a Material Adverse Effect. Each of the Borrower and its Subsidiaries
is authorized to do business, duly qualified and in good standing in the
jurisdiction as set forth in Schedule 8 and no qualification or authorization
is necessary in any other jurisdictions in which the character of its
properties or the nature of its business requires such qualification or
authorization, except where the failure to be so qualified or authorized could
not reasonably be expected to have a Material Adverse Effect.
(b) Authorization. The Borrower has legal power and has taken all
necessary legal action to authorize it to borrow hereunder. Each of the
Borrower and its Subsidiaries has legal power and has taken all necessary legal
action to execute, deliver and perform the Loan Documents to which it is party
in accordance with the terms thereof, and to consummate the transactions
contemplated thereby. Each Loan Document has been duly executed and delivered
by the Borrower or its Subsidiary executing it. Each of the Loan Documents to
which the Borrower or any of its Subsidiaries is a party is a legal, valid and
binding obligation of the Borrower or such Subsidiary, as applicable,
enforceable in accordance with its terms, subject, to enforcement of remedies,
to the following qualifications: (i) equitable principles generally, and (ii)
Debtor Relief Laws (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower or any such Subsidiary).
(c) Compliance with Other Loan Documents and Contemplated
Transactions. The execution, delivery and performance by the Borrower and its
Subsidiaries of the Loan Documents to which they are respectively a party, and
the consummation of the transactions contemplated thereby, do not and will not
(i) require any consent or approval necessary on or prior to the Agreement Date
not already obtained, except to the extent that the failure to obtain such
consent or approval could not reasonably be expected to have a Material Adverse
Effect, (ii) violate any Applicable Law, except to the extent that any
violation could not reasonably be expected to have a Material Adverse Effect,
(iii) conflict with, result in a breach of, or constitute a default under the
certificate of incorporation or by-laws or other applicable organizational
documents of the Borrower or any of its Subsidiaries, (iv) conflict with,
result in a breach of, or constitute a default under any Necessary
Authorization, indenture, agreement or other instrument, to which the Borrower
or any of its Subsidiaries is a party or by which they or their respective
properties may be bound, the effect of which could reasonably be expected to
have a Material Adverse Effect, or (v) result in or require the creation or
imposition of any Lien (other than Liens in favor of the Collateral Agent for
the benefit of (A) the Lenders to secure the Obligations hereunder and (B) the
lenders under the Amended and Restated Credit Agreement to secure the
Obligations (as defined in the Amended and Restated Credit Agreement)
thereunder) upon or with respect to any property now owned or hereafter
acquired by the Borrower or any of its Subsidiaries.
(d) Business. The Borrower and its Subsidiaries are engaged
primarily in the business of the manufacture, marketing, sale and distribution
of a wide variety of home textile and related products as well as businesses
and activities reasonably related thereto.
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<PAGE> 51
(e) Licenses, etc. All Necessary Authorizations have been duly
obtained, and are in full force and effect without any known conflict with the
rights of others and free from any unduly burdensome restrictions, except for
Necessary Authorizations, the failure of which to obtain or have in effect
could not in the aggregate reasonably be expected to result in a Material
Adverse Effect, and Necessary Authorizations that could be obtained by the
taking of ministerial action to secure the grant or transfer thereof. The
Borrower and its Subsidiaries are and will continue to be in compliance with
all provisions thereof, except to the extent that any such failure to comply
could not reasonably be expected to have a Material Adverse Effect. No
circumstance exists which could reasonably be expected to impair the utility of
the Necessary Authorization or the right to renew such Necessary Authorization
the effect of which could reasonably be expected to have a Material Adverse
Effect. No Necessary Authorization is the subject of any pending or, to the
best of the Borrower's knowledge, threatened challenge, suspension,
cancellation or revocation, the effect of which could reasonably be expected to
have a Material Adverse Effect.
(f) Compliance with Law. The Borrower and its Subsidiaries are in
compliance in all respects with all Applicable Laws, except where the failure
to so comply could not reasonably be expected to have a Material Adverse
Effect.
(g) Title to Properties. The Borrower and its Subsidiaries have
good title to, or a valid leasehold or subleasehold interest in, all of their
material assets, except for assets disposed of to the extent permitted pursuant
to Section 7.4 or 7.5 hereof. None of their assets are subject to any Liens,
except Permitted Liens. No financing statement or other Lien filing (except
relating to Permitted Liens and other Liens for which releases and UCC-3
Termination Statements have been obtained pursuant to Section 3.1(i) hereof) is
on file in any state or jurisdiction that names the Borrower or any of its
Subsidiaries as debtor or covers (or purports to cover) any assets of the
Borrower or any of its Subsidiaries, except for Indebtedness with respect to
which the requirements of Section 3.1(i) hereof have been satisfied. The
Borrower and its Subsidiaries have not signed any such financing statement or
filing, nor any security agreement authorizing any Person to file any such
financing statement or filing (except relating to Permitted Liens).
(h) Litigation. Except as reflected on Schedule 4 hereto, as of
the Agreement Date, there is no Litigation pending against, or, to the
Borrower's current actual knowledge, threatened against the Borrower or any of
its Subsidiaries, or in any other manner relating directly and adversely to the
Borrower or any of its Subsidiaries, or any of their respective properties, in
any court or before any arbitrator of any kind or before or by any governmental
body in which the amount claimed in an aggregate amount (excluding liabilities
for which credit worthy insurance companies have acknowledged coverage) exceeds
$1,000,000.
(i) Taxes. All federal, state and other tax returns of the
Borrower and its Subsidiaries required by law to be filed have been duly filed,
or extensions have been timely filed, except where the failure to so file could
not reasonably be expected to have a Material Adverse Effect or where the
obligation to so file is being diligently contested in good faith by
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<PAGE> 52
appropriate proceedings, and all Taxes shown to be due and payable on such
returns, have been paid, unless the same are being diligently contested in
accordance with Section 5.6 hereof. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of their Taxes are, in
the reasonable judgment of the Borrower, adequate.
(j) Financial Statements; Material Liabilities.
(i) The Borrower has heretofore delivered to Lenders the
audited consolidated balance sheets of the Borrower and its
Subsidiaries and Fieldcrest Cannon and its Subsidiaries as at December
31, 1996, and the related statements of earnings and changes in
shareholders' equity and statement of cash flows for the twelve- month
period then ended (the "Financial Statements"). The Financial
Statements were prepared in conformity with GAAP (other than as set
forth in the respective audit reports attached thereto) and fairly
present, in all material respects, the financial position of the
Borrower and its Subsidiaries and Fieldcrest Cannon and its
Subsidiaries, respectively, as at the date thereof and the combined
results of operations and cash flows for the period covered thereby.
(ii) The projected financial statements of the Borrower
and its Subsidiaries (including Fieldcrest Cannon and its
Subsidiaries), delivered to the Lenders prior to or on the Agreement
Date are based on good faith estimates and assumptions made by the
management of the Borrower and believed to be reasonable at the time
made, it being recognized by the Lenders that such projections as to
future events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections may
differ from the projected results.
(iii) The financial statements of the Borrower and its
Subsidiaries delivered to the Lenders pursuant to Section 6.1 and 6.2
hereof fairly present in all material respects their respective
financial condition and their respective results of operations as of
the dates and for the periods shown, all in accordance with GAAP,
subject to normal year-end adjustments. The latest of such financial
statements reflects all material liabilities, direct and contingent,
of the Borrower and each Subsidiary of the Borrower that are required
to be disclosed in accordance with GAAP.
(k) No Adverse Change. Since December 31, 1996 (after giving
effect to the Fieldcrest Cannon Transaction), no event or circumstance has
occurred or arisen which is reasonably likely to have a Material Adverse
Effect.
(l) ERISA. Each Plan of the Borrower and its Controlled Group
(other than any Multiemployer Plan) is in compliance in all material respects
with the applicable provisions of ERISA, the Code, and any other applicable
Law, except to the extent that failure to so comply would not reasonably be
expected to have a Material Adverse Effect. With respect to each Plan (other
than any Multiemployer Plan) of the Borrower and each member of its Controlled
Group, all reports required under ERISA or any other Applicable Law to be filed
with any Tribunal,
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<PAGE> 53
the failure of which to file could reasonably be expected to result in
liability of the Borrower or any member of its Controlled Group in excess of
$500,000, have been duly filed. All such reports are true and correct in all
material respects as of the date given. No Plan of the Borrower or any member
of its Controlled Group has been terminated under Section 4041(c) of ERISA nor
has any accumulated funding deficiency (as defined in Section 412(a) of the
Code) been incurred (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service been
received or requested the result of which could reasonably be expected to have
a Material Adverse Effect. None of the Borrower or any member of its
Controlled Group has failed to make any contribution or pay any amount due or
owing as required under the terms of any such Plan, or by Section 412 of the
Code or Section 302 of ERISA by the due date under Section 412 of the Code and
Section 302 of ERISA, the result of which could reasonably be expected to have
a Material Adverse Effect. There has been no ERISA Event or any event
requiring disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Plan or its related trust of the Borrower or any member of its
Controlled Group since the effective date of ERISA, the result of which could
reasonably be expected to have a Material Adverse Effect. The present value of
the benefit liabilities, as defined in Title IV of ERISA, of each Plan subject
to Title IV of ERISA (other than a Multiemployer Plan) of the Borrower and each
member of its Controlled Group does not exceed the present value of the assets
of each such Plan as of the most recent valuation date using each such Plan's
actuarial assumptions at such date by an amount which (i) could be reasonably
be expected to have a Material Adverse Effect or (ii) if capitalized as
Indebtedness on the Financial Statements of the Borrower, would result in an
Event of Default under Section 7.11 hereof. There are no pending, or to the
Borrower's knowledge threatened, claims, lawsuits or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against, and neither the Borrower nor any member of its Controlled Group has
knowledge of any threatened litigation or claims against, the assets of any
Plan or its related trust or against any fiduciary of a Plan with respect to
the operation of such Plan, the result of which could reasonably be expected to
have a Material Adverse Effect. None of the Borrower or, to the Borrower's
knowledge, any member of its Controlled Group has engaged in any prohibited
transactions, within the meaning of Section 406 of ERISA or Section 4975 of the
Code, in connection with any Plan the result of which could reasonably be
expected to have a Material Adverse Effect. None of the Borrower or any member
of its Controlled Group has withdrawn from any Multiemployer Plan, nor has
incurred or reasonably expects to incur (A) any liability under Title IV of
ERISA (other than premiums due under Section 4007 of ERISA to the PBGC), (B)
any withdrawal liability (and no event has occurred which with the giving of
notice under Section 4219 of ERISA would result in such liability) under
Section 4201 of ERISA as a result of a complete or partial withdrawal (within
the meaning of Section 4203 or 4205 of ERISA) from a Multiemployer Plan, or (C)
any liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA, the result of which could reasonably be expected
to have a Material Adverse Effect. None of the Borrower, any member of its
Controlled Group, or any organization to which the Borrower or any member of
its Controlled Group is a successor or parent corporation within the meaning of
ERISA Section 4069(b), has engaged in a transaction within the meaning of ERISA
Section 4069, the result of which could reasonably be expected to have a
Material Adverse Effect. Any Plan that is a welfare benefit
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<PAGE> 54
plan within the meaning of 3(1) of ERISA maintained or contributed by the
Borrower or any member of its Controlled Group and which provides for
continuing benefits or coverage for any participant or any beneficiary of any
participant after such participant's termination of employment may be
terminated by the Borrower or any member of its Controlled Group at any time
without liability other than liability that could not reasonably be expected to
have a Material Adverse Effect. Each of Borrower and its Controlled Group
which maintains a Plan which is a welfare benefit plan within the meaning of
Section 3(1) of ERISA has complied in all material respects with the provisions
of Parts 6 and 7 of subtitle B of Title I of ERISA, as amended, and the
regulations thereunder. None of the Borrower or any member of its Controlled
Group maintains or has established a multiemployer welfare benefit arrangement
within the meaning of Section 3(40)(A) of ERISA.
(m) Compliance with Regulations G, T, U and X. The Borrower is
not engaged principally or as one of its important activities in the business
of extending credit for the purpose of purchasing or carrying any margin stock
within the meaning of Regulations G, T, U and X of the Board of Governors of
the Federal Reserve System. No more than 25% of the assets of the Borrower and
its Subsidiaries are margin stock. None of the Borrower and its Subsidiaries
nor any agent acting on their behalf, have taken or will take any action which
might cause the Borrower, the Lenders, this Agreement or any other Loan
Document to violate any regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect. Neither the making of any Advances nor
the application of any proceeds thereof will violate, or be inconsistent with,
the provisions Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System.
(n) Required Consents. The Borrower and its Subsidiaries are not
required to obtain any material Necessary Authorization on or prior to the
Agreement Date that has not already been obtained from, or effect any material
filing or registration that has not already been effected with, any Tribunal in
connection with the execution and delivery of this Agreement or any other Loan
Document, or the performance thereof, in accordance with their respective
terms, including any borrowings hereunder, except (i) for the filing of
financing statements (and other similar notices) and other Collateral Documents
containing a description of the Collateral with certain Tribunals, including
the United States Patent and Trademark Office, (ii) where the failure to so
obtain such Necessary Authorization could not reasonably be expected to have a
Material Adverse Effect and (iii) where such Necessary Authorization could be
obtained by the taking of ministerial action to secure the grant or transfer
thereof.
(o) Absence of Default. The Borrower and its Subsidiaries are in
compliance in all material respects with all of the provisions of their
certificate of incorporation, by-laws and other organizational documents, and
no event has occurred or failed to occur, which has not been remedied or
waived, the occurrence or non-occurrence of which constitutes, or which with
the passage of time or giving of notice or both would constitute, (i) an Event
of Default or (ii) a default by the Borrower or any of its Subsidiaries under
any indenture, agreement or other instrument, or any judgment, decree or order
to which the Borrower or any of its Subsidiaries
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<PAGE> 55
or by which they or any of their respective properties is bound, the result of
which with respect to any default set forth in clause (ii) could reasonably be
expected to have a Material Adverse Effect.
(p) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended. Neither the entering into or
performance by the Borrower of this Agreement nor the issuance of the Notes
violates any provision of such act or requires any consent, approval, or
authorization of, or registration with, the Securities and Exchange Commission
or any other Tribunal pursuant to any provisions of such act.
(q) Environmental Matters. The Borrower does not have any
knowledge that any hazardous substance has been placed (i) on any real property
fee title to which is now owned by the Borrower or any of its Subsidiaries or
(ii) by Borrower or any of its Subsidiaries on any real property leased by the
Borrower or any of its Subsidiaries, in either case in a manner which does not
comply with Applicable Environmental Laws, except to the extent that the
failure to so comply could not reasonably be expected to have a Material
Adverse Effect. The Borrower and its Subsidiaries are not in violation of or
subject to any existing, pending or, to the best of the Borrower's knowledge,
threatened investigation or inquiry by any Tribunal or to any remedial
obligations under any Applicable Environmental Laws, the effect of which could
reasonably be expected to have a Material Adverse Effect. The Borrower and its
Subsidiaries have not failed to obtain any permits, licenses or similar
authorizations required to be obtained by reason of any Applicable
Environmental laws with respect to any real property owned or leased by the
Borrower or any of its Subsidiaries, except to the extent that the failure to
so obtain could not reasonably be expected to have a Material Adverse Effect.
The Borrower has no current actual knowledge that any hazardous substances have
been disposed of or otherwise released (i) on or to the real property fee title
to which is owned by the Borrower or any of its Subsidiaries or (ii) by
Borrower or any of its Subsidiaries on or to any real property leased by
Borrower or any of its Subsidiaries, all within the meaning of the Applicable
Environmental Laws, the effect of which could reasonably be expected to have a
Material Adverse Effect.
(r) Certain Fees. Except for fees and expenses incurred in
connection with the Fieldcrest Cannon Transaction, no broker's, finder's or
other fee or commission will be payable by the Borrower (other than under the
Underwriting Fee Letter and as set forth in Section 2.4 hereof) with respect to
the making of the Commitment or the Advances hereunder.
(s) Intellectual Property. The Borrower and its Subsidiaries have
collectively obtained or applied for or licensed or otherwise obtained the
right to use all patents, trademarks, service marks, trade names, copyrights,
and other rights, free from Liens (except Permitted Liens), that are necessary
for the operation of their business as presently conducted and as proposed to
be conducted, except to the extent that the failure to so obtain, apply,
license or
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<PAGE> 56
obtain the right to use could not reasonably be expected to have a Material
Adverse Effect. Nothing has come to the current actual knowledge of the
Borrower or any of its Subsidiaries to the effect that (i) any process, method,
part or other material presently contemplated to be employed by the Borrower or
any of its Subsidiaries infringes any valid and enforceable patent, trademark,
service mark, trade name, copyright, license or other right owned by any other
Person, or (ii) there is pending or overtly threatened any claim or litigation
against or affecting the Borrower or any of its Subsidiaries contesting its
right to sell or use any such process, method, part or other material, which
could reasonably be expected to have a Material Adverse Effect.
(t) Disclosure. All information, reports, financial statements,
exhibits and schedules furnished in writing by the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender in connection with this
Agreement or the other Loan Documents is, and all other such written
information hereafter furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Administrative Agent or any Lender will be, true and
accurate in all material respects (or, in the case of projections based on
reasonable estimates and assumptions) on the date as of which such information
is dated or certified and not incomplete by omitting to state any material fact
necessary to make such information not misleading at such time in light of the
circumstances under which such information was provided. There is no fact
known to the Borrower and not known to the public generally that could
reasonably be expected to have a Material Adverse Effect, which has not been
set forth in this Agreement or in the documents, certificates and statements
furnished to the Lenders by or on behalf of the Borrower hereof in connection
with the transactions contemplated hereby or thereby.
(u) Solvency. The Borrower is, and Borrower and its Subsidiaries
on a consolidated basis are, Solvent.
(v) Labor Relations. Except as provided on Schedule 9, neither
the Borrower nor any of its Subsidiaries is a party to a collective bargaining
agreement or similar agreement, and the Borrower and each Subsidiary is in
compliance in all material respects with all Laws respecting employment and
employment practices, terms and conditions of employment, wages and hours and
other laws related to the employment of its employees, except where the failure
to comply could not reasonably be expected to result in a Material Adverse
Effect, and there are no arrears in the payment of wages, withholding or social
security taxes, unemployment insurance premiums or other similar obligations of
the Borrower or any of its Subsidiaries or for which the Borrower or any such
Subsidiary may be responsible other than in the ordinary course of business,
except for such unpaid or unwithheld arrears which could not reasonably be
expected to result in a Material Adverse Effect. There is no strike, work
stoppage or labor dispute with any union or group of employees pending or
overtly threatened involving Borrower or any of its Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(w) Common Enterprise. The Borrower and its Subsidiaries are
engaged in the businesses set forth in Section 4.1(d) hereof. These operations
require financing on a basis such that the credit supplied can be made
available from time to time to the Borrower and various of
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its Subsidiaries, as required for the continued successful operation of the
Borrower and its Subsidiaries as a whole. The Borrower and its Subsidiaries
expect to derive benefit (and the boards of directors of the Borrower and its
Subsidiaries have determined that the Borrower and its Subsidiaries may
reasonably be expected to derive benefit), directly or indirectly, from the
credit extended by the Lenders hereunder, both in their separate capacities and
as members of the group of companies, since the successful operation and
condition of the Borrower and its Subsidiaries is dependent on the continued
successful performance of the functions of the group as a whole.
Section 4.2 Survival of Representations and Warranties, etc. All
representations and warranties made under this Agreement and the other Loan
Documents shall be deemed to be made at and as of the Agreement Date and at and
as of the date of each Advance, and each shall be true and correct in all
material respects when made, except to the extent (a) previously fulfilled in
accordance with the terms hereof, (b) previously waived in writing by the
Determining Lenders with respect to any particular factual circumstance or
permitted by the terms of this Agreement or (c) such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material
respects on and as of such date. All such representations and warranties shall
survive, and not be waived by, the execution hereof by any Lender, any
investigation or inquiry by any Lender, or by the making of any Advance under
this Agreement.
ARTICLE 5
General Covenants
Prior to the Release Date:
Section 5.1 Preservation of Existence and Similar Matters. The
Borrower shall, and shall cause each of its Subsidiaries to:
(a) except as otherwise permitted pursuant to Section 7.4 hereof,
preserve and maintain, or timely obtain and thereafter preserve and maintain,
its existence, rights, franchises, licenses, authorizations, consents,
privileges and all other Necessary Authorizations from any Tribunal, the loss
of which could reasonably be expected to have a Material Adverse Effect; and
(b) except as otherwise permitted pursuant to Section 7.4 hereof,
qualify and remain qualified and authorized to do business in each jurisdiction
in which the character of its properties or the nature of its business requires
such qualification or authorization, unless the failure to do so could not
reasonably be expected to have a Material Adverse Effect.
Section 5.2 Business; Compliance with Applicable Law. The
Borrower and its Subsidiaries shall (a) engage primarily in the businesses set
forth in Section 4.1(d) hereof, and
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(b) comply in all respects with the requirements of all Applicable Law, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
Section 5.3 Maintenance of Properties. Subject to Sections 7.4
and 7.5 hereof, the Borrower shall, and shall cause each of its Subsidiaries
to, maintain or cause to be maintained all its properties (whether owned or
held under lease) in adequate operating condition and repair for purposes of
their current use with due regard to the age thereof, taken as a whole, subject
to ordinary wear and tear, and from time to time make or cause to be made all
appropriate (in the reasonable judgment of the Borrower) repairs, renewals,
replacements, additions, betterments and improvements thereto in accordance
with past practice, except where the failure to so maintain, repair, renew,
replace or improve could not reasonably be expected to have a Material Adverse
Effect.
Section 5.4 Accounting Methods and Financial Records. The
Borrower shall, and shall cause each of its Subsidiaries to, maintain a system
of accounting established and administered in accordance with GAAP, keep
adequate records and books of account in which complete entries will be made
and all transactions reflected in accordance with GAAP, and keep accurate and
complete records of its respective assets.
Section 5.5 Insurance. The Borrower shall, and shall cause each
of its Subsidiaries to, maintain insurance from responsible companies in such
amounts and against such risks as shall be customary and usual in the industry
for companies of similar size and capability. Each insurance policy shall (a)
provide for at least 30 days' prior notice to the Administrative Agent of any
proposed termination or cancellation of such policy, whether on account of
default or otherwise and (b) otherwise contain the requirements for insurance
set forth in the Collateral Documents.
Section 5.6 Payment of Taxes and Claims. The Borrower shall, and
shall cause each of its Subsidiaries to, pay and discharge all material taxes
to which they are subject prior to the date on which penalties attach thereto,
and all lawful material claims for labor, materials and supplies which, if
unpaid, might by Law become a Lien upon any of its properties; except that no
such tax or claim need be paid which is being diligently contested in good
faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the appropriate books, but only so long as any Lien related
thereto is a Permitted Lien. The Borrower shall, and shall cause each of its
Subsidiaries to, timely file all information returns (or extensions of such
filing deadlines) required by federal, state or local tax authorities, except
where the failure to so file could not reasonably be expected to have a
Material Adverse Effect or where the obligation to so file is being diligently
contested in good faith by appropriate proceedings.
Section 5.7 Visits and Inspections. The Borrower shall, and
shall cause each of its Subsidiaries to, promptly permit representatives of the
Administrative Agent or any Lender from time to time after reasonable notice by
the Administrative Agent or any Lender to (a) visit and inspect the properties
of the Borrower and its Subsidiaries as often as the Administrative Agent
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or any Lender shall reasonably deem advisable, (b) review, inspect and make
extracts from and copies of the Borrower's and each such Subsidiary's books and
records, and (c) discuss with the Borrower's and each such Subsidiary's
directors, officers, employees and auditors its business, assets, liabilities,
financial positions, results of operations and business prospects, provided
that such representatives of the Administrative Agent or any Lender shall keep
confidential all information obtained pursuant to this Section 5.7 to the
extent required by Section 11.13. The Borrower shall pay the reasonable
out-of-pocket expenses related to inspections and reviews performed (a) at any
time by the Administrative Agent, and (b) after the occurrence and during the
continuance of an Event of Default, by each Lender. Except after the
occurrence and during the continuance of an Event of Default, all such visits
and inspections shall be conducted during normal business hours. Following the
occurrence and during the continuance of an Event of Default, such visits and
inspections shall be conducted at any time requested by the Administrative
Agent or any Lender without any requirement for reasonable notice.
Section 5.8 Use of Proceeds. The proceeds of the Advances shall
be used by the Borrower to (a) to consummate the Fieldcrest Cannon Transaction
and pay certain outstanding Indebtedness of the Borrower and Fieldcrest Cannon,
(b) pay certain fees and expenses related to the Fieldcrest Cannon Transaction
and this Agreement, and (c) finance the ongoing working capital and general
corporate requirements of the Borrower and its Subsidiaries.
SECTION 5.9 INDEMNITY.
(a) THE BORROWER AGREES TO DEFEND, PROTECT, INDEMNIFY AND HOLD
HARMLESS THE ADMINISTRATIVE AGENT, EACH LENDER, EACH OF THEIR RESPECTIVE
AFFILIATES, AND EACH OF THEIR RESPECTIVE (INCLUDING SUCH AFFILIATES') OFFICERS,
DIRECTORS, EMPLOYEES, TRUSTEES, AGENTS, ATTORNEYS AND CONSULTANTS (INCLUDING,
WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE SATISFACTION OR
ATTEMPTED SATISFACTION OF ANY OF THE CONDITIONS SET FORTH HEREIN) OF EACH OF
THE FOREGOING (COLLECTIVELY, "INDEMNITEES") FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, CLAIMS, REASONABLE COSTS, REASONABLE OUT-OF-POCKET EXPENSES AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR SUCH
INDEMNITEES IN CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT SUCH INDEMNITEES SHALL BE DESIGNATED A PARTY
THERETO), IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST SUCH INDEMNITEES
(WHETHER DIRECT, INDIRECT OR CONSEQUENTIAL, WHETHER BASED ON ANY FEDERAL,
STATE, OR LOCAL LAWS AND REGULATIONS, UNDER COMMON LAW OR AT EQUITY, OR ON
CONTRACT, TORT OR OTHERWISE, AND WHETHER ARISING FROM OR CONNECTED WITH THE
PAST, PRESENT OR FUTURE OPERATIONS OF THE BORROWER OR ANY SUBSIDIARY OF THE
BORROWER OR THEIR RESPECTIVE
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PREDECESSORS IN INTEREST, OR THE PAST, PRESENT OR FUTURE ENVIRONMENTAL
CONDITION OF PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF THE BORROWER),
RELATING TO OR ARISING OUT OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY
ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR TRANSACTION RELATING
THERETO, INCLUDING IN CONNECTION WITH, OR AS A RESULT, IN WHOLE OR IN PART, OF
ANY ORDINARY OR MERE NEGLIGENCE OF ADMINISTRATIVE AGENT OR ANY LENDER (OTHER
THAN THOSE MATTERS RAISED EXCLUSIVELY BY A PARTICIPANT AGAINST THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, OR ANY LENDER AND NOT THE
BORROWER), OR THE USE OR INTENDED USE OF THE PROCEEDS OF THE ADVANCES
HEREUNDER, OR IN CONNECTION WITH ANY INVESTIGATION OF ANY POTENTIAL MATTER
COVERED HEREBY, BUT EXCLUDING (I) ANY CLAIM OR LIABILITY THAT ARISES AS THE
RESULT OF THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF ANY INDEMNITEE, AS
FINALLY JUDICIALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION, (II) ANY
CLAIM OR LIABILITY THAT ARISES AS THE DIRECT RESULT OF THE OPERATION OF THE
PROPERTY OF THE BORROWER OR ANY SUBSIDIARY OF THE BORROWER BY THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT OR ANY OF THE LENDERS AFTER TAKING
POSSESSION THEREOF BY FORECLOSURE OR BY TRANSFER IN LIEU OF FORECLOSURE
(PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT RELATE TO ANY CONDITION
EXISTING ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF
FORECLOSURE), AND (III) MATTERS RAISED BY ONE LENDER AGAINST ANOTHER LENDER OR
BY ANY SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT
(COLLECTIVELY, EXCEPT FOR THE MATTERS REFERRED TO CLAUSES (I), (II) OR (III)
ABOVE, "INDEMNIFIED MATTERS", AND THE MATTERS REFERRED TO IN CLAUSES (I), (II)
OR (III) ABOVE, COLLECTIVELY, "EXCLUDED MATTERS"). TO THE EXTENT THAT ANY
INDEMNIFIED MATTER INVOLVES ONE OR MORE INDEMNITEES, SUCH INDEMNITEES SHALL USE
THE SAME LEGAL COUNSEL UNLESS ANY INDEMNITEE IN ITS REASONABLE DISCRETION
DETERMINES THAT CONFLICTS EXIST OR MAY ARISE IN CONNECTION WITH SUCH
REPRESENTATION.
(b) WITHOUT DUPLICATION, THE BORROWER SHALL PERIODICALLY, UPON
REQUEST, REIMBURSE EACH INDEMNITEE FOR ITS REASONABLE OUT-OF-POCKET LEGAL AND
OTHER ACTUAL REASONABLE EXPENSES (INCLUDING THE REASONABLE COST OF ANY
INVESTIGATION AND PREPARATION) INCURRED IN CONNECTION WITH ANY INDEMNIFIED
MATTER; PROVIDED THAT SUCH INDEMNITEE SHALL PROVIDE ADEQUATE DOCUMENTATION OF
SUCH EXPENSES; PROVIDED, FURTHER, THAT IF AN INDEMNITEE IS REIMBURSED HEREUNDER
FOR SUCH AMOUNT, THE AMOUNT SO PAID SHALL BE REFUNDED TO THE BORROWER IF AND TO
THE EXTENT IT IS FINALLY JUDICIALLY DETERMINED THAT THE INDEMNIFIED MATTER IN
QUESTION
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WAS AN EXCLUDED MATTER. THE REIMBURSEMENT AND INDEMNITY OBLIGATIONS UNDER THIS
SECTION 5.9 SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE BORROWER MAY
OTHERWISE HAVE, SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO EACH
INDEMNITEE, AND SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF ANY
SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL REPRESENTATIVES OF THE BORROWER, THE
ADMINISTRATIVE AGENT, THE LENDERS AND ALL OTHER INDEMNITEES. THIS SECTION
SHALL SURVIVE ANY TERMINATION OF THIS AGREEMENT AND PAYMENT OF THE OBLIGATIONS
AND SHALL CONTINUE WITH RESPECT TO ANY LENDER THAT MAY ASSIGN ALL OF ITS RIGHTS
AND OBLIGATIONS UNDER THE LOAN DOCUMENTS.
Section 5.10 Environmental Law Compliance. The use which the
Borrower or any of its Subsidiaries make of any real property which is owned or
leased by it will not result in the disposal or other release of any hazardous
substance or solid waste on or to such real property which is in violation of
Applicable Environmental Laws, the effect of which could reasonably be expected
to have a Material Adverse Effect. As used herein, the terms "hazardous
substance" and "release" as used in this Section shall have the meanings
specified in CERCLA (as defined in the definition of Applicable Environmental
Laws), and the terms "solid waste" and "disposal" shall have the meanings
specified in RCRA (as defined in the definition of Applicable Environmental
Laws); provided, however, that if CERCLA or RCRA is amended so as to broaden or
lessen the meaning of any term defined thereby, such broader or lesser meaning
shall apply subsequent to the effective date of such amendment; and provided
further, to the extent that any other law applicable to the Borrower, any
Subsidiary or any of their properties establishes a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is broader or lesser
than that specified in either CERCLA or RCRA, such broader or lesser meaning
shall apply.
Section 5.11 Further Assurances. At any time or from time to time
upon reasonable request by the Administrative Agent, the Borrower or any of its
Subsidiaries shall execute and deliver such further documents and do such other
acts and things as the Administrative Agent may reasonably request in order to
effect fully the purposes of this Agreement and the other Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement and the other Loan Documents. Without limiting the generality of the
foregoing, the Borrower agrees to (a) update and deliver to the Administrative
Agent Schedule 5 hereto (with respect to the identities, jurisdictions of
organization and ownership of the Borrower's Subsidiaries) at the time of
delivery of the financial statements set forth in Sections 6.1 and 6.2 hereof
if the information provided therein is not complete and correct, (b) update and
deliver to the Collateral Agent Schedule 2 to the Security Agreements promptly
upon discovery if the information provided therein is not complete and correct,
and (c) execute and deliver to the Collateral Agent deeds of trust or
mortgages, as appropriate, in substantially the form of Exhibit I-1 and I-2
hereto with respect to any real property hereafter acquired by the Borrower or
any Subsidiary, as applicable, together with surveys and environmental reports
in form reasonably satisfactory to the Administrative Agent and title insurance
thereon in form and
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amount reasonably satisfactory to the Administrative Agent, and such board
resolutions, officer's certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request with respect
thereto; provided this Section 5.11(c) shall not apply to any leasehold
interests unless requested by the Determining Lenders or any leasehold interest
for sales or office space only. The Borrower shall use its reasonable best
efforts to obtain Landlord's Agreements and Landlord's Waivers with respect to
such real property of the Borrower and its Domestic Subsidiaries as the
Administrative Agent shall reasonably require.
Section 5.12 Subsidiaries. At any time that any Person becomes a
Domestic Subsidiary, (a) such Subsidiary shall execute a Subsidiary Guaranty of
the Obligations and Collateral Documents granting a first priority Lien
(subject to the Intercreditor Agreement) in all unencumbered assets of such
Subsidiary required by the Determining Lenders to be pledged, except, to the
extent applicable, for Permitted Liens, to secure the Obligations, (b) 100% of
such Subsidiary's Capital Stock shall be pledged to secure the Obligations and
(c) the Lenders shall receive such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request in connection with the actions described in
clauses (a) and (b) above. At any time that any Person becomes a direct
Foreign Subsidiary, (a) 65% of such Subsidiary's Capital Stock shall be pledged
to secure the Obligations and (b) the Lenders shall receive such board
resolutions, officers' certificates, corporate and other documents and opinions
of counsel as the Administrative Agent shall reasonably request in connection
with the action described in the immediately preceding clause (a) above. All
Foreign Subsidiaries shall be direct Subsidiaries of the Borrower or of a
Domestic Subsidiary.
ARTICLE 6
Information Covenants
Prior to the Release Date, the Borrower shall furnish or cause to be
furnished to each Lender:
Section 6.1 Quarterly Financial Statements and Information.
Within 45 after the end of each Fiscal Quarter of each Fiscal Year (other than
the end of a Fiscal Quarter which coincides with the end of a Fiscal Year), the
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such fiscal quarter and the related consolidated statements of earnings for
such fiscal quarter and for the elapsed portion of the year ended with the last
day of such fiscal quarter, and consolidated statements of cash flow for the
elapsed portion of the year ended with the last day of such fiscal quarter, all
of which shall be certified by a Responsible Officer, to, in his or her opinion
acting solely in his or her capacity as an officer of the Borrower, present
fairly in all material respects, in accordance with GAAP (except for the
absence of footnotes), the financial position and results of operations of the
Borrower and its Subsidiaries as at the end of and for such fiscal quarter, and
for the elapsed portion of the year ended with the last day of such fiscal
quarter, subject only to normal year-end adjustments.
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Section 6.2 Annual Financial Statements and Information;
Certificate of No Default.
(a) Within 120 days after the end of each Fiscal Year, a copy of
(i) the consolidated balance sheets of the Borrower and its Subsidiaries, as of
the end of the current and prior Fiscal Years and (ii) the consolidated
statements of earnings and consolidated statements of changes in shareholders'
equity and consolidated statements of cash flow as of and through the end of
such Fiscal Year, all of which are prepared in accordance with GAAP, and
certified by independent certified public accountants reasonably acceptable to
the Administrative Agent (provided, however, any big six public accounting firm
shall be acceptable to the Administrative Agent), whose opinion shall be in
scope and substance in accordance with generally accepted auditing standards
and shall be unqualified as to scope of audit and going concern.
(b) Simultaneously with the delivery of the statements required by
this Section 6.2, a letter from the Borrower's public accountants stating to
the effect that during their audit of such financial statements nothing has
come to their attention that would result in a Default or Event of Default
under this Agreement, recognizing, however, that the scope and purpose of their
audit was not to determine compliance with the terms of this Agreement or
whether a Default or Event of Default has otherwise occurred.
Section 6.3 Compliance Certificate. At the time financial
statements are furnished pursuant to Sections 6.1 and 6.2 hereof, the
Compliance Certificate, completed as provided therein.
Section 6.4 Copies of Other Reports and Notices.
(a) Promptly upon their becoming available, copies of (i) all
material final reports or letters submitted to the Borrower or any of its
Subsidiaries by accountants in connection with any annual, interim or special
audit, including without limitation any final report prepared in connection
with the annual audit referred to in Section 6.2 hereof, and any other comment
letter submitted to management in connection with any such audit, (ii) each
regular, periodic or other report and any registration statement (other than
statements on Form S-8) or prospectus (or material written communication in
respect of any thereof) filed by the Borrower or any of its Subsidiaries with
any securities exchange, with the Securities and Exchange Commission or any
successor agency, and (iii) all press releases concerning material financial
aspects of the Borrower or any of its Subsidiaries;
(b) Promptly upon the Borrower becoming aware that (i) the
holder(s) of any note(s) or other evidence of indebtedness or other security of
the Borrower or any of its Subsidiaries in excess of $1,000,000 in the
aggregate has given notice or taken any action with respect to a breach,
failure to perform, claimed default or event of default thereunder or (ii) any
event, circumstance or condition which could reasonably be expected to be
classified as a Material Adverse Effect, a written notice specifying the
details thereof (or the nature of any claimed default or event of default) and
what action is being taken or is proposed to be taken with respect thereto;
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(c) Promptly upon the Borrower becoming aware that any party to
any Capitalized Lease Obligations in excess of $1,000,000 or Operating Lease in
which the annual rentals thereunder exceed $150,000 has given notice or taken
any action with respect to a breach, failure to perform, claimed default or
event of default thereunder, a written notice specifying the details thereof
(or the nature of any claimed default or event of default) and what action is
being taken or is proposed to be taken with respect thereto;
(d) Promptly upon receipt by the Borrower thereof, information
with respect to and copies of any notices received from any Tribunal relating
to any order, ruling, law, information or policy that relates to a breach of or
noncompliance with any Law, and could reasonably be expected to result in the
payment of money by the Borrower or any of its Subsidiaries of the Borrower in
an amount of $1,000,000 or more in the aggregate or otherwise have a Material
Adverse Effect, or result in the loss or suspension of any Necessary
Authorization where such loss could reasonably be expected to have a Material
Adverse Effect; and
(e) From time to time and promptly upon each request, such
material data, certificates, reports, statements, documents or further
information regarding the assets, business, liabilities, financial position,
projections, results of operations or business prospects of the Borrower and
its Subsidiaries, as the Administrative Agent or any Lender may reasonably
request.
Section 6.5 Notice of Litigation, Default and Other Matters.
Prompt notice of the following events after the Borrower has knowledge or
notice thereof:
(a) The commencement of all Litigation and investigations by or
before any Tribunal, and all actions and proceedings in any court or before any
arbitrator involving claims for damages (including punitive damages) in excess
of $1,000,000 (after deducting the amount with respect to which creditworthy
insurance companies have acknowledged coverage), against or in any other way
relating directly to the Borrower, any of its Subsidiaries or any of their
respective properties or businesses; and
(b) Promptly upon the happening of any condition or event of which
the Borrower has current actual knowledge which constitutes a Default, a
written notice specifying the nature and period of existence thereof and what
action is being taken or is proposed to be taken with respect thereto.
Section 6.6 ERISA Reporting Requirements.
(a) Promptly and in any event (i) within 30 days after the
Borrower has current actual knowledge that any ERISA Event described in clause
(a) of the definition of ERISA Event or any event described in Section 4063(a)
of ERISA with respect to any Plan of the Borrower or any member of its
Controlled Group has occurred, and (ii) within 10 Business Days after the
Borrower or any member of its Controlled Group has current actual knowledge
that any other ERISA Event with respect to any Plan of the Borrower or any
member of its Controlled Group
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has occurred or a request for a minimum funding waiver under Section 412 of the
Code has been made with respect to any Plan of the Borrower or any member of
its Controlled Group, a written notice describing such event and describing
what action is being taken or is proposed to be taken with respect thereto,
together with a copy of any notice of such event that is given to the PBGC;
(b) Promptly and in any event within ten Business Days after
receipt thereof by the Borrower, copies of each notice received by the Borrower
or any member of its Controlled Group from the PBGC of the PBGC's intention to
terminate any Plan or to have a trustee appointed to administer any Plan;
(c) Promptly and in any event within 30 days after the filing
thereof by the Borrower or any member of its Controlled Group with the United
States Department of Labor or the Internal Revenue Service, copies of each
annual report (including Schedule B thereto, if applicable) with respect to
each Plan subject to Title IV of ERISA of which Borrower or any member of its
Controlled Group is the "plan sponsor";
(d) Promptly, and in any event within 10 Business Days after
receipt thereof by the Borrower, a copy of any correspondence the Borrower or
any member of its Controlled Group receives from the Plan Sponsor (as defined
by Section 4001(a)(10) of ERISA) of any Plan concerning potential withdrawal
liability pursuant to Section 4219 or 4202 of ERISA, and a statement from the
chief financial officer of the Borrower or such member of its Controlled Group
setting forth details as to the events giving rise to such potential withdrawal
liability and the action which the Borrower or such member of its Controlled
Group is taking or proposes to take with respect thereto;
(e) Notification within 30 days of any material increases in the
benefits provided under any existing Plan which is not a Multiemployer Plan, or
the establishment of any new Plans, or the commencement of contributions to any
Plan to which the Borrower or any member of its Controlled Group was not
previously contributing, which could reasonably be expected in any such case to
result in an additional material liability to the Borrower;
(f) Notification within five Business Days after the Borrower
knows that the Borrower or any such member of its Controlled Group has filed or
intends to file a notice of intent to terminate any Plan under a distress
termination within the meaning of Section 4041(c) of ERISA and a copy of such
notice; and
(g) Within five Business Days after receipt by the Borrower of
written notice of commencement thereof, notice of all actions, suits and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting the Borrower
or any member of its Controlled Group with respect to any Plan, except those
which, in the aggregate, if adversely determined could not reasonably be
expected to have a Material Adverse Effect.
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ARTICLE 7
Negative Covenants
Prior to the Release Date:
Section 7.1 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, create, assume, incur or otherwise
become or remain obligated in respect of, or permit to be outstanding, or
suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Accounts payable and accrued liabilities incurred in the
ordinary course of business;
(c) Indebtedness of the Borrower and its Domestic Subsidiaries,
including in respect of Capitalized Lease Obligations, incurred to purchase, or
to finance the purchase of, assets which constitute property, plant and
equipment, not to exceed, together with Indebtedness permitted pursuant to
clause (o) of this Section 7.1, $35,000,000 in aggregate principal amount
outstanding;
(d) Institutional Debt of the Borrower; provided that (i) the Net
Cash Proceeds of such Institutional Debt are applied in accordance with Section
2.5(e) hereof to the extent required therein and (ii) the scheduled principal
payments of all Indebtedness of the Borrower and its Subsidiaries immediately
after the issuance thereof is not greater in amount during any year in which
the Obligations are scheduled to be outstanding or earlier in amortization than
immediately preceding the issuance thereof.
(e) Hedging obligations under Hedge Agreements entered into with
any Person that is a Lender or an Affiliate of a Lender at the time of entering
into such Hedge Agreement;
(f) Indebtedness existing on the Agreement Date which is described
on Schedule 7 hereto, including renewals, replacements and refinancings (but no
increases) thereof;
(g) Indebtedness in respect of endorsement of negotiable
instruments in the ordinary course of business;
(h) Indebtedness assumed in connection with Acquisitions permitted
under Section 7.6 (excluding the Fieldcrest Cannon Transaction) not to exceed
$20,000,000 in aggregate principal amount outstanding;
(i) Indebtedness owing to the Borrower or any of its Subsidiaries
by the Borrower or any of its Subsidiaries, which Indebtedness is subordinated
to the Obligations and evidenced by an entry on the financial records of the
Borrower and any such Subsidiary;
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(j) Guaranties by Subsidiaries of the Borrower of Indebtedness of
the Borrower or other Subsidiaries of the Borrower and Guaranties by the
Borrower of Indebtedness of Subsidiaries of the Borrower, in each case to the
extent such underlying Indebtedness is permitted hereunder;
(k) Indebtedness in respect of the 1997 Senior Subordinated Notes;
(l) Indebtedness in respect of the Amended and Restated Credit
Agreement;
(m) Indebtedness consisting of performance bonds, surety or appeal
bonds provided by the Borrower or any of its Subsidiaries in the ordinary
course of business and which do not secure other Indebtedness;
(n) Indebtedness in respect of the Borrower Preferred Stock; and
(o) Other Indebtedness of the Borrower and its Domestic
Subsidiaries not to exceed, together with Indebtedness permitted pursuant to
clause (c) of this Section 7.1, $35,000,000 in aggregate principal amount
outstanding;
provided, however, that no Indebtedness otherwise permitted pursuant to clauses
(c), (d), (h), (j) and (o) above may be incurred if, immediately before or
after giving effect to the incurrence thereof, any Event of Default shall have
occurred and be continuing.
Section 7.2 Liens. The Borrower shall not, and shall not permit
any Subsidiary of Borrower to, create, assume, incur, permit or suffer to
exist, directly or indirectly, any Lien on any of its assets, whether now owned
or hereafter acquired, except Permitted Liens. The Borrower shall not, and
shall not permit any Subsidiary to, agree with any other Person that it shall
not create, assume, incur, permit or suffer to exist or to be created, assumed,
incurred or permitted to exist, directly or indirectly, any Lien on any of its
assets other than in respect of Indebtedness permitted by Sections 7.1(c) and
(h) hereof, provided that such agreement relates only to the assets purchased
or acquired.
Section 7.3 Investments. The Borrower shall not, and shall not
permit any Subsidiary of Borrower to, make any Investment, except that the
Borrower and any Subsidiary of the Borrower may purchase or otherwise acquire
and own:
(a) Cash and Cash Equivalents;
(b) Accounts receivable that arise in the ordinary course of
business and are payable in a manner consistent with past practice;
(c) Investments in existence on the Agreement Date which are
described on Schedule 6 hereto;
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(d) Investments which are Acquisitions permitted pursuant to
Section 7.6 hereof;
(e) Investments in the form of Hedge Agreements permitted by
Section 7.1(e) hereof;
(f) Investments in (i) Domestic Subsidiaries of the Borrower (A)
which have executed a Subsidiary Guaranty and Collateral Documents granting a
first priority Lien in all unencumbered assets of such Subsidiary required by
the Determining Lenders to be pledged, to secure the Obligations, (B) 100% of
whose Capital Stock shall be pledged to secure the Obligations and (C) which
have delivered to the Lenders such board resolutions, officer's certificates,
corporate and other documents and opinions of counsel as the Administrative
Agent shall reasonably request, (ii) Foreign Subsidiaries of the Borrower 65%
of whose Capital Stock shall be pledged to secure the Obligations and (iii) the
Borrower;
(g) Investments consisting of non-cash consideration received in
connection with a sale of assets permitted by Section 7.5 hereof not to exceed
$25,000,000 in aggregate amount outstanding at any time;
(h) Investments arising from transactions by the Borrower or any
of its Subsidiaries with customers or suppliers in the ordinary course of
business, including endorsements of negotiable instruments, debt obligations
and other investments received in connection with the bankruptcy or
reorganization of customers and suppliers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers;
(i) Loans or advances to directors, officers and employees of the
Borrower or any of its Subsidiaries that do not exceed $5,000,000 in aggregate
amount outstanding at any time; and
(j) Other Investments not to exceed $25,000,000 in aggregate
amount outstanding at any time;
provided, however, that no Investment otherwise permitted by clauses (d), (g),
(i), and (j) above shall be permitted to be made if, immediately before or
after giving effect thereto, any Event of Default shall have occurred and be
continuing.
Section 7.4 Liquidation, Merger. The Borrower shall not, and
shall not permit any Subsidiary of Borrower to, at any time:
(a) liquidate or dissolve itself (or suffer any liquidation or
dissolution) or otherwise wind up, except that (i) a Subsidiary of the Borrower
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower
which is an Obligor, (ii) a Subsidiary of the Borrower which is not an Obligor
may liquidate or dissolve into the Borrower or a Subsidiary of the Borrower,
and (iii) a Subsidiary of the Borrower may dissolve if substantially all of its
assets have been conveyed pursuant to Section 7.5(e) hereof; or
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<PAGE> 69
(b) enter into any merger or consolidation unless (i) with respect
to a merger or consolidation involving the Borrower, the Borrower shall be the
surviving corporation, (ii) with respect to a merger or consolidation involving
a Subsidiary of the Borrower which is an Obligor and not the Borrower, such
Subsidiary shall be the surviving corporation, or such merger or consolidation
shall be a part of an Acquisition permitted by Section 7.6 hereof or part of a
disposition permitted by Section 7.5 hereof, (iii) such transaction shall not
be utilized to circumvent compliance with any term or provision herein and (iv)
no Default or Event of Default shall then be in existence or occur as a result
of such transaction.
Section 7.5 Sales of Assets. The Borrower shall not, and shall
not permit any of its Subsidiaries to, sell, transfer or otherwise dispose of,
any of its assets except (a) inventory in the ordinary course of business, (b)
obsolete or worn-out assets, (c) asset sales in which the Net Cash Proceeds
from the disposition thereof (to the extent not applied pursuant to clause (f)
hereof) are reinvested, within 270 days after such disposition, in productive
tangible assets used in the business of the Borrower and its Subsidiaries, and
provided that the aggregate amount of Net Cash Proceeds outstanding and pending
reinvestment pursuant to this clause (c) shall not exceed $5,000,000 at any
time, (d) assets (i) obtained as a result of mergers, consolidations and
Acquisitions permitted under this Agreement and (ii) that are unnecessary to
the business operations of the Borrower and its Subsidiaries, including those
assets acquired in the Fieldcrest Cannon Transaction and set forth on Schedule
10 hereto, (e) sales and dispositions (i) from any of the Borrower's Domestic
Subsidiaries to the Borrower or any of its Domestic Subsidiaries or any of the
Borrower's Foreign Subsidiaries of which at least 65% of whose Capital Stock
has been pledged to secure the Obligations and (ii) from any of its Foreign
Subsidiaries to the Borrower or any of its Subsidiaries, and (f) asset sales
the Net Cash Proceeds of which are applied in accordance with Section 2.5(b)
hereof.
Section 7.6 Acquisitions. The Borrower shall not, and shall not
permit any of its Subsidiaries to, make any Acquisitions; provided, however, if
(a) immediately prior to and after giving effect to the proposed Acquisition
there shall not exist a Default or Event of Default and (b) immediately after
giving effect to the proposed transaction the Revolver Availability shall be no
less than $40,000,000, the Borrower or any of its Subsidiaries may make
Acquisitions so long as (i) such Acquisition shall not be opposed by the board
of the directors of the Person being acquired, (ii) the Lenders shall have
received written notice thereof at least 15 Business Days prior to the date of
such Acquisition, (iii) the Administrative Agent shall have received at least
10 Business Days prior to the date of such Acquisition a Compliance Certificate
setting forth the covenant calculations both immediately prior to and after
giving effect to the proposed Acquisition, (iv) the assets, property or
business acquired shall be in the business described in Section 4.1(d) hereof
and the Administrative Agent for the benefit of the Lenders shall have a first
priority Lien (subject to the Intercreditor Agreement) in substantially all of
such assets (or, if less than substantially all of such assets, such assets
required by the
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Determining Lenders to be pledged), except for Permitted Liens, (v) if such
Acquisition results in a Domestic Subsidiary, (A) such Subsidiary shall execute
a Subsidiary Guaranty of the Obligations and Collateral Documents granting a
first priority Lien (subject to the Intercreditor Agreement) in substantially
all of such assets (or, if less than substantially all of such assets, all
assets required by the Determining Lenders to be pledged), except for Permitted
Liens to secure the Obligations, (B) 100% of such Subsidiary's Capital Stock
shall be pledged to secure the Obligations and (C) the Administrative Agent on
behalf of the Lenders shall have received such board resolutions, officer's
certificates and opinions of counsel as the Administrative Agent shall
reasonably request in connection with the actions described in clauses (A) and
(B) above, and (vi) if such Acquisition results in a direct Foreign Subsidiary,
(A) 65% of such Subsidiary's Capital Stock shall be pledged to secure the
Obligations and (B) the Administrative Agent on behalf of the Lenders shall
have received such board resolutions, officer's certificates and opinions of
counsel as the Administrative Agent shall reasonably request in connection with
clause (A) immediately preceding.
Section 7.7 Capital Expenditures. The Borrower shall not, and
shall not permit any of its Subsidiaries to, make or commit to make any Capital
Expenditures after the Agreement Date in an aggregate amount in excess of an
amount equal to the sum of (a) $175,000,000 plus (b) 3.25% of cumulative net
revenues of the Borrower and its Subsidiaries from and after the Agreement
Date.
Section 7.8 Restricted Payments. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly declare,
pay or make any Restricted Payments except (a) Dividends payable by a
Subsidiary to the Borrower or another Subsidiary that is an Obligor or to a
Foreign Subsidiary of the Borrower of which at least 65% of its Capital Stock
has been pledged to secure the Obligations, (b) Dividends payable by the
Borrower the aggregate amount of which during any Fiscal Year do not exceed
$10,000,000, (c) cash paid in respect of the redemption of the Fieldcrest
Cannon Subordinated Debentures, (d) purchases, redemptions, retirements or
acquisitions of Indebtedness in respect of the 11-1/4% Senior Subordinated
Debentures Due 2004 of Fieldcrest Cannon, (e) the refinancing of the Bridge
Notes and (f) purchases, redemptions, retirements or acquisitions of the
Borrower Preferred Stock, provided that the consideration therefor consists
solely of Net Cash Proceeds from the issuance of Capital Stock of the Borrower;
provided, however, the Borrower shall not pay or make any Restricted Payments
permitted by this Section 7.8 unless there shall exist no Default or Event of
Default prior to or after giving effect to any such proposed Restricted
Payment.
Section 7.9 Affiliate Transactions. The Borrower shall not, and
shall not permit any of its Subsidiaries to, at any time engage in any
transaction with an Affiliate (other than the Borrower or any of its
Subsidiaries) on terms materially less advantageous to the Borrower or such
Subsidiary than would be the case if such transaction had been effected with a
non-Affiliate. The Borrower shall not, and shall not permit any of its
Subsidiaries to, in any event incur or suffer to exist any Indebtedness or
Guaranty in favor of any Affiliate, unless such Affiliate shall subordinate the
payment and performance thereof to the Obligations on terms, conditions and
documentation satisfactory to the Determining Lenders.
Section 7.10 Compliance with ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly, or permit
any member of its Controlled Group to directly or indirectly, (a) terminate any
Plan so as likely to result in liability to the Borrower
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or any member of its Controlled Group taken as a whole which could reasonably
be expected to have a Material Adverse Effect, (b) permit to exist any ERISA
Event, or any other event or condition with respect to a Plan which could
reasonably be expected to have a Material Adverse Effect, (c) make a complete
or partial withdrawal (within the meaning of Section 4201 of ERISA) from any
Multiemployer Plan which could reasonably be expected to have a Material
Adverse Effect on the Borrower or any member of its Controlled Group taken as a
whole, or (d) enter into any new Plan or modify any existing Plan so as to
increase its obligations thereunder which could reasonably be expected to have
a Material Adverse Effect.
Section 7.11 Maximum Leverage Ratio. At the end of each Fiscal
Quarter occurring during the periods indicated below, the Borrower shall not
permit the Leverage Ratio to be greater than the ratio set forth below opposite
the period in which such Fiscal Quarter occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the last Fiscal Quarter of Fiscal Year 1997 to but not 5.75 to 1
including the last Fiscal Quarter of Fiscal Year 1998
From and including the last Fiscal Quarter of Fiscal Year 1998 to but not 5.25 to 1
including the last Fiscal Quarter of Fiscal Year 1999
From and including the last Fiscal Quarter of Fiscal Year 1999 to but not 4.75 to 1
including the last Fiscal Quarter of Fiscal Year 2000
From and including the last Fiscal Quarter of Fiscal Year 2000 and thereafter 4.25 to 1
</TABLE>
Section 7.12 Minimum Fixed Charge Coverage Ratio. At the end of
each Fiscal Quarter occurring during this Agreement commencing with the first
Fiscal Quarter of Fiscal Year 1998, the Borrower shall not permit the Fixed
Charge Coverage Ratio to be less than 1.10 to 1.
Section 7.13 Minimum Net Worth. The Borrower shall not permit the
Net Worth at any time to be less than the sum of (a) the amounts set forth
below opposite the respective periods below, plus (b) an amount equal to the
net worth of any Person that, on or after the Agreement Date becomes a
Subsidiary of the Borrower or any of its Subsidiaries or is merged into or
consolidated with the Borrower or any of its Subsidiaries or substantially all
of the assets of which are acquired by the Borrower or any of its Subsidiaries
to the extent that the purchase price therefore is paid in Capital Stock of the
Borrower or any of its Subsidiaries, plus (c) an amount equal to 100% of any
increase in Net Worth pursuant to offerings of Capital Stock of the Borrower or
any of its Subsidiaries or pursuant to the conversion or exchange of any
convertible subordinated debt or redeemable preferred stock into Capital Stock
of the Borrower or any of its Subsidiaries (excluding in both (b) and (c) above
any such increase as a result of the Fieldcrest Cannon Transaction):
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<PAGE> 72
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
From the Agreement Date to but not including the last Fiscal Quarter of $250,000,000
Fiscal Year 1998
From and including the last Fiscal Quarter of Fiscal Year 1998 but not $260,000,000
including the last Fiscal Quarter of Fiscal Year 1999
From and including the last Fiscal Quarter of Fiscal Year 1999 but not $280,000,000
including the last Fiscal Quarter of Fiscal Year 2000
From and including the last Fiscal Quarter of Fiscal Year 2000 but not $300,000,000
including the last Fiscal Quarter of Fiscal Year 2001
From and including the last Fiscal Quarter of Fiscal Year 2001 but not $320,000,000
including the last Fiscal Quarter of Fiscal Year 2002
From and including the last Fiscal Quarter of Fiscal Year 2002 and $340,000,000
thereafter
</TABLE>
Section 7.14 Sale or Discount of Receivables. The Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell, with or without recourse, for discount or otherwise, any notes or
accounts receivable.
Section 7.15 Business. Neither the Borrower nor any Subsidiary of
the Borrower shall conduct any business other than the business described in
Section 4.1(d) hereof.
Section 7.16 Fiscal Year. Neither the Borrower nor any of its
Subsidiaries shall change its Fiscal Year.
Section 7.17 Amendment of Organizational Documents. The Borrower
shall not, and shall not permit any Subsidiary of the Borrower to, amend its
articles of incorporation, bylaws or other applicable organizational documents
in any manner that could reasonably be expected to result in a Material Adverse
Effect.
Section 7.18 Amendments and Waivers of Institutional Debt. The
Borrower shall not, and shall not permit any Subsidiary to, change or amend (or
take any action or fail to take any action the result of which is an effective
amendment or change) or accept any waiver or consent with respect to, any
document, instrument or agreement relating to any Institutional Debt that would
result in (a) an increase in the principal, interest, overdue interest, fees or
other amounts payable under the Institutional Debt, (b) an acceleration in any
date fixed for payment or prepayment of principal, interest, fees or other
amounts payable under the Institutional Debt
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(including, without limitation, as a result of any redemption), (c) a reduction
in any percentage of holders of the Institutional Debt required under the terms
of the Institutional Debt to take (or refrain from taking) any action under the
Institutional Debt, (d) a change in the definition of "Change of Control" or
"Change in Control" or similar event or circumstance, however defined or
designated, as provided in the Institutional Debt which would result in such
definition being more restrictive than such definition in this Agreement, (e) a
change in any of the subordination provisions of the Institutional Debt, (f) a
change in any covenant, term or provision in the Institutional Debt which would
result in such term or provision being more restrictive than the terms of this
Agreement and the other Loan Documents or (g) a change in any term or provision
of the Institutional Debt that could have, in any material respect, an adverse
effect on the interest of the Lenders.
Section 7.19 Foreign Subsidiaries. Notwithstanding anything in
this Agreement to the contrary, the Borrower shall not, and shall not permit
any Subsidiary to, create or acquire any Foreign Subsidiary on or after the
Agreement Date.
ARTICLE 8
Default
Section 8.1 Events of Default. Each of the following shall
constitute an Event of Default, whatever the reason for such event, and whether
voluntary, involuntary, or effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or non-governmental body:
(a) Any representation or warranty made under any Loan Document
shall prove to have been incorrect or misleading in any material respect when
made;
(b) The Borrower shall fail to pay any (i) principal under any
Note when due; or (ii) interest under any Note or any fees payable hereunder or
any other costs, fees, expenses or other amounts payable hereunder or under any
other Loan Document within the earlier of (A) three Business Days after the
date due or (B) one Business Day after written notice thereof from the
Administrative Agent;
(c) The Borrower or any Subsidiary shall default in the
performance or observance of any agreement or covenant contained in Article 7
hereof;
(d) Any Obligor or any Foreign Subsidiary shall default in the
performance or observance of any other agreement or covenant contained in this
Agreement not specifically referred to elsewhere in this Section 8.1, and such
default shall not be cured within a period of thirty days after the earlier of
notice from the Administrative Agent thereof or actual notice thereof by a
Responsible Officer of any Obligor or such Foreign Subsidiary;
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(e) Any Obligor or any Foreign Subsidiary shall default in the
performance or observance of any agreement or covenant in any of the Loan
Documents (other than this Agreement) and such default shall not be cured
within a period of thirty days after the earlier of notice from the
Administrative Agent thereof or actual notice thereof by a Responsible Officer
of any Obligor or such Foreign Subsidiary;
(f) There shall be commenced an involuntary proceeding or an
involuntary petition shall be filed in a court having competent jurisdiction
seeking (i) relief in respect of any Obligor or any Foreign Subsidiary (other
than any Foreign Subsidiary whose aggregate book value of assets does not
exceed $1,000,000), or a substantial part of the property or the assets of such
Obligor or such Foreign Subsidiary, under Title 11 of the United States Code,
as now constituted or hereafter amended, or any other applicable Federal, state
or foreign bankruptcy law or other similar law, (ii) the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of any Obligor or any such Foreign Subsidiary, or of any substantial
part of their respective properties, or (iii) the winding- up or liquidation of
the affairs of any Obligor or any such Foreign Subsidiary, and any such
proceeding or petition shall continue unstayed and in effect for a period of 60
consecutive days;
(g) Any Obligor or any Foreign Subsidiary shall (i) file a
petition, answer or consent seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other applicable Federal,
state or foreign bankruptcy law or other similar law, (ii) consent to the
institution of proceedings thereunder or to the filing of any such petition or
to the appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of any Obligor or
any Foreign Subsidiary or of substantially all of its properties, (iii) file an
answer admitting the material allegations filed against it in any such
proceeding, (iv) make a general assignment for the benefit of creditors, (v)
become unable, admit in writing its inability, or fail generally, to pay its
debts as they become due, or (vi) any Obligor or any Foreign Subsidiary shall
take any corporate action in furtherance of any such action;
(h) A final judgment or judgments shall be entered by any court
against any Obligor or any Foreign Subsidiary for the payment of money which
exceeds $200,000 in the aggregate, or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Obligor or
any Foreign Subsidiary which, together with all other such property of the
Obligors and the Foreign Subsidiaries subject to other such process, exceeds in
value $200,000 in the aggregate, and if such judgment or award is not insured
or, within 45 days after the entry, issue or levy thereof, such judgment,
warrant or process shall not have been paid or discharged or stayed pending
appeal, or if, after the expiration of any such stay, such judgment, warrant or
process shall not have been paid or discharged;
(i) With respect to any Plan of the Borrower or any member of its
Controlled Group: (i) the Borrower, any such member, or any other
party-in-interest or disqualified person (other than any Lender) shall engage
in transactions which in the aggregate would reasonably be expected to result
in a direct or indirect liability to the Borrower or any member of its
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Controlled Group under Section 409 or 502 of ERISA or Section 4975 of the Code;
(ii) the Borrower or any member of its Controlled Group shall incur any
accumulated funding deficiency, as defined in Section 412 of the Code, or
request a funding waiver from the Internal Revenue Service for contributions;
(iii) the Borrower or any member of its Controlled Group shall incur any
withdrawal liability as a result of a complete or partial withdrawal within the
meaning of Section 4203 or 4205 of ERISA, or any other liability with respect
to a Plan, unless the amount of such liability has been funded within the Plan
or pursuant to one or more insurance contracts; (iv) the Borrower or any member
of its Controlled Group shall fail to make a required contribution by the due
date under Section 412 of the Code or Section 302 of ERISA which would result
in the imposition of a lien under Section 412 of the Code or Section 302 of
ERISA; (v) the Borrower, any member of its Controlled Group or any Plan sponsor
shall notify the PBGC of an intent to terminate, or the PBGC shall institute
proceedings to terminate, or the PBGC shall institute proceedings to terminate,
any Plan subject to Title IV of ERISA; (vi) a Reportable Event shall occur with
respect to a Plan subject to Title IV of ERISA, and within 15 days after the
reporting of such Reportable Event to the Administrative Agent, the
Administrative Agent shall have notified the Borrower in writing that the
Determining Lenders have made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a trustee to administer such Plan and as a result thereof an Event of
Default shall have occurred hereunder; (vii) a trustee shall be appointed by a
court of competent jurisdiction to administer any Plan or the assets thereof;
or (viii) any ERISA Event with respect to a Plan subject to Title IV of ERISA
shall have occurred, and 30 days thereafter (A) such ERISA Event, other than
such event described in clause (f) of the definition of ERISA Event herein, (if
correctable) shall not have been corrected and (B) the then present value of
such Plan's benefit liabilities, as defined in Title IV of ERISA, shall exceed
the then current value of assets accumulated in such Plan; provided, however,
that the events listed in subsections (i) - (viii) above shall constitute
Events of Default only if the maximum aggregate liability which the Borrower or
any member of its Controlled Group has a reasonable likelihood of incurring
under the applicable provisions of ERISA resulting from an event or events (A)
could reasonably be expected to have a Material Adverse Effect or (B) if
capitalized as Indebtedness on the Financial Statements of the Borrower, would
result in an Event of Default under Section 7.11 hereof.
(j) Any Obligor or any Foreign Subsidiary shall fail to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any Indebtedness in excess
of $5,000,000 beyond any grace period provided with respect thereto, or any
other event or condition shall exist under any agreement or instrument under
which such Indebtedness is created or evidenced beyond any applicable grace
period, if the effect of such event or condition is to permit or cause the
holder of such Indebtedness (or a trustee on behalf of any such holder) to (i)
cause such Indebtedness to become due or prepaid prior to its date of maturity
or (ii) require any Obligor or any Foreign Subsidiary of the Borrower to
purchase, prepay or redeem such Indebtedness;
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(k) Except as a result of transactions permitted by this
Agreement, any real property lease where the Borrower or any Subsidiary of the
Borrower is the lessee shall terminate or cease to be effective, and
termination or cessation thereof, together with all other real property leases,
if any, which have been terminated or cease to be effective, could reasonably
be expected to have a Material Adverse Effect; provided, however, that
termination or cessation of a real property lease shall not constitute an Event
of Default if another real property lease reasonably satisfactory to the
Administrative Agent is contemporaneously substituted therefor;
(l) Any provision of any Loan Document shall for any reason cease
to be valid and binding on or enforceable against any party to it (other than
the Administrative Agent, the Collateral Agent, or any Lender) in any material
respect other than in accordance with its terms or as the appropriate parties
under Section 11.11 hereof may otherwise agree in writing, and other than as a
result of an action or inaction by the Administrative Agent, the Collateral
Agent, any Lender or any representative thereof, or any such party (other than
the Administrative Agent, the Collateral Agent or any Lender) shall so assert
in writing;
(m) Any Collateral Document shall for any reason cease to create a
valid and perfected first priority Lien (subject to the Intercreditor
Agreement) in any Collateral subject thereto, and other than as (i) a result of
an action or inaction by the Administrative Agent, the Collateral Agent, any
Lender or any representative thereof, or (ii) as expressly provided or
permitted in such Collateral Document or in this Agreement;
(n) A Change of Control shall occur;
(o) An Event of Default (as defined in the Amended and Restated
Credit Agreement) shall occur; or
(p) Total assets owned by all Foreign Subsidiaries shall exceed 3%
of the aggregate amount of assets owned by the Borrower and its Subsidiaries.
Section 8.2 Remedies. If an Event of Default shall have occurred
and shall be continuing:
(a) With the exception of an Event of Default specified in Section
8.1(f) or (g) hereof, the Administrative Agent may at its election (provided
that the Administrative Agent has not previously received notice to the
contrary from the Determining Lenders), and shall upon the direction of the
Determining Lenders, but subject to the Intercreditor Agreement, terminate the
Commitments and/or by written notice to the Borrower declare the principal of
and interest on the Advances and all Obligations and other amounts owed under
the Loan Documents to be forthwith due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived, except
for notices expressly set forth in the Loan Documents.
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(b) Upon the occurrence of an Event of Default specified in
Section 8.1(f) or (g) hereof, such principal, interest and other amounts shall
thereupon and concurrently therewith become due and payable and the Commitments
shall forthwith terminate, all without any action by the Administrative Agent,
any Lender or any holders of the Notes and without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.
(c) Subject to the Intercreditor Agreement, the Administrative
Agent and the Lenders may exercise all of the Rights granted to them under the
Loan Documents or under Applicable Law.
(d) The Rights of the Administrative Agent and the Lenders
hereunder shall be cumulative, and not exclusive.
ARTICLE 9
Changes in Circumstances
Section 9.1 LIBOR Basis Determination Inadequate. If with
respect to any proposed LIBOR Advance for any Interest Period, (i) any Lender
determines that deposits in dollars (in the applicable amount) are not being
offered to that Lender in the relevant market for such Interest Period or (ii)
the Determining Lenders determine that the LIBOR Rate for such proposed LIBOR
Advance does not adequately and fairly reflect the cost to such Lender of
making and maintaining such proposed LIBOR Advance for such Interest Period,
such Lender or Determining Lenders, as the case may be, shall forthwith give
prompt notice thereof to the Borrower, whereupon until such Lender or
Determining Lenders, as the case may be, notify the Borrower that the
circumstances giving rise to such situation no longer exist, the obligation of
such Lender to make LIBOR Advances shall be suspended; provided, however, such
Lender or the Determining Lenders, as the case may be, shall promptly notify
the Borrower if the circumstances giving rise to such situation no longer
exist.
Section 9.2 Illegality. If after the Agreement Date any change
or phase-in of applicable law, rule or regulation, or adoption thereof, or any
change in any interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its LIBOR Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency, shall make it
unlawful or impossible for such Lender (or its LIBOR Lending Office) to make,
maintain or fund its LIBOR Advances, such Lender shall promptly so notify the
Borrower and the Administrative Agent. Before giving any notice to the
Borrower pursuant to this Section, the notifying Lender shall designate a
different LIBOR Lending Office or other lending office if such designation will
avoid the need for giving such notice and will not, in the reasonable judgment
of the Lender, be disadvantageous to the Lender. Upon receipt of such notice,
notwithstanding anything contained
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in Article 2 hereof, the Borrower shall repay in full the then outstanding
principal amount of each LIBOR Advance owing to the notifying Lender, together
with accrued interest thereon and any reimbursement required under Section 2.8
hereof, on either (a) the last day of the Interest Period applicable to such
Advance, if the Lender may lawfully continue to maintain and fund such Advance
to such day, or (b) immediately, if the Lender may not lawfully continue to
fund and maintain such Advance to such day or if the Borrower so elects.
Concurrently with repaying each affected LIBOR Advance owing to such Lender if
the Borrower does not terminate this Agreement, notwithstanding anything
contained in Article 2 hereof, the Borrower may, without any requirement to
satisfy the conditions precedent set forth in Section 3.1, 3.2 or 3.3, borrow a
Base Rate Advance from such Lender, and such Lender shall make such Base Rate
Advance, in an amount such that the outstanding principal amount of the
Advances owing to such Lender shall equal the outstanding principal amount of
the Advances owing immediately prior to such repayment.
Section 9.3 Increased Costs.
(a) If after the Agreement Date any change, phase-in or adoption
of any law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof or
compliance by any Lender (or its LIBOR Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or compatible agency:
(i) shall subject a Lender (or its LIBOR Lending Office)
to any Tax (net of any tax benefit engendered thereby) with respect to
its LIBOR Advances or its obligation to make such Advances, or shall
change the basis of taxation of payments to a Lender (or to its LIBOR
Lending Office) of the principal of or interest on its LIBOR Advances
or in respect of any other amounts due under this Agreement, as the
case may be, or its obligation to make such Advances (except for
changes in (A) the rate of tax on the overall net income, net worth or
capital of the Lender and franchise taxes, doing business taxes or
minimum taxes imposed upon such Lender, (B) withholding taxes of any
Tribunal other than the United States of America or any state thereof
and (C) taxes referred to in clauses (ii), (iii) and (iv) of Section
2.13(a) hereof); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors
of the Federal Reserve System), special deposit or similar requirement
against assets of, deposits with or for the account of, or credit
extended by, a Lender's LIBOR Lending Office or shall impose on the
Lender (or its LIBOR Lending Office) or on the London interbank market
any other condition affecting its LIBOR Advances or its obligation to
make such Advances (but excluding any reserves or deposits that are
included in the calculation of LIBOR Basis);
and the result of any of the foregoing is to increase the cost to a Lender (or
its LIBOR Lending Office) of making or maintaining any LIBOR Advances, or to
reduce the amount of any sum
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received or receivable by a Lender (or its LIBOR Lending Office) with respect
thereto, by an amount deemed by a Lender to be material ("Increased Advance
Costs"), then, within 30 days after demand by a Lender, the Borrower agrees to
pay to such Lender such additional amount as will compensate such Lender for
such Increased Advance Costs, subject to Section 11.9 hereof; provided,
however, that the Borrower shall not be required to comply with this Section
9.3 to the extent the Borrower has complied with Section 2.13 hereof with
respect to Taxes described in Section 9.3(a)(i) hereof. The affected Lender
will as soon as practicable notify the Borrower of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Lender to
compensation pursuant to this Section and will designate a different LIBOR
Lending Office or other lending office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
judgment of the affected Lender made in good faith, be disadvantageous to such
Lender. Notwithstanding the foregoing, any Lender's demand for Increased
Advance Costs shall not include any Increased Advance Costs with respect to any
period more than 180 days prior to the date that such Lender gives notice to
the Borrower of such Increased Advance Costs unless the effective date of the
condition which results in the right to receive Increased Advance Costs is
retroactive (the "Increased Advance Costs Retroactive Effective Date"). If any
Increased Advance Costs has an Increased Advance Costs Retroactive Effective
Date and any Lender demands compensation within 180 days after the date setting
the Increased Advance Costs Retroactive Date Effective Date (the "Increased
Advance Costs Set Date"), such Lender shall have the right to receive such
Increased Advance Costs from the Increased Advance Retroactive Effective Date.
If a Lender does not demand such Increased Advance Costs within 180 days after
the Increased Advance Costs Set Date, such Lender may not receive payment of
Increased Advance Costs with respect to any period more than 180 days prior to
such demand.
(b) A certificate of any Lender claiming compensation under this
Section and setting forth the additional amounts to be paid to it hereunder
shall certify that such amounts or costs were actually incurred by such Lender
and shall show in reasonable detail an accounting of the amount payable and the
calculations used to determine in good faith such amount and shall be
controlling absent demonstrable error. In determining such amount, a Lender
may use any reasonable averaging and attribution methods. Nothing in this
Section 9.3 shall provide the Borrower or any of its Subsidiaries the right to
inspect the records, files or books of any Lender. If a Lender demands
compensation under this Section, the Borrower may at any time, upon at least
five Business Days' prior notice to the Lender, after reimbursement to the
Lender by the Borrower in accordance with this Section of all costs incurred,
prepay in full the then outstanding LIBOR Advances of the Lender, together with
accrued interest thereon to the date of prepayment, along with any
reimbursement required under Section 2.8 hereof. Concurrently with prepaying
such LIBOR Advances, the Borrower may, without any requirement to satisfy the
conditions precedent set forth in Section 3.1, 3.2 or 3.3, borrow a Base Rate
Advance from the Lender, and the Lender shall make such Base Rate Advance, in
an amount such that the outstanding principal amount of the Advances owing to
such Lender shall equal the outstanding principal amount of the Advances owing
immediately prior to such prepayment.
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Section 9.4 Effect On Base Rate Advances. If notice has been
given pursuant to Section 9.1, 9.2 or 9.3 hereof suspending the obligation of a
Lender to make LIBOR Advances, or requiring LIBOR Advances of a Lender to be
repaid or prepaid, then, unless and until the Lender notifies the Borrower that
the circumstances giving rise to such repayment no longer apply, all Advances
which would otherwise be made by such Lender as LIBOR Advances shall be made
instead as Base Rate Advances.
Section 9.5 Capital Adequacy. If (a) the phase-in or the
introduction of or any change in or in the interpretation of any law, rule or
regulation after the Agreement Date or (b) compliance by a Lender with any Law
or any guideline or request from any central bank or other governmental
authority (whether or not having the force of law) adopted, promulgated or
phased-in after the Agreement Date (any of such events in clauses (a) and (b)
herein being referred to as a "Regulatory Modification") affects or would
affect the amount of capital required or expected to be maintained by a Lender
or any corporation controlling such Lender, and such Lender determines that the
amount of such capital is increased by or based upon the existence of such
Lender's commitment or Advances hereunder and other commitments or advances of
such Lender of this type, then, within 20 days after demand by such Lender,
subject to Section 11.9, the Borrower shall immediately pay to such Lender,
from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender with respect to such circumstances (collectively,
"Additional Costs"), to the extent that such Lender reasonably determines in
good faith such increase in capital to be allocable to the existence of such
Lender's commitments hereunder, to the extent not compensated for in the Base
Rate Basis or in the LIBOR Rate Basis or in amounts paid by the Borrower
pursuant to Section 9.3 hereof. Notwithstanding the foregoing, any Lender's
demand for Additional Costs shall not include any Additional Costs with respect
to any period more than 180 days prior to the date that such Lender gives
notice to the Borrower of such Additional Costs unless the effective date of
the Regulatory Modification which results in the right to receive Additional
Costs is retroactive (the "Regulatory Modification Retroactive Effective
Date"). If any Regulatory Modification has a Regulatory Modification
Retroactive Effective Date and any Lender demands compensation within 180 days
after the date setting the Regulatory Modification Retroactive Effective Date
(the "Regulatory Modification Set Date"), such Lender shall have the right to
receive such Additional Costs from the Regulatory Modification Retroactive
Effective Date. If a Lender does not demand such Additional Costs within 180
days after the Regulatory Modification Set Date, such Lender may not receive
payment of Additional Costs with respect to any period more than 180 days prior
to such demand. A certificate as to such amounts submitted to the Borrower by
a Lender hereunder shall, in the absence of demonstrable error, be controlling
and binding for all purposes. A certificate as to any additional amounts
payable to any Lender under this Section 9.5 submitted to the Borrower by such
Lender shall certify that such amounts were actually incurred by such Lender or
corporation controlling such Lender and shall show in reasonable detail an
accounting of the amount payable and the calculations used to determine in good
faith such amount and shall be controlling absent demonstrable error. In
determining such amount, such Lender or a corporation controlling such Lender
may use any reasonable averaging and attribution methods. Notwithstanding the
foregoing, nothing in this Section 9.5 shall
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provide the Borrower or any Subsidiary of the Borrower the right to inspect the
records, files or books of any Lender or any corporation controlling such
Lender.
Section 9.6 Replacement Lender. If the Borrower becomes
obligated to pay additional amounts to any Lender described in Section 9.2, 9.3
or 9.5, the Borrower may designate a financial institution reasonably
acceptable to the Administrative Agent to replace such Lender by purchasing for
cash and receiving an assignment of such Lender's pro rata share of such
Lender's obligations under the Loan Documents and the Rights of such Lender
under the Loan Documents without recourse to or warranty by, or expense to,
such Lender, for a purchase price equal to the outstanding amounts owing to
such Lender (including such additional amounts owing to such Lender pursuant to
Section 9.3 or 9.5). Upon execution of an Assignment Agreement, such other
financial institution shall be deemed to be a "Lender" for all purposes of this
Agreement as set forth in Section 11.6 hereof.
Section 9.7 Replacement by the Borrower of a Lender.
(a) Acquired Lender. If any lender is acquired by or merges with
any other Person (including any other Lender) and (i) such lender is not the
surviving Person, and (ii) there exists no Default or Event of Default
hereunder, the Borrower may replace such Lender in whole with another Eligible
Assignee reasonably acceptable to the Administrative Agent pursuant to an
Assignment Agreement within thirty days following the date of consummation of
any such acquisition or merger.
(b) Certain Circumstances. If (i) there exists no Default or
Event of Default on any such date and no Default or Event of Default shall be
caused by the action permitted below and (ii) any Lender refuses to consent to
any amendment, waiver or consent to any provision hereof or in any Loan
Documents in accordance with the terms of Section 11.11 hereof (other than an
amendment to increase the Commitment of such Lender), but to which each other
Lender has previously agreed, then, the Borrower may, within 90 days after the
date of such consent, amendment or waiver, replace such Lender in whole with
another Eligible Assignee, pursuant to an Assignment Agreement.
ARTICLE 10
Agreement Among Lenders
Section 10.1 Agreement Among Lenders. The Lenders agree among
themselves that:
(a) Administrative Agent. Each Lender hereby appoints the
Administrative Agent as its nominee in its name and on its behalf, to receive
all documents and items to be furnished hereunder; to act as nominee for and on
behalf of all Lenders under the Loan Documents; to, except as otherwise
expressly set forth herein, take such action as may be requested by the
Determining Lenders, provided that, (i) unless and until the Administrative
Agent shall have
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received such requests, the Administrative Agent may take such administrative
action, or refrain from taking such administrative action, as it may deem
advisable and in the best interests of the Lenders, and (ii) the Administrative
Agent shall not be required to take any action that exposes the Administrative
Agent to personal liability or that is contrary to any Loan Document or
Applicable Law; to arrange the means whereby the proceeds of the Advances of
the Lenders are to be made available to the Borrower; to distribute promptly to
each Lender information, requests and documents received from the Borrower, and
each payment (in like funds received) with respect to any of such Lender's
Advances, or the ratable amount of fees or other amounts; and to deliver to the
Borrower requests, demands, approvals and consents received from the Lenders.
The Administrative Agent agrees to promptly distribute to each Lender, at such
Lender's address set forth below information, requests, documents and payments
received from the Borrower. The Administrative Agent shall have no trustee or
other fiduciary relationship in respect of any Lender by reason of this
Agreement or any other Loan Document. The Administrative Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement.
The duties of the Administrative Agent are mechanical and administrative in
nature.
(b) Replacement of Administrative Agent. Should the
Administrative Agent or any successor Administrative Agent ever cease to be a
Lender hereunder, or should the Administrative Agent or any successor
Administrative Agent ever resign as Administrative Agent, or should the
Administrative Agent or any successor Administrative Agent ever be removed with
cause or without cause by the action of the Determining Lenders (other than the
Administrative Agent), then the Lender appointed by the other Lenders (provided
no Event of Default shall have occurred and be continuing, with the consent of
the Borrower, which consent shall not be unreasonably withheld) shall forthwith
become the Administrative Agent, and the Borrower and the Lenders shall execute
such documents as any Lender may reasonably request to reflect such change at
no cost to the Borrower. Any resignation or removal of the Administrative
Agent or any successor Administrative Agent shall become effective upon the
appointment by the Lenders of a successor Administrative Agent from among the
other Lenders; provided, however, if no successor Administrative Agent shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Administrative Agent's giving of notice of resignation or
the Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lenders and, provided that no Event
of Default shall have occurred and be continuing, with the consent of the
Borrower, which consent shall not be unreasonably withheld, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the Laws
of the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as the Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its
duties and obligations under the Loan Documents, provided that if the retiring
or removed Administrative Agent is unable to appoint a successor Administrative
Agent, the Administrative Agent shall, after the expiration of a 60 day period
from the date of notice, be relieved of all obligations as Administrative Agent
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hereunder. Notwithstanding any Administrative Agent's resignation or removal
hereunder, the provisions of this Article shall continue to inure to its
benefit as to any actions taken or omitted to be taken by it while it was the
Administrative Agent under this Agreement.
(c) Expenses. Each Lender shall pay its pro rata share, based on
its Total Specified Percentage, of any reasonable expenses paid by the
Administrative Agent directly and solely in connection with any of the Loan
Documents (other than expenses for which the Administrative Agent has received
compensation in the form of the fees set forth in the Administrative Agent Fee
Letter) if the Administrative Agent does not receive reimbursement therefor
from other sources within 60 days after the date incurred. Any amount so paid
by the Lenders to the Administrative Agent shall be returned by the
Administrative Agent pro rata to each paying Lender to the extent later paid by
the Borrower or any other Person on the Borrower's behalf to the Administrative
Agent.
(d) Delegation of Duties. The Administrative Agent may execute
any of its duties hereunder by or through officers, directors, employees,
attorneys or agents, and shall be entitled to (and shall be protected in
relying upon) advice of counsel concerning all matters pertaining to its duties
hereunder.
(e) Reliance by Administrative Agent. The Administrative Agent
and its officers, directors, employees, attorneys and agents shall be entitled
to rely and shall be fully protected in relying on any writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telex or
teletype message, statement, order, or other document or conversation
reasonably believed by it or them in good faith to be genuine and correct and
to have been signed or made by the proper Person and, with respect to legal
matters, upon opinions of counsel selected by the Administrative Agent. The
Administrative Agent may, in its reasonable judgment, deem and treat the payee
of any Note as the owner thereof for all purposes hereof.
(f) Limitation of Administrative Agent's Liability. Neither the
Administrative Agent nor any of its officers, directors, employees, attorneys
or agents shall be liable for any action taken or omitted to be taken by it or
them hereunder in good faith and believed by it or them to be within the
discretion or power conferred to it or them by the Loan Documents or be
responsible for the consequences of any error of judgment, except for its or
their own gross negligence or wilful misconduct. Except as aforesaid, the
Administrative Agent shall be under no duty to enforce any rights with respect
to any of the Advances, or any security therefor. The Administrative Agent
shall not be compelled to do any act hereunder or to take any action towards
the execution or enforcement of the powers hereby created or to prosecute or
defend any suit in respect hereof, unless indemnified to its reasonable
satisfaction against loss, cost, liability and expense. The Administrative
Agent shall not be responsible in any manner to any Lender for the
effectiveness, enforceability, genuineness, validity or due execution of any of
the Loan Documents, or for any representation, warranty, document, certificate,
report or statement made herein or furnished in connection with any Loan
Documents, or be under any obligation to any Lender to ascertain or to inquire
as to the performance or observation of any of the terms, covenants or
conditions of any Loan Documents on the part of the Borrower or any other
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Obligor. TO THE EXTENT NOT REIMBURSED BY THE BORROWER, EACH LENDER HEREBY
SEVERALLY INDEMNIFIES AND HOLDS HARMLESS THE ADMINISTRATIVE AGENT, PRO RATA
ACCORDING TO ITS TOTAL SPECIFIED PERCENTAGE, FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, REASONABLE EXPENSES AND/OR DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THE
ADMINISTRATIVE AGENT (IN SUCH CAPACITY) IN ANY WAY WITH RESPECT TO ANY LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THE ADMINISTRATIVE AGENT UNDER THE
LOAN DOCUMENTS (INCLUDING ANY NEGLIGENT ACTION OF THE ADMINISTRATIVE AGENT),
EXCEPT TO THE EXTENT THE SAME ARE FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION TO RESULT FROM GROSS NEGLIGENCE OR WILFUL MISCONDUCT BY THE
ADMINISTRATIVE AGENT. THE INDEMNITY PROVIDED IN THIS SECTION 10.1(f) SHALL
SURVIVE TERMINATION OF THIS AGREEMENT.
(g) Liability Among Lenders. No Lender shall incur any liability
(other than the sharing of expenses and other matters specifically set forth
herein and in the other Loan Documents) to any other Lender, except for acts or
omissions in bad faith.
(h) Rights as Lender. With respect to its commitment hereunder,
the Advances made by it and the Notes issued to it, the Administrative Agent
shall have the same rights as a Lender and may exercise the same as though it
were not the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent or any Lender may accept
deposits from, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower and any of its Affiliates, and any Person
who may do business with or own securities of the Borrower or any of its
Affiliates, all as if the Administrative Agent were not the Administrative
Agent hereunder and without any duty to account therefor to the Lenders.
Section 10.2 Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender and based upon the financial statements referred to in
Sections 4.1(j), 6.1, and 6.2 hereof, and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents. Each
Lender also acknowledges that its decision to fund the initial Advances shall
constitute evidence to the Administrative Agent that such Lender has deemed all
of the conditions set forth in Section 3.1 to have been satisfied.
Section 10.3 Benefits of Article. None of the provisions of this
Article shall inure to the benefit of any Person other than Lenders and, with
respect to Section 10.1(b), the Borrower;
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consequently, no such other Person shall be entitled to rely upon, or to raise
as a defense, in any manner whatsoever, the failure of the Administrative Agent
or any Lender to comply with such provisions.
ARTICLE 11
Miscellaneous
Section 11.1 Notices.
(a) All notices and other communications under this Agreement
shall be in writing (except in those cases where giving notice by telephone is
expressly permitted) and shall be deemed to have been given on the date
personally delivered or sent by telecopy (answer back received), or three days
after deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one day after being entrusted to a reputable
commercial overnight delivery service, addressed to the party to which such
notice is directed at its address determined as provided in this Section. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Borrower, at:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Chief Financial Officer
Telephone: (214) 333-3225
Telecopier: (214) 330-6016
(ii) If to the Administrative Agent, at:
NationsBank of Texas, N.A.
901 Main Street, 13th Floor
Dallas, Texas 75202-3714
Attn: Marie T. Lancaster
Telephone: (214) 508-2158
Telecopier: (214) 508-2515
(iii) If to a Lender, at its address shown below its name
on the signature pages hereof, or if applicable, set
forth in its Assignment Agreement.
(b) Any party hereto may change the address to which notices shall
be directed by giving 10 days' written notice of such change to the other
parties.
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Section 11.2 Expenses. The Borrower shall promptly pay:
(a) all reasonable out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery
of this Agreement and the other Loan Documents, the transactions contemplated
hereunder and thereunder, and the making of Advances hereunder, including
without limitation the reasonable fees and disbursements of Special Counsel;
(b) all reasonable out-of-pocket expenses, including reasonable
attorneys' fees, of the Administrative Agent in connection with the
transactions contemplated in this Agreement and the other Loan Documents and
the preparation, negotiation, execution and delivery of any waiver, amendment
or consent by the Administrative Agent relating to this Agreement or the other
Loan Documents; and
(c) all reasonable out-of-pocket costs, expenses and attorneys'
fees of the Administrative Agent and each Lender incurred for enforcement,
collection, restructuring, refinancing and "work-out", or otherwise incurred in
obtaining performance under the Loan Documents, which in each case shall
include without limitation reasonable fees and expenses of consultants, counsel
for the Administrative Agent and any Lender.
Section 11.3 Waivers. The rights and remedies of the Lenders
under this Agreement and the other Loan Documents shall be cumulative and not
exclusive of any rights or remedies which they would otherwise have. No
failure or delay by the Administrative Agent or any Lender in exercising any
right shall operate as a waiver of such right. The Lenders expressly reserve
the right to require strict compliance with the terms of this Agreement in
connection with any funding of a request for an Advance. In the event that any
Lender decides to fund an Advance at a time when the Borrower is not in strict
compliance with the terms of this Agreement, such decision by such Lender shall
not be deemed to constitute an undertaking by the Lender to fund any further
requests for Advances or preclude the Lenders from exercising any rights
available under the Loan Documents or at law or equity. Any waiver or
indulgence granted by the Lenders shall not constitute a modification of this
Agreement, except to the extent expressly provided in such waiver or
indulgence, or constitute a course of dealing by the Lenders at variance with
the terms of the Agreement such as to require further notice by the Lenders of
the Lenders' intent to require strict adherence to the terms of the Agreement
in the future. Any such actions shall not in any way affect the ability of the
Administrative Agent or the Lenders, in their discretion, to exercise any
rights available to them under this Agreement or under any other agreement,
whether or not the Administrative Agent or any of the Lenders are a party
thereto, relating to the Borrower.
Section 11.4 Calculation by the Lenders Conclusive and Binding.
Any mathematical calculation required or expressly permitted to be made by the
Administrative Agent or any Lender under this Agreement shall be controlling,
absent demonstrable error.
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Section 11.5 Set-Off. In addition to any rights now or hereafter
granted under Applicable Law and not by way of limitation of any such rights,
upon the occurrence and during the continuation of an Event of Default, each
Lender and any subsequent holder of any Note, and any assignee of any Note,
subject to the Intercreditor Agreement, is hereby authorized by the Borrower at
any time or from time to time, without notice to the Borrower or any other
Person, any such notice being hereby expressly waived, to set-off, appropriate
and apply any deposits (general or special (except trust and escrow accounts),
time or demand, including without limitation Indebtedness evidenced by
certificates of deposit, in each case whether matured or unmatured) and any
other Indebtedness at any time held or owing by such Lender or holder to or for
the credit or the account of the Borrower, against and on account of the
Obligations and other liabilities of the Borrower to such Lender or holder,
irrespective of whether or not (a) the Lender or holder shall have made any
demand hereunder, or (b) the Lender or holder shall have declared the principal
of and interest on the Advances and other amounts due hereunder to be due and
payable as permitted by Section 8.2 hereof (but after each set-off such Lender
shall promptly notify the Administrative Agent and the Borrower). Any sums
obtained by any Lender or by any assignee or subsequent holder of any Note
shall, subject to the Intercreditor Agreement, be subject to pro rata
treatment of all Obligations and other liabilities hereunder in accordance with
each Specified Percentage.
Section 11.6 Assignment.
(a) The Borrower may not assign or transfer any of its rights or
obligations hereunder or under the other Loan Documents without the prior
written consent of the Lenders.
(b) No Lender shall be entitled to assign or grant a participation
in its interest in this Agreement, its Notes or its Advances, except as
hereinafter set forth.
(c) Each Lender may sell participations to one or more banks or
other entities (the "Participants") in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of the Advances owing to it and the Note or Notes held by it) (the
"Participations"); provided, however, that (i) such Lender's obligations under
this Agreement (including, without limitation, its Specified Percentage of the
Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement, (v)
no Participant under any such Participation shall have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to
any departure by the Borrower therefrom, except to the extent that such
amendment, waiver or consent would (A) reduce or postpone any date fixed for
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder (B) increase the commitment of any Participant or (C) release
any Collateral or security for the Obligations, except pursuant to the Loan
Documents, in each case to the extent subject to such Participation, and (vi)
no Participation shall be in an amount less than
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$5,000,000. The Lenders may, subject to Section 11.13 hereof, provide copies
of all financial information received from the Borrower to such Participants.
(d) Each Lender may assign to one or more Eligible Assignees its
rights and obligations under this Agreement and the other Loan Documents;
provided, however, that (i) each such assignment shall be subject to the prior
written consent of the Administrative Agent and Borrower, which consents shall
not be unreasonably withheld (provided, however, notwithstanding anything
herein to the contrary, no consent of the (A) Borrower is required for any
assignment (x) during any time that an Event of Default has occurred and is
continuing, (y) to an Affiliate of a Lender and (z) to another Lender hereunder
and (B) Administrative Agent is required for any assignment (y) to an Affiliate
of a Lender and (z) to another Lender hereunder), (ii) no such assignment
(including any simultaneous assignment pursuant to the Amended and Restated
Credit Agreement) shall be in an amount less than $5,000,000, unless the
commitment (including any commitment under the Amended and Restated Credit
Agreement) of a Lender is less than $5,000,000, in which case such assignment
may be in the aggregate amount of such Lender's Specified Percentage of the
Commitments, (iii) the applicable Lender, Administrative Agent, the Borrower
and Eligible Assignee shall execute and deliver to the Administrative Agent an
Assignment and Acceptance Agreement (an "Assignment Agreement") in
substantially the form of Exhibit G hereto, together with the Notes subject to
such assignment and (iv) the Eligible Assignee executing the Assignment, shall
deliver to the Administrative Agent a processing fee of $3,500 (less any
processing fee paid in respect of a simultaneous assignment under the Amended
and Restated Credit Agreement). Upon such execution, delivery and acceptance
from and after the effective date specified in each Assignment, which effective
date shall be at least three Business Days after the execution thereof and the
recordation of the information therein in the Register pursuant to Section
11.6(j) hereof, (A) the Eligible Assignee thereunder shall be party hereto and,
to the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment, have the rights and obligations of a Lender
hereunder and (B) the applicable Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such assignment,
relinquish such rights and be released from such obligations under this
Agreement; provided, however, the indemnity provided such Lender in Section 5.9
hereof shall survive such assignment.
(e) Notwithstanding anything in clause (d) above to the contrary,
(i) any Lender may assign and pledge all or any portion of its Advances and
Notes to any Federal Reserve Bank as collateral security pursuant to Regulation
A of F.R.S. Board and any Operating Circular issued by such Federal Reserve
Bank and (ii) any Lender that is a fund may at any time assign or pledge all or
any portion of its rights under this Agreement to secure such Lender's
indebtedness; provided, however, that no such assignment under this clause (e)
shall release the assignor Lender from its obligations hereunder.
(f) Upon its receipt of an Assignment Agreement executed by a
Lender and an Eligible Assignee, and any Note or Notes subject to such
assignment, the Borrower shall, subject to the Borrower's rights under Section
11.6(d), within five Business Days after its receipt of such Assignment
Agreement execute and deliver to the Administrative Agent in exchange for
- 82 -
<PAGE> 89
the surrendered Notes new Notes to the order of such Eligible Assignee in an
amount equal to the portion of the Advances and the Specified Percentage of the
Commitments assigned to it pursuant to such Assignment Agreement and new Notes
to the order of the assignor Lender in an amount equal to the portion of the
Advances and the Specified Percentage of the Commitments retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment Agreement and shall otherwise be in
substantially the form of Exhibit A or B, as applicable, hereto.
(g) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.6, disclose to the Eligible Assignee or Participant or proposed Eligible
Assignee or participant, any information relating to the Borrower furnished to
such Lender by or on behalf of the Borrower, provided such Person agrees in
writing to handle such information in accordance with the standards set forth
in Section 11.13 hereof.
(h) Except as specifically set forth in this Section 11.6, nothing
in this Agreement or any other Loan Documents, expressed or implied, is
intended to or shall confer on any Person other than the respective parties
hereto and thereto and their successors and assignees permitted hereunder and
thereunder any benefit or any legal or equitable right, remedy or other claim
under this Agreement or any other Loan Documents.
(i) Notwithstanding anything in this Section 11.6 to the contrary,
no Eligible Assignee or Participant (nor the assigning or participating Lender)
shall be entitled to receive (whether individually or collectively) any greater
payment under Section 2.13 or Section 9.3 or Section 9.5 than such assigning or
participating Lender or any other Lender would have been entitled to receive
with respect to the interest assigned or participated to such Eligible Assignee
or Participant.
(j) The Administrative Agent shall maintain at its address
referred to in Section 11.1 a copy of each Assignment Agreement delivered to
and accepted by it and a register (the "Register") for the recordation of the
names and addresses of the Lenders, any U.S. taxpayer identification number,
the Specified Percentages of the Lenders (the "Ownership Information"), whether
such Lender is an original Lender or the assignee of another Lender pursuant to
an Assignment Agreement and the effective date and amount of each Assignment
Agreement delivered to and accepted by it and the parties thereto. Any
transfer of an ownership interest in any Advance, including any right to
principal or interest payable with respect to such Advance, shall be subject to
and conditioned upon the due recordation of such transfer and the Ownership
Information with respect to the transferee in the Register and such transfer
shall be effective only upon such recordation (and not prior thereto), which
recordation the Administrative Agent agrees to make. The entries in the
Register shall be controlling for all purposes, absent demonstrable error, and
the Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder
- 83 -
<PAGE> 90
for all purposes hereof. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
Section 11.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such separate counterparts shall together constitute but one and the same
instrument.
Section 11.8 Severability. Any provision of this Agreement or any
other Loan Document which is for any reason prohibited or found or held invalid
or unenforceable by any court or governmental agency shall be ineffective to
the extent of such prohibition or invalidity or unenforceability without
invalidating the remaining provisions hereof or thereof in such jurisdiction or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.9 Interest and Charges. It is not the intention of any
parties to this Agreement to make an agreement in violation of the laws of any
applicable jurisdiction relating to usury. Regardless of any provision in any
Loan Documents, no Lender shall ever be entitled to charge, receive, collect or
apply, as interest on the Obligations, any amount in excess of the Highest
Lawful Rate. If any Lender or participant ever receives, collects or applies,
as interest, any such excess, such amount which would be excessive interest
shall be deemed a partial repayment of principal and treated hereunder as such;
and if principal is paid in full, any remaining excess shall be paid to the
Borrower. In determining whether or not the interest paid or payable, under
any specific contingency, exceeds the Highest Lawful Rate, the Borrower and the
Lenders shall, to the maximum extent permitted under Applicable Law, (a)
characterize any nonprincipal payment as an expense, fee or premium rather than
as interest, (b) exclude voluntary prepayments and the effect thereof, and (c)
amortize, prorate, allocate and spread in equal parts, the total amount of
interest throughout the entire contemplated term of the Obligations so that the
interest rate is uniform throughout the entire term of the Obligations;
provided, however, that if the Obligations are paid and performed in full prior
to the end of the full contemplated term thereof, and if the interest received
for the actual period of existence thereof exceeds the Highest Lawful Rate, the
Lenders shall refund to the Borrower the amount of such excess or credit the
amount of such excess against the total principal amount of the Obligations
owing, and, in such event, the Lenders shall not be subject to any penalties
provided by any laws for contracting for, charging or receiving interest in
excess of the Highest Lawful Rate. This Section shall control every other
provision of all agreements pertaining to the transactions contemplated by or
contained in the Loan Documents.
Section 11.10 Headings. Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.
Section 11.11 Amendment and Waiver. Subject to the Intercreditor
Agreement, the provisions of this Agreement may not be amended, modified or
waived except by the written agreement of the Borrower and the Determining
Lenders; provided, however, that no such amendment, modification or waiver
shall be made (a) without the consent of all Lenders, if it would (i) increase
the amount of the Facility A Term Loan Commitment or the Facility B Term
- 84 -
<PAGE> 91
Loan Commitment, (ii) change the Specified Percentage or commitment of any
Lender, or (iii) extend or postpone the date of maturity of, extend the due
date for any payment of principal or interest on, reduce the amount of any
installment of principal or interest on, or reduce the rate of interest on, any
Advance, or other amount owing under any Loan Documents to which such Lender is
entitled or (iv) release any guaranty of the Obligations or all or
substantially all of the Collateral (except, in any case, pursuant to this
Agreement or the other Loan Documents), or (v) reduce the fees payable
hereunder to which such Lender is entitled, or (vi) revise this Section 11.11,
or (vii) waive or extend the date for payment or prepayment of any principal,
interest or fees hereunder or (viii) amend the definition of "Determining
Lenders", "Facility A Term Loan Specified Percentage", "Facility B Term Loan
Specified Percentage" or "Total Specified Percentage", or (b) without the
consent of the Administrative Agent, if it, would alter the rights, duties or
obligations of the Administrative Agent. Notwithstanding anything in this
Agreement to the contrary, no amendment, waiver or consent that changes the
allocations of payments between the Facility A Term Loan Advances and the
Facility B Term Loan Advances may be without the express written consent of the
following: Lenders holding more than 50% of all outstanding Facility A Term
Loan Advances and the Lenders holding more than 50% of all outstanding Facility
B Term Loan Advances. Neither this Agreement nor any term hereof may be
amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing signed by the Administrative Agent and, in the case of an
amendment, by the Borrower.
Section 11.12 Exception to Covenants. Neither the Borrower nor any
of its Subsidiaries shall be deemed to be permitted to take any action or fail
to take any action which is permitted as an exception to any of the covenants
contained herein or which is within the permissible limits of any of the
covenants contained herein if such action or omission would result in the
breach of any other covenant contained herein.
Section 11.13 Confidentiality. Each Lender and the Administrative
Agent agrees (on behalf of itself and each of its Affiliates, directors,
officers, employees and representatives) to keep confidential, in accordance
with customary procedures for handling confidential information of this nature
and in accordance with safe and sound banking or investment practices, any
non-public information supplied to it by the Borrower or any of its Affiliates
pursuant to this Agreement, provided that nothing herein shall limit the
disclosure of any such information (a) to the extent required by statute, rule,
regulation or judicial process, (b) to counsel for any Lender or the
Administrative Agent, (c) to bank or other examiners, regulatory bodies,
auditors or accountants of any Lender, (d) to the Administrative Agent or any
other Lender or any Affiliate thereof, (e) in connection with any Litigation
relating to the transactions contemplated by the Loan Documents to which any
one or more of Lenders is a party, (f) to the extent necessary in connection
with the exercise of any Right under this Agreement or any other Loan Document,
or (g) to any Eligible Assignee or Participant (or prospective Eligible
Assignee or Participant) or to any direct or indirect contractual
counterparties in
- 85 -
<PAGE> 92
swap agreements or to the professional advisors of such swap counterparties so
long as such Eligible Assignee or Participant (or prospective Eligible Assignee
or Participant) or direct or indirect contractual counterparties in swap
agreements or such swap counterparties' professional advisors agrees to handle
such information in accordance with the provisions of this Section 11.13.
SECTION 11.14 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS) AND THE
UNITED STATES OF AMERICA. THE LOAN DOCUMENTS ARE PERFORMABLE IN DALLAS COUNTY,
TEXAS, AND THE BORROWER AND EACH SURETY, GUARANTOR, ENDORSER AND ANY OTHER
PARTY EVER LIABLE FOR PAYMENT OF ANY MONEY PAYABLE WITH RESPECT TO THE LOAN
DOCUMENTS, JOINTLY AND SEVERALLY WAIVE THE RIGHT TO BE SUED ELSEWHERE. WITHOUT
EXCLUDING ANY OTHER JURISDICTION, THE BORROWER AGREES THAT THE STATE AND
FEDERAL COURTS OF TEXAS LOCATED IN DALLAS, TEXAS, SHALL HAVE JURISDICTION OVER
PROCEEDINGS IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
HEREBY SUBMITS WITH RESPECT TO ITSELF AND ITS PROPERTY TO THE JURISDICTION OF
ANY SUCH COURT FOR THE PURPOSE OF ANY SUIT, ACTION, PROCEEDING OR JUDGMENT
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
SECTION 11.15 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY KNOWINGLY VOLUNTARILY, IRREVOCABLY
AND INTENTIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM ARISING OUT OF OR RELATED TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY. THIS
PROVISION IS A MATERIAL INDUCEMENT TO EACH LENDER ENTERING INTO THIS AGREEMENT
AND MAKING ANY ADVANCES HEREUNDER.
SECTION 11.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES REGARDING THE SUBJECT MATTER HEREIN AND THEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
- 86 -
<PAGE> 93
IN WITNESS WHEREOF, this Credit Agreement is executed as of the date
first set forth above.
BORROWER: PILLOWTEX CORPORATION
By: /S/ J. MARK KIRKPATRICK
-----------------------------------
J. Mark Kirkpatrick
Vice President & Treasurer
<PAGE> 94
ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A., as
Administrative Agent
By: /s/ SUZANNE B. SMITH
-----------------------------------
Suzanne B. Smith
Vice President
LENDERS: NATIONSBANK OF TEXAS, N.A., as a Lender
By: /s/ SUZANNE B. SMITH
-----------------------------------
Suzanne B. Smith
Vice President
901 Main Street, 67th Floor
Dallas, Texas 75202
Attn: Suzanne B. Smith
<PAGE> 95
BANK OF AMERICA NT&SA
By: /s/ JAMES E. FLORCZAK
-----------------------------------
Name: JAMES E. FLORCZAK
------------------------------
Title: MANAGING DIRECTOR
-----------------------------
231 South LaSalle Street, 9Q
Chicago, Illinois 60697
Attn: JAMES E. FLORCZAK
---------------------------------
MANAGING DIRECTOR
<PAGE> 96
THE BANK OF NOVA SCOTIA
ATLANTA AGENCY
By: /s/ F.C.H. ASHBY
-------------------------------------
Name: F.C.H. ASHBY
--------------------------------
Title: SENIOR MANAGER LOAN OPERATIONS
-------------------------------
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attn: F.C.H. Ashby
<PAGE> 97
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ JENNY GILPIN
-----------------------------------
Jenny Gilpin
Vice President
One First National Plaza, Suite 0324
Chicago, Illinois 60670
Attn: Jenny Gilpin
<PAGE> 98
COMERICA BANK
By: /s/ KIM A. UHLEMANN
-----------------------------------
Name: KIM A. UHLEMANN
------------------------------
Title: VICE PRESIDENT
-----------------------------
4100 Spring Valley Road, Suite 900
Dallas, Texas 75244
Attn: Kim A. Uhlemann
<PAGE> 99
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROBERT IVOSEVICH
-----------------------------------
Name: ROBERT IVOSEVICH
------------------------------
Title: SENIOR VICE PRESIDENT
-----------------------------
2200 Ross Avenue, Suite 4400W
Dallas, Texas 75201
Attn: Robert Smith
<PAGE> 100
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: /s/ MARY JO HOCH
-----------------------------------
Name: MARY JO HOCH
------------------------------
Title: VICE PRESIDENT
-----------------------------
1445 Ross Avenue, 3rd Floor
Dallas, Texas 75202
Attn: Mary Jo Hoch
<PAGE> 101
THE BANK OF TOKYO-MITSUBISHI, LTD.
By: /s/ CHRIS W. HOLDER
-----------------------------------
Name: CHRIS W. HOLDER
------------------------------
Title: VICE PRESIDENT
-----------------------------
2001 Ross Avenue, LB 118
Dallas, Texas 75201
Attn: John Mearns
<PAGE> 102
BANK ONE, TEXAS, N.A.
By: /s/ SCOTT RHEA
-----------------------------------
Name: SCOTT RHEA
------------------------------
Title: VICE PRESIDENT
-----------------------------
1717 Main Street, 3rd Floor
Dallas, Texas 75201
Attn: Scott Rhea
<PAGE> 103
BANKBOSTON, N.A.
By: /s/ RANDALL PARRISH
-----------------------------
Name: RANDALL PARRISH
------------------------
Title: VICE PRESIDENT
-----------------------
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, Georgia 30346
Attn: Randall Parrish
<PAGE> 104
BHF-BANK AKTIENGESELLSCHAFT
By: /s/ JOHN SYKES THOMAS J. SCIFO
-----------------------------------
Name: JOHN SYKES THOMAS J. SCIFO
------------------------------
Title: AVP AVP
-----------------------------
590 Madison Avenue
New York, New York 10022-2540
Attn: Thomas J. Scifo
<PAGE> 105
FIRST UNION NATIONAL BANK
By: /s/ ED ROSS
-----------------------------------
Name: ED ROSS
-------------------------------
Title: VICE PRESIDENT
-----------------------------
301 South College Street, 5th Floor
Charlotte, North Carolina 28288-0745
Attn: Brent Cummings
<PAGE> 106
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ ROGER M. BURNS
-----------------------------------
Name: ROGER M. BURNS
------------------------------
Title: DULY AUTHORIZED SIGNATORY
-----------------------------
201 High Ridge Road
Stamford, Connecticut 06927-5100
Attn: Roger Burns
<PAGE> 107
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ W. PIETER C. KODDE
-----------------------------------
Name: W. PIETER C. KODDE
------------------------------
Title: VICE PRESIDENT
-----------------------------
By: /s/ DANA W. HEMENWAY
-----------------------------------
Name: DANA W. HEMENWAY
------------------------------
Title: VICE PRESIDENT
-----------------------------
245 Park Avenue
New York, New York 10167
Attn: Corporate Services Department
with a copy to:
Rabobank Nederland
One Galleria Tower
13355 Noel Road, Lock Box 69
Dallas, Texas 75240
Attn: David Streeter
<PAGE> 108
SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ DAVID C. OLDANI
-----------------------------------
Name: DAVID C. OLDANI
------------------------------
Title: ASSISTANT TREASURER
-----------------------------
By: /s/ CHRISTOPHER J. SPELTZ
-----------------------------------
Name: CHRISTOPHER J. SPELTZ
------------------------------
Title: V.P. AND MANAGER
-----------------------------
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attn: Dave Oldani
<PAGE> 109
THE BANK OF NEW YORK
By: /s/ RONALD R. REEDY
-----------------------------------
Name: RONALD R. REEDY
------------------------------
Title: VICE PRESIDENT
-----------------------------
One Wall Street, 22nd Floor
New York, New York 10286
Attn: Ronald R. Reedy
<PAGE> 110
COMPAGNIE FINANCIERE DE CIC ET
DE L'UNION EUROPEENNE
By: /s/ MARCUS EDWARD
-----------------------------------
Name: MARCUS EDWARD
------------------------------
Title: VICE PRESIDENT
-----------------------------
By: /s/ SEAN MOUNIER
-----------------------------------
Name: SEAN MOUNIER
------------------------------
Title: FIRST VICE PRESIDENT
-----------------------------
520 Madison Avenue, 37th Floor
New York, New York 10022
Attn: Anthony Rock
<PAGE> 111
CREDITANSTALT BANKVEREIN
By: /s/ ROBERT M. BIRINGER
-----------------------------------
Name: ROBERT M. BIRINGER
------------------------------
Title: EXECUTIVE V.P.
-----------------------------
By: /s/ JOHN G. TAYLOR
-----------------------------------
Name: JOHN G. TAYLOR
------------------------------
Title: SENIOR ASSOCIATE
-----------------------------
Two Ravinia Drive, Suite 1680
Atlanta, Georgia 30346
Attn: John Taylor
<PAGE> 112
FLEET BANK, N.A.
By: /s/ DAVID R. DUBINSKY
-----------------------------------
David R. Dubinsky
Senior Vice President
1185 Avenue of the Americas, 2nd Floor
New York, New York 10036-6710
Attn: David R. Dubinsky
<PAGE> 113
THE FUJI BANK, LTD. - HOUSTON AGENCY
By: /s/ PHILIP C. LAUINGER III
-----------------------------------
Name: PHILIP C. LAUINGER III
------------------------------
Title: VICE PRESIDENT & MANAGER
-----------------------------
1221 McKinney, Suite 4100
Houston, Texas 77010
Attn: Jay Fort
<PAGE> 114
NATIONAL BANK OF CANADA
By: /s/ LARRY L. SEARS
-----------------------------------
Name: LARRY L. SEARS
------------------------------
Title: GROUP VICE PRESIDENT
-----------------------------
By: /s/ JOHN T. DIXON
-----------------------------------
Name: JOHN T. DIXON
------------------------------
Title: VICE PRESIDENT
-----------------------------
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attn: William Handley
<PAGE> 115
NATIONAL CITY BANK OF KENTUCKY
By: /s/ DON R. PULLEN
-----------------------------------
Don R. Pullen
Vice President
101 South Fifth Street
Southern Banking
Louisville, Kentucky 40202
Attn: Don R. Pullen
<PAGE> 116
THOROUGHBRED LIMITED PARTNERSHIP I
By: Appaloosa Management L.P.
its General Partner
By: Appaloosa Partners Inc.
its General Partner
By: /s/ JAMES E. BOLIN
-----------------------------------
Name: JAMES E. BOLIN
------------------------------
Title: VICE PRESIDENT
-----------------------------
c/o Appaloosa Partners
51 JFK Parkway
Short Hills, New Jersey 07078
Attn: James E. Bolin
<PAGE> 117
KZH HOLDING CORPORATION III
By: /s/ VIRGINIA R. CONWAY
-----------------------------------
Name: VIRGINIA R. CONWAY
------------------------------
Title: AUTHORIZED AGENT
-----------------------------
c/o Chancellor Capital Management
1166 Avenue of the Americas
27th Floor
New York, New York 10036
Attn: Chris Jansen
<PAGE> 118
PRIME INCOME TRUST
By: /s/ VIRGINIA R. CONWAY
-----------------------------------
Name: VIRGINIA R. CONWAY
------------------------------
Title: AUTHORIZED AGENT
-----------------------------
c/o Dean Witter Intercapital
Two World Trade Center, 72nd Floor
New York, New York 10048
Attn: VIRGINIA R. CONWAY
---------------------------------
<PAGE> 119
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By: /s/ SCOTT H. PAGE
---------------------------
Name: SCOTT H. PAGE
----------------------
Title: VICE PRESIDENT
---------------------
c/o State Bank & Trust Company
Corporate Trust Division
One Enterprise Drive
North Quincy, Massachusetts 02171
Attn: Patrick McEnroe
with a copy to:
Eaton Vance Management
Attn: Prime Rate Reserves
24 Federal Street, 6th Floor
Boston, Massachusetts 02110
<PAGE> 120
CREDIT AGRICOLE INDOSUEZ
By: /s/ MURRAY KENNEY
-----------------------------------
Name: MURRAY KENNEY
------------------------------
Title: MANAGING DIRECTOR
-----------------------------
By: /s/ FRANCOISE BERTHELOT
-----------------------------------
Name: FRANCOISE BERTHELOT
------------------------------
Title: VICE PRESIDENT
-----------------------------
1211 Avenue of the Americas
New York, New York 10036-8701
<PAGE> 121
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ ANNE McCARTHY
-----------------------------------
Name: ANNE McCARTHY
------------------------------
Title: AUTHORIZED SIGNATORY
-----------------------------
c/o Merrill Lynch Asset Management
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Attn: Ann MacCarthy
<PAGE> 122
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By: /s/ JUSTIN L. DRISCOLL
--------------------------
Name: JUSTIN L. DRISCOLL
------------------------
Title: SENIOR VICE PRESIDENT
-----------------------
c/o TCW Asset Management Company
200 Park Avenue, Suite 2200
New York, New York 10166-0228
Attn: Mark L. Gold/Justin Driscoll
with copies to:
Crescent/Mach I Partners, L.P.
c/o State Street Bank & Trust Co.
Two International Place
Boston, Massachusetts 02110
Attn: Howie Gorman
<PAGE> 123
KZH-CRESCENT CORPORATION
By: /s/ ANDREW TAYLOR
-------------------------------
Name: ANDREW J. TAYLOR
--------------------------
Title: AUTHORIZED AGENT
-------------------------
c/o The Chase Manhattan Bank
450 West 33rd Street - 15th Floor
New York, New York 10001
Attn: Virginia Conway
<PAGE> 124
EXHIBIT A
FACILITY A TERM LOAN NOTE
Dallas, Texas $_____________ December 19, 1997
PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), for
value received, promises to pay to the order of
_____________________________________ ("Lender") or its registered assigns, at
the principal office of NationsBank of Texas, N.A., in lawful money of the
United States of America, the principal sum of ________________________________
____________________________________________________________________
($______________), or such lesser sum as shall be due and payable from time to
time hereunder, as hereinafter provided. All terms used but not defined herein
shall have the meanings set forth in the Credit Agreement described below.
Principal of and interest on the unpaid principal balance of Facility
A Term Loan Advances under this Facility A Term Loan Note from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Facility A Term Loan Note is issued pursuant to and evidences
Facility A Term Loan Advances under a Credit Agreement, dated as of December
19, 1997, among the Borrower, NationsBank of Texas, N.A., as Administrative
Agent, and the lenders parties thereto (as amended, restated, supplemented,
renewed, extended or otherwise modified from time to time, "Credit Agreement"),
to which reference is made for a statement of the rights and obligations of the
Lender and the duties and obligations of the Borrower in relation thereto; but
neither this reference to the Credit Agreement nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the Borrower to
pay the principal sum of and interest on this Facility A Term Loan Note when
due.
THIS FACILITY A TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF
AMERICA. THE BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN
CONNECTION WITH THIS FACILITY A TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS.
THIS FACILITY A TERM LOAN NOTE, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES
<PAGE> 125
HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
PILLOWTEX CORPORATION
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
- 2 -
<PAGE> 126
EXHIBIT B
FACILITY B TERM LOAN NOTE
Dallas, Texas $_____________ December 19, 1997
PILLOWTEX CORPORATION, a Texas corporation (the "Borrower"), for value
received, promises to pay to the order of _____________________________________
("Lender") or its registered assigns, at the principal office of NationsBank of
Texas, N.A., in lawful money of the United States of America, the principal sum
of ____________________________________________________________________________
_____________________ ($______________), or such lesser sum as shall be due and
payable from time to time hereunder, as hereinafter provided. All terms used
but not defined herein shall have the meanings set forth in the Credit
Agreement described below.
Principal of and interest on the unpaid principal balance of Facility
B Term Loan Advances under this Facility B Term Loan Note from time to time
outstanding shall be due and payable as set forth in the Credit Agreement.
This Facility B Term Loan Note is issued pursuant to and evidences
Facility B Term Loan Advances under a Credit Agreement, dated as of December
19, 1997, among the Borrower, NationsBank of Texas, N.A., as Administrative
Agent, and the lenders parties thereto (as amended, restated, supplemented,
renewed, extended or otherwise modified from time to time, "Credit Agreement"),
to which reference is made for a statement of the rights and obligations of the
Lender and the duties and obligations of the Borrower in relation thereto; but
neither this reference to the Credit Agreement nor any provision thereof shall
affect or impair the absolute and unconditional obligation of the Borrower to
pay the principal sum of and interest on this Facility B Term Loan Note when
due.
THIS FACILITY B TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), AND OF THE UNITED STATES OF
AMERICA. THE BORROWER AGREES THAT THE STATE AND FEDERAL COURTS OF TEXAS
LOCATED IN DALLAS, TEXAS SHALL HAVE JURISDICTION OVER THE PROCEEDINGS IN
CONNECTION WITH THIS FACILITY B TERM LOAN NOTE AND THE OTHER LOAN DOCUMENTS.
THIS FACILITY B TERM LOAN NOTE, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR,
<PAGE> 127
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
PILLOWTEX CORPORATION
By:
-----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
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<PAGE> 128
EXHIBIT C
================================================================================
SECURITY AGREEMENT
Between
----------------------------------
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
as Collateral Agent
December 19, 1997
================================================================================
<PAGE> 129
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
ARTICLE 1
Grant
-----
Section 1.1 Assignment and Grant of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
--------------------------------
Section 1.2 Description of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
--------------------------
Section 1.3 Debtor Remains Liable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
---------------------
Section 1.4 Delivery of Security and Instrument Collateral . . . . . . . . . . . . . . . . . . . . . . 6
----------------------------------------------
ARTICLE 2
Representations and Warranties
------------------------------
Section 2.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
------------------------------
ARTICLE 3
Covenants
---------
Section 3.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------------------
Section 3.2 Equipment, Fixtures and Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------------
Section 3.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------
Section 3.4 Place of Perfection; Records; Collection of Receivables, Chattel Paper and Instruments. . . 11
--------------------------------------------------------------------------------------
Section 3.5 Transfers and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------
Section 3.6 Rights to Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------
Section 3.7 Right of the Collateral Agent to Notify Issuers . . . . . . . . . . . . . . . . . . . . . . 12
-----------------------------------------------
Section 3.8 The Collateral Agent Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------------------------
ARTICLE 4
Rights and Powers of the Collateral Agent
-----------------------------------------
Section 4.1 The Collateral Agent May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------------------------------
Section 4.2 The Collateral Agent's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-----------------------------
Section 4.3 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--------
Section 4.4 Further Approvals Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------------
SECTION 4.5 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
----------------------
</TABLE>
<PAGE> 130
ARTICLE 5
Miscellaneous
<TABLE>
<S> <C> <C>
Section 5.1 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-----------------
Section 5.2 Modifications; Amendments; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------
Section 5.3 Continuing Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
----------------------------
SECTION 5.4 GOVERNING LAW; TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
Section 5.5 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
--------------------
Section 5.6 The Collateral Agent's Right to Use Agents . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------------------------
Section 5.7 Waivers of Rights Inhibiting Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------------------------
Section 5.8 Notices and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
----------------------
(a) Manner of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------
(b) Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
---------
Section 5.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
----------------------
Section 5.10 Loan Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------
Section 5.11 Consent to Jurisdiction; Waiver of Immunities . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------------------------------
Section 5.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
Section 5.13 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
Section 5.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------
[SECTION 5.15 NO NOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------
Section 5.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------
</TABLE>
- ii -
<PAGE> 131
SCHEDULES:
Schedule 1 - Equipment, and Inventory Locations
Schedule 2 - Trade Names
Schedule 3 - Restricted Accounts
Schedule 4 - Rolling Stock
- iii -
<PAGE> 132
SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated as of December 19, 1997,
made between _____________________________ , a _______ corporation (the
"Debtor"), and NationsBank of Texas, N.A., a national banking association, in
its capacity as collateral agent (the "Collateral Agent") for itself, each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below)) a party to the
Amended and Restated Credit Agreement described below (the "Revolving
Lenders"), NationsBank of Texas, N.A., in its capacity as administrative agent
under the Amended and Restated Credit Agreement (the "Revolving Agent"), each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below)) a party to the
Term Credit Agreement described below (the "Term Lenders"), and NationsBank of
Texas, N.A., in its capacity as administrative agent under the Term Credit
Agreement (the "Term Agent") (each singularly, a "Secured Party", and
collectively, the "Secured Parties").
BACKGROUND
(1) [The Debtor] ["Pillowtex Corporation, a Texas corporation (the
"Borrower")], the Revolving Agent and the Revolving Lenders entered into that
certain Amended and Restated Credit Agreement, dated as of December 19, 1997
(as amended, modified, supplemented or restated from time to time, the "Amended
and Restated Credit Agreement").
(2) [The Debtor] [the Borrower], the Term Agent and the Term
Lenders entered into that certain Term Credit Agreement, dated as of December
19, 1997 (as amended, modified, supplemented or restated from time to time, the
"Term Credit Agreement"). The Amended and Restated Credit Agreement and the
Term Credit Agreement are herein, collectively, the "Credit Agreements."
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in each of the Credit Agreements.
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Debtor
securing the payment of the obligations set forth in Section 1.2 hereof,
subject only to Permitted Liens.
(4) It is a condition precedent to the obligation of the Revolving
Lenders and the Term Lenders, as appropriate, to make the Advances, and issue,
or participate in the issuance of, Letters of Credit under the Credit
Agreements that the Debtor shall have executed and delivered to the Collateral
Agent this Agreement.
<PAGE> 133
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in order to induce the Secured Parties, as
appropriate, to make the Advances and issue, or participate in the issuance of,
Letters of Credit under the Credit Agreements, the Debtor hereby agrees with
the Collateral Agent for its benefit and the ratable benefit of the other
Secured Parties, as hereinafter set forth.
ARTICLE 1
Grant
Section 1.1 Assignment and Grant of Security. The Debtor hereby
assigns, pledges, hypothecates and transfers to the Collateral Agent, for its
benefit and the ratable benefit of the other Secured Parties, and hereby grants
to the Collateral Agent, for its benefit and the ratable benefit of the other
Secured Parties, a security interest in, the entire right, title and interest
of the Debtor, in and to the following assets of the Debtor, whether now owned
or hereafter acquired ("Collateral"):
(a) all writings which evidence both a monetary obligation and a
security interest in or a lease of specific goods ("Chattel Paper");
(b) all documents, warehouse receipts, bills of lading, including,
without limitation, documents of title (as defined in the UCC) or other
receipts covering, evidencing or representing collateral ("Documents");
(c) all equipment (as defined in the UCC), and (whether or not
included in such definition) all vehicles, tractors, trailers, rolling stock,
machinery, chattels, tools, parts, furniture, furnishings, and supplies, of
every nature, wherever located, all additions, accessories and improvements
thereto and substitutions therefor and all accessories, parts and equipment
which may be attached to or which are necessary for the operation and use of
such personal property, whether or not the same shall be deemed to be affixed
to real property, together with all accessions thereto, and all rights under or
arising out of present or future contracts relating to the foregoing,
excluding, however, any such Equipment or other property which is financed with
Indebtedness permitted to be incurred pursuant to Section 7.1(c) or 7.1(h) of
the Credit Agreements ("Equipment");
(d) all fixtures and articles of personal property now or
hereafter attached to or used in or about any building or buildings now erected
or hereafter to be erected on any real property now or hereafter owned or
leased by the Debtor (the "Property"), which are necessary to the complete and
comfortable use and occupancy of such building or buildings for the purposes
for which they were or are to be erected; all materials to be delivered to the
Property and used or
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<PAGE> 134
to be used in connection with the construction of any building to be
constructed on the Property, including, but not limited to, all masonry,
siding, roof shingles, flooring, doors, windows, tile, shutters, stoves, ovens,
awnings, screens, cabinets, shades, blinds, carpets, draperies, furniture,
furnishings, plumbing, heating, air conditioning, lighting, ventilating,
refrigerating, cooking, laundry and incinerating equipment and all fixtures and
appurtenances thereto, and such other goods and chattels and personal property
as are ever used or furnished in operating such buildings or the activities
conducted therein, and all building materials and equipment now or hereafter
delivered to the Property and intended to be installed thereon ("Fixtures");
(e) all general intangibles (as defined in the UCC), and (whether
or not included in such definition) all contract rights; all trade secrets,
inventions, processes, production methods, proprietary information and
know-how; and all licenses or other agreements granted to Debtor with respect
to any of the foregoing; all information, advertising lists, customer lists,
identification of suppliers, data, plans, blueprints, specifications, designs,
drawings, recorded knowledge, surveys, engineering reports, test reports,
manuals, materials standards, processing standards, performance standards,
telephone numbers and telephone listings, catalogs, books, records, computer
and automatic machinery software and programs, and the like pertaining to
operations by or the business of the Debtor; all field accounting information
and all media in which or on which any of the information or knowledge or data
or records may be recorded or stored and all computer programs used for the
compilation or printout of such information, knowledge, records or data; all
licenses, consents, permits, variances, certifications and approvals of all
Tribunals now or hereafter held by Debtor pertaining to operations or business
now or hereafter conducted; all rights to receive return of deposits and trust
payments; all rights to payment under letters of credit and similar agreements;
and all causes of action, rights, claims and warranties now or hereafter owned
or acquired by Debtor ("General Intangibles");
(f) all instruments and letters of credit (each as defined in the
UCC, and (whether or not included in such definitions) all promissory notes,
drafts, bills of exchange and trade acceptances ("Instruments");
(g) all inventory in all of its forms, wherever located, now or
hereafter existing, including, but not limited to, (i) all raw materials and
work in process therefor, finished goods thereof, and materials used or
consumed in the manufacture or production thereof, (ii) goods in which Debtor
has an interest in mass or a joint or other interest or right of any kind
(including, without limitation, goods in which the Debtor has an interest or
right as consignee but only to the extent of the Debtor's interest therein),
and (iii) goods which are returned to or repossessed by the Debtor, and all
accessions thereto and products thereof and documents therefor (any and all
such inventory, accessions, products and documents being the "Inventory");
(h) all accounts, contract rights, chattel paper, documents,
instruments, deposit accounts, general intangibles, tax refunds (including,
without limitation, all federal and state income tax refunds and benefits of
net operating loss carry forwards) and other obligations of any kind owing to
the Debtor, now or hereafter existing, whether or not arising out of or in
connection with the sale or lease of goods or the rendering of services, and
all rights now or
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<PAGE> 135
hereafter existing in and to all security agreements, leases, and other
contracts securing or otherwise relating to any such accounts, contract rights,
chattel paper, documents, instruments, deposit accounts, general intangibles or
obligations (any and all such accounts, contract rights, chattel paper,
documents, instruments, deposit accounts, general intangibles and obligations
being the "Receivables");
(i) all agreements with each manufacturer, vendor, sales agent,
sales representative and each other Person pursuant to which the Debtor
receives, maintains, sells, leases or otherwise disposes of Inventory,
including all agreements permitting the use of each such Person's name, logo,
trademarks, tradenames and advertising ("Vendor Agreements");
(j) all right, title and interest of the Debtor in, to and under
each contract and other agreement relating to the lease, sale or other
disposition of Collateral;
(k) all rights, claims and benefits of the Debtor against any
Person arising out of, relating to or in connection with Collateral purchased
by the Debtor, including, without limitation, any such rights, claims or
benefits against any Person storing or transporting such Collateral;
(l) the balance of every deposit account of the Debtor under
control of the Collateral Agent and each other Secured Party and any other
claim of Debtor against the Collateral Agent and each other Secured Party, now
or hereafter existing, liquidated or unliquidated, and all money, instruments,
securities, documents, chattel paper, credits, claims, demands, income, and any
other property, rights and interests of the Debtor which at any time shall come
into the possession or custody or under the control of the Collateral Agent or
any other Secured Party or any of its agents, affiliates or correspondents, for
any purpose, and the proceeds of any thereof (the Collateral Agent and each
other Secured Party shall be deemed to have possession of any of the Collateral
in transit to or set apart for it or any of its agents, affiliates or
correspondents).
(m) 100% of the issued and outstanding Capital Stock of each
Domestic Subsidiary of Debtor, together with all Dividends, cash, proceeds,
profits, instruments, distributions and other property from time to time
distributed in respect thereof, and any subscription rights or warrants to
acquire any interest in such Subsidiary;
(n) 65% of the issued and outstanding Capital Stock of each direct
Foreign Subsidiary of Debtor, together with all Dividends, cash, proceeds,
profits, instruments, distributions and other property from time to time
distributed in respect thereof and any subscription rights or warrants to
acquire any interest in such Subsidiary;
(o) all Fieldcrest Cannon Transaction Documents;
(p) all insurance policies and bonds and claims and payments under
any Collateral;
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<PAGE> 136
(q) all property similar to the above hereafter acquired by
Debtor; and
(r) all accessions to, substitutions for and replacements,
proceeds and products of any and all of the foregoing Collateral (including,
without limitation, proceeds which constitute property of the types described
in this Section 1.1) and, to the extent not otherwise included, all (i)
payments under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral and (ii)
cash.
Notwithstanding anything herein to the contrary, the Lien granted
herein shall not (a) cover or be effective with respect to any assets which are
subject to Liens set forth on Schedule 3 of the Credit Agreements and Liens
resulting from the refinancing of the related Indebtedness (provided, however,
if at any time such amounts are released from such Liens then the Lien granted
herein shall automatically cover such assets without any action being taken by
the Debtor, the Collateral Agent or any other Person), (b) cover or be
effective with respect to any contracts of the Debtor which contain a provision
that they may not be assigned without the consent of the other party thereto if
the Lien granted herein is deemed to be an assignment in violation of such
assignment provision[, and] (c) cover or be effective with respect to any
Inventory, Equipment or Accounts which are identified as Inventory, General
Intangibles, Equipment or Accounts of the Bigelow Packing Division of
Fieldcrest Cannon, Inc., provided that the aggregate sales price of such
Inventory, General Intangibles, Equipment and Accounts is not in excess of
$1,700,000[, and (d) cover or be effective with respect to the publicly traded
Capital Stock of Fieldcrest Cannon, Inc. that is being purchased by Debtor
pursuant to the Fieldcrest Cannon Transaction (which Capital Stock shall be
cancelled and reissued with Debtor as the registered owner thereof, which
reissued Capital Stock shall be pledged and subject to the Lien granted herein
in favor of the Collateral Agent].
Section 1.2 Description of Obligations. This Agreement creates
an enforceable security interest in the Collateral, subject only to Permitted
Liens, to secure the payment and performance of any and all obligations now or
hereafter existing of the Debtor and each other Obligor under the Credit
Agreements and the other Loan Documents, including any extensions,
modifications, substitutions, amendments and renewals thereof, whether for
principal, interest, fees, premium, expenses, reimbursement obligations,
indemnification or otherwise (all such obligations of the Debtor and each other
Obligor being the "Obligations"). Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Obligations and would be owed by the Debtor and each other Obligor
to the Collateral Agent or any other Secured Party under any Loan Document, but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding under any Debtor Relief
Law involving the Debtor, any other Obligor or any other Person (including all
such amounts which would become due or would be secured but for the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding of Debtor, any other Obligor or any other
Person under any Debtor Relief Law). [NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN ANY ACTION OR PROCEEDING INVOLVING ANY STATE CORPORATE LAW, OR ANY
STATE OR FEDERAL BANKRUPTCY, INSOLVENCY,
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<PAGE> 137
REORGANIZATION OR OTHER LAW AFFECTING THE RIGHTS OF CREDITORS GENERALLY IF THE
LIENS GRANTED BY THE DEBTOR HEREIN SHALL BE HELD VOID, INVALID OR
UNENFORCEABLE, OR SUBORDINATED TO THE LIENS OR CLAIMS OF ANY OTHER CREDITORS,
ON ACCOUNT OF THE AMOUNT OF THE OBLIGATIONS SECURED BY SUCH LIENS, THEN, THE
AMOUNT OF THE OBLIGATIONS SECURED BY SUCH LIENS SHALL, WITHOUT ANY ACTION BY
THE DEBTOR, THE COLLATERAL AGENT, ANY OTHER SECURED PARTY OR ANY OTHER PERSONS,
BE AUTOMATICALLY LIMITED AND REDUCED TO THE HIGHEST AMOUNT THAT IS VALID AND
ENFORCEABLE AND NOT SUBORDINATED TO THE CLAIMS OF OTHER CREDITORS AS DETERMINED
IN SUCH ACTION OR PROCEEDING.]
Section 1.3 Debtor Remains Liable. Anything herein to the
contrary notwithstanding, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Collateral Agent of any of the rights hereunder shall not release the Debtor
from any of its duties or obligations under the contracts and agreements
included in the Collateral, and (c) neither the Collateral Agent nor any other
Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
the Collateral Agent or any other Secured Party be obligated to perform any of
the obligations or duties of the Debtor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 1.4 Delivery of Security and Instrument Collateral. All
certificates or instruments representing or evidencing the Collateral shall be
delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form
and substance reasonably satisfactory to the Collateral Agent. The Collateral
Agent shall have the right, as provided in Section 3.6, and during the
continuance, of an Event of Default, but without any requirement for prior
written notice to the Debtor, to transfer to or to register in the name of the
Collateral Agent or any of its nominees any or all of such Collateral. In
addition, the Collateral Agent shall have the right at any time during the
continuance of an Event of Default to exchange certificates or instruments
representing or evidencing Collateral for certificates or instruments of
smaller or larger denominations. Except as provided in Section 3.8(d), the
Debtor maintains the voting rights in the Securities Collateral (as defined
below) which was granted in the Securities Collateral pursuant to Section
1.1(m) and (n).
ARTICLE 2
Representations and Warranties
Section 2.1 Representations and Warranties. The Debtor
represents and warrants to the Collateral Agent and each other Secured Party,
with respect to itself and the Collateral, as follows:
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<PAGE> 138
(a) All of the Equipment, Fixtures and Inventory pledged by the
Debtor hereunder are located at the places specified on Schedule 1 hereto (as
supplemented from time to time by the Debtor by written notice to the
Collateral Agent as permitted herein) or in transit to a place specified on
Schedule 1 hereto (as supplemented from time to time by Debtor by written
notice to Collateral Agent as permitted herein) or in transit for sale to a
third-party purchaser that upon such sale will become the obligor under a
Receivable or promptly pay for such Equipment, Fixtures and Inventory. The
chief place of business and chief executive office of the Debtor and the office
where the Debtor keeps all of its records concerning the Receivables, are
located at the place specified on Schedule 1 hereto. Schedule 1 is a complete
and correct list of, as to any leased property on which any Collateral is
located, the description of such property sufficient for recording and the name
of the record owner of such property. All promissory notes or other
instruments evidencing the Receivables (excluding checks[ and notes evidencing
loans to employees not to exceed $250,000 in aggregate amount]) have been
delivered and pledged to the Collateral Agent duly endorsed and accompanied by
such duly executed instruments of transfer or assignment as are necessary for
such pledge, to be held as pledged collateral. All Equipment owned by the
Debtor consisting of vehicles, tractors, trailers and other rolling stock with
a net book value of $20,000 or more are identified on Schedule 4.
(b) The Debtor is the legal and beneficial owner of the Collateral
pledged by it free and clear of any Lien, except for (i) the security interest
created by this Agreement, (ii) Permitted Liens and (iii) Liens in connection
with Indebtedness with respect to which the requirements of Section 3.1(i) of
each of the Credit Agreements have been satisfied. No effective financing
statement or other similar document used to perfect and preserve a security
interest under the laws of any jurisdiction covering all or any part of the
Collateral is on file in any recording office, except such as may have been
filed (i) in favor of the Collateral Agent relating to this Agreement, (ii) in
respect of Permitted Liens, and (iii) in connection with Indebtedness with
respect to which the requirements of Section 3.1(i) of each of the Credit
Agreements have been satisfied. As of the date hereof, the Debtor has the
trade names set forth on Schedule 2 (and no others). The Debtor (including any
corporate or partnership predecessor) has not existed or operated under any
name other than as stated on Schedule 2 since the date three years preceding
the date of this Agreement.
(c) This Agreement and the pledge of the Collateral pursuant
hereto, together with the filing of financing statements containing the
description of the Collateral in the jurisdictions set forth on Schedule 1,
which will be made immediately following the date of closing, creates a valid
and perfected first priority security interest in the Collateral in which a
security interest can be perfected by filing a UCC financing statement,
securing the payment of the Obligations; provided that additional actions may
be required with respect to the perfection of proceeds of the Collateral; and
further provided that the Collateral Agent retains physical possession of any
Collateral, the possession of which is required for perfection.
(d) No material Necessary Authorization is required (i) for the
pledge by the Debtor of the Collateral pledged by it hereunder, for the grant
by the Debtor of the security interest granted hereby or for the execution,
delivery or performance of this Agreement by the Debtor,
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<PAGE> 139
(ii) for the perfection or maintenance of the pledge, assignment and security
interest created hereby (including the first priority nature (subject to
Permitted Liens) of such pledge, assignment and security interest as provided
herein) (except for the filing of financing and continuation statements under
the UCC, fixture filings and filings with the United States Patent and
Trademark Office) or (iii) for the exercise by the Collateral Agent of the
rights provided for in this Agreement (except for consents of landlords
pursuant to the Landlords' Waivers and as otherwise required by law, including
pursuant to Section 4.4 of this Agreement), except, in each case, for such
Necessary Authorizations that already have been obtained by the Debtor and
except, in each case, where the failure to so obtain such Necessary
Authorizations could not reasonably be expected to have a Material Adverse
Effect.
(e) None of the Collateral described in Sections 1.1(m) and 1.1(n)
("Securities Collateral") is subject to any unpaid capital call or dispute, any
buy-sell, voting trust, transfer restriction, preferential right to purchase or
similar agreement or any option, warrant, put or call or similar agreement.
All of the Securities Collateral are duly authorized, validly issued and
non-assessable and were not issued in violation of the Rights of any Person.
ARTICLE 3
Covenants
Section 3.1 Further Assurances. (a) The Debtor agrees that where
any agreement existing as of the date hereof or hereafter to which Debtor is a
party contains any restriction that could reasonably be expected to prohibit
Debtor from granting any security interest under this Agreement, the Debtor
will use its reasonable best efforts to obtain the necessary consent to or
waiver of such restriction from any Person so as to enable the Debtor to
effectively grant to the Collateral Agent such security interest under this
Agreement.
(b) The Debtor agrees that from time to time, at the expense of
the Debtor, the Debtor will promptly execute and deliver all further
instruments and documents (including supplements to all schedules), and take
all further action, that may be necessary, and that the Collateral Agent may
reasonably request, in order to perfect and protect any pledge, assignment or
security interest granted or purported to be granted hereby, and the priority
thereof, or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, upon reasonable written request by the Collateral
Agent, the Debtor will: (i) during the continuation of an Event of Default,
mark conspicuously each Chattel Paper included in Receivables, and, at the
request of the Collateral Agent, each of its records pertaining to the
Collateral with the following legend:
THIS INSTRUMENT IS SUBJECT TO A SECURITY INTEREST AND LIEN PURSUANT TO
A SECURITY AGREEMENT DATED AS OF DECEMBER 19, 1997 (AS THE SAME HAS BEEN AND
MAY
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HEREAFTER BE AMENDED, MODIFIED OR RESTATED) MADE BY DEBTOR IN FAVOR OF
NATIONSBANK OF TEXAS, N.A., AS COLLATERAL AGENT FOR THE BENEFIT OF THE SECURED
PARTIES NAMED THEREIN.
or such other legend, in form and substance reasonably satisfactory to and as
specified by the Collateral Agent, indicating that such Chattel Paper or
Collateral is subject to the pledge, assignment and security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or other
instrument, deliver and pledge to the Collateral Agent hereunder such note and
instrument duly indorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance reasonably satisfactory to
the Collateral Agent; (iii) if any Collateral shall be evidenced by Chattel
Paper, during the continuance of an Event of Default, deliver to the Collateral
Agent such Chattel Paper duly endorsed and accompanied by duly executed
instrument of transfer or assignment, all in form and substance reasonably
satisfactory to the Collateral Agent; and (iv) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary, or as the Collateral Agent may reasonably
request, in order to perfect and preserve the pledge, assignment and security
interest granted or purported to be granted hereby.
(c) In addition to such other information as shall be specifically
provided for herein, the Debtor will furnish to the Collateral Agent from time
to time during the continuance of an Event of Default statements and schedules
further identifying and describing the Collateral and such other lists,
documents, reports, and product, service and sales documents in connection with
the Collateral as the Collateral Agent may reasonably request, all in
reasonable detail. Subject to the confidentiality provisions of the Credit
Agreements, in connection with its enforcement of the security interest, the
Collateral Agent may use such information or transfer it to any assignee
permitted hereunder for such assignee's use.
(d) The Debtor hereby authorizes the Collateral Agent to file one
or more continuation statements and during the continuance of an Event of
Default, financing statements, relating to all or any part of the Collateral
without the signature of the Debtor where permitted by law. A photocopy or
other reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
Section 3.2 Equipment, Fixtures and Inventory.
(a) The Debtor shall not keep the Equipment, Fixtures and
Inventory pledged by it hereunder (other than Inventory sold in the ordinary
course of business) in any location other than the places specified in Schedule
1 unless no later than 15 days prior to removal from any such location the
Debtor has delivered to the Collateral Agent a financing statement for such
Equipment, Fixtures and Inventory kept by the Debtor at such other location or
such other documentation in the opinion of the Collateral Agent which is
reasonably necessary to properly perfect or maintain the perfection of the
security interest granted herein in such Collateral.
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(b) Except as permitted under the Credit Agreements, the Debtor
shall cause the Equipment and Fixtures pledged by it hereunder that are
necessary for the Debtor's business to be maintained and preserved in adequate
operating condition and repair for purposes of their current use with due
regard to the age thereof, taken as a whole, subject to ordinary wear and tear
and shall from time to time make or cause to be made all appropriate (in the
reasonable judgment of Debtor) all repairs, replacements, and other
improvements thereto in accordance with past practice, except where the failure
to so repair, replace or improve could not reasonably be expected to have a
Material Adverse Effect. The Debtor shall promptly furnish to the Collateral
Agent a statement respecting any loss or damage which singly or in the
aggregate equals or exceeds $1,000,000 for any fiscal year to any of the
Equipment pledged by it hereunder. The Debtor shall promptly furnish to the
Collateral Agent a statement respecting any loss or damage which singly or in
the aggregate equals or exceeds $1,000,000 for any fiscal year to any of the
Inventory pledged by it hereunder.
Section 3.3 Insurance. The Debtor shall, at its own expense,
maintain insurance with respect to the Collateral in accordance with the terms
set forth in Section 5.5 of the Credit Agreement. The Debtor further covenants
and agrees to keep the Collateral which is Inventory, Equipment, Fixtures and
other tangible personal property insured in such amounts, against such risks
and with such insurers as is consistent with customary and usual in the
industry for companies of similar size and capability, provided that none of
such insurance shall be in amounts less than the greater of (a) the replacement
value and (b) the original cost of the covered property (less any deduction
standard in the industry for such type of property), subject in the case of any
property damage insurance to normal and customary rights granted in the
ordinary course of business to (i) any landlord (with respect to the property
covered by any lease), (ii) in the case of any equipment financing, to any
equipment lessor or lender (with respect to the equipment covered thereby), or
(iii) mortgagees of any real property. All such policies of insurance shall
show the Collateral Agent as loss payee, as its interests may appear, and shall
provide for at least thirty days' prior written notice of cancellation or
change of coverage to the Collateral Agent. The Debtor shall promptly furnish
to the Collateral Agent evidence of such insurance in form and content
reasonably satisfactory to the Collateral Agent. If the Debtor fails to
maintain the insurance it is required to maintain with respect to the
Collateral in accordance with this Section 3.3, upon written notice to the
Debtor, the Collateral Agent may at its own option obtain insurance in such
Collateral, any premium thereby paid by the Collateral Agent to become part of
the Obligations, bear interest prior to the existence of an Event of Default,
at the then applicable Base Rate Basis, and during the existence of an Event of
Default, at the Default Rate. In the event the Collateral Agent maintains such
substitute insurance, the additional premium for such insurance shall be due on
demand and payable by the Debtor to the Collateral Agent in accordance with any
notice delivered to the Debtor by the Collateral Agent. Subject to Section 7.5
of the Credit Agreements, proceeds of insurance shall be applied as follows:
first, to reimburse the Collateral Agent for all reasonable costs and expenses,
if any, including reasonable attorneys' fees, incurred in connection with the
collection of such proceeds; second, if an Event of Default has not occurred
and is continuing or the amount of proceeds in respect of any one loss or
damage does not exceed $5,000,000, the proceeds shall be reinvested in
productive, tangible assets used in the business of the Debtor,
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and the Debtor shall provide the Collateral Agent with evidence reasonably
satisfactory to the Collateral Agent of such use; and third, if an Event of
Default has occurred and is continuing or the proceeds in respect of any one
loss or damage is equal to or greater than $5,000,000, the proceeds shall, at
the Collateral Agent's direction, be used to repair or replace the Collateral
or applied to the Obligations as provided in the Intercreditor Agreement.
Section 3.4 Place of Perfection; Records; Collection of
Receivables, Chattel Paper and Instruments.
(a) The Debtor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Receivables, and the originals of all Chattel Paper and Instruments, at the
location therefor specified in Section 2.1(a), in each case which may be
changed upon written notice to the Collateral Agent at least 30 days prior to
such change. The Debtor will hold and preserve such records and Chattel Paper
and Instruments and will permit representatives of the Collateral Agent at any
time during normal business hours and after reasonable notice to inspect and
make abstracts from and copies of such records and Chattel Paper and
Instruments.
(b) Except as otherwise provided in this Section 3.4(b), the
Debtor shall continue to collect, at its own expense, all amounts due or to
become due the Debtor under the Receivables, Chattel Paper and Instruments. In
connection with such collections, the Debtor may take (and, during the
continuance of an Event of Default at the Collateral Agent's direction, shall
take) such action as the Debtor or, during the continuance of an Event of
Default, the Collateral Agent, may deem reasonably necessary to enforce
collection of the Receivables, Chattel Paper and Instruments; provided,
however, that the Collateral Agent shall have the right (during the continuance
of an Event of Default) to notify the account debtors or obligors under any
Receivables, Chattel Paper and Instruments of the assignment of such
Receivables, Chattel Paper and Instruments to the Collateral Agent and to
direct such account debtors or obligors to make payment of all amounts due or
to become due to the Debtor thereunder directly to the Collateral Agent and,
upon such notification at the expense of the Debtor, to enforce collection of
any such Receivables, Chattel Paper and Instruments, and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as the Debtor might have done or as the Collateral Agent deems
reasonably necessary. During the continuance of an Event of Default, all
amounts and proceeds (including Instruments) received by the Debtor in respect
of the Receivables, Chattel Paper and Instruments shall be received in trust
for the benefit of the Collateral Agent hereunder, shall be segregated from
other funds of the Debtor and, after receipt of written notice from the
Collateral Agent, shall be forthwith paid over to the Collateral Agent in the
same form as so received (with any necessary indorsement) to be applied as
provided in the Intercreditor Agreement. During the continuation of an Event
of Default, the Debtor shall not adjust, settle or compromise the amount or
payment of any Receivable, Chattel Paper or Instrument, release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount
thereon, in each case, other than those made in the ordinary course of
business. To the extent that the Collateral Agent has notified any account
debtor or obligor under any Receivables, Chattel Paper or Instrument of an
Event of Default and such Event of Default is
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cured or otherwise waived, the Collateral Agent shall promptly notify such
account holder or obligor of such fact.
Section 3.5 Transfers and Other Liens. The Debtor shall not (a)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except as permitted
under the Credit Agreements, or (b) create or permit to exist any Lien upon any
of the Collateral, except Permitted Liens.
Section 3.6 Rights to Dividends and Distributions. With respect
to any Securities Collateral, the Collateral Agent shall have authority during
the continuance of an Event of Default, either to have the same registered in
the Collateral Agent's name or in the name of a nominee, and, with or without
such registration, upon such notification to demand of the issuer thereof, and
to receive and receipt for, any and all Dividends (including any stock or
similar Dividend) payable in respect thereof, whether they be ordinary or
extraordinary. If the Debtor shall become entitled to receive or shall receive
any interest in or certificate (including, without limitation, any interest in
or certificate representing a Dividend in connection with any reclassification,
increase, or reduction of capital, or issued in connection with any
reorganization), or any option or rights arising from or relating to any of the
Collateral that is evidenced by a certificate or other instrument or security,
whether as an addition to, in substitution of, as a conversion of, or in
exchange for any of the Collateral, or otherwise, the Debtor agrees to accept
the same as the Collateral Agent's agent and to hold the same in trust on
behalf of and for the benefit of the Collateral Agent, and, after receipt of
written notice from the Collateral Agent, to deliver the same immediately to
the Collateral Agent in the exact form received, with appropriate undated stock
or similar powers, duly executed in blank, to be held by the Collateral Agent,
subject to the terms hereof, as Collateral. Unless an Event of Default is in
existence, the Debtor shall be entitled to receive all cash Dividends paid in
respect of any of the Collateral (subject to the restrictions of any other Loan
Document). During the continuance of an Event of Default, the Collateral Agent
shall be entitled to all Dividends, and to any sums paid upon or in respect of
any Collateral, and to any additional securities issued in respect of the
Securities Collateral, upon the liquidation, dissolution, or reorganization of
the issuer thereof, all of which shall be paid to the Collateral Agent to be
held by it as additional collateral security for the Obligations and
application to the Obligations as provided in the Intercreditor Agreement. All
Dividends paid or distributed in respect of the Collateral which are received
by the Debtor in violation of this Agreement shall, until paid or delivered to
the Collateral Agent, be held by the Debtor in trust on behalf of and for the
benefit of the Collateral Agent as additional Collateral for the Obligations.
Section 3.7 Right of the Collateral Agent to Notify Issuers. At
any time during the continuance of an Event of Default, the Collateral Agent
may notify issuers of the Securities Collateral to make payments of all
Dividends directly to the Collateral Agent and the Collateral Agent may take
control of all proceeds of any Securities Collateral. Until the Collateral
Agent elects to exercise such rights, during the continuance of an Event of
Default, the Debtor, as agent of the Collateral Agent, shall collect and
segregate all Dividends and other amounts paid or distributed with respect to
the Securities Collateral. To the extent that the Collateral Agent
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has notified any issuer of Securities Collateral of an Event of Default and
such Event of Default is cured or otherwise waived, the Collateral Agent shall
promptly notify such issuer of such fact.
Section 3.8 The Collateral Agent Appointed Attorney-in-Fact. The
Debtor hereby irrevocably appoints the Collateral Agent the Debtor's
attorney-in-fact (exercisable during the continuance of an Event of Default),
with full authority in the place and stead of the Debtor and in the name of the
Debtor or otherwise to take any action and to execute any instrument (in
accordance with this Agreement, including without limitation, Section 4.2
hereof) which the Collateral Agent may deem reasonably necessary to accomplish
the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Collateral Agent in accordance with Section 3.3,
(b) to ask for, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due
under or in connection with the Collateral,
(c) to receive, indorse, and collect any drafts or other
Instruments, documents and Chattel Paper in connection with clauses (a) or (b)
above, and
(d) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem reasonably necessary for the
collection of any of the Collateral or otherwise to enforce compliance with the
terms and conditions of any Collateral or the rights of the Collateral Agent
with respect to any of the Collateral. THE DEBTOR HEREBY IRREVOCABLY GRANTS TO
THE COLLATERAL AGENT THE DEBTOR'S PROXY (EXERCISABLE DURING THE CONTINUANCE OF
AN EVENT OF DEFAULT) TO VOTE ANY SECURITIES COLLATERAL AND APPOINTS THE
COLLATERAL AGENT THE DEBTOR'S ATTORNEY-IN-FACT (EXERCISABLE DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT WHICH IS CONTINUING) TO PERFORM ALL
OBLIGATIONS OF DEBTOR UNDER THIS AGREEMENT. THE PROXY AND EACH POWER OF
ATTORNEY HEREIN GRANTED ARE COUPLED WITH AN INTEREST AND ARE IRREVOCABLE PRIOR
TO FINAL PAYMENT IN FULL OF THE OBLIGATIONS.
This appointment as attorney-in-fact and this proxy shall terminate
upon the termination of this Agreement pursuant to Section 5.3 hereof.
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ARTICLE 4
Rights and Powers of the Collateral Agent
Section 4.1 The Collateral Agent May Perform. If the Debtor
fails to perform any agreement contained herein, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the reasonable
expenses of the Collateral Agent incurred in connection therewith shall be
payable by the Debtor under Section 4.5.
Section 4.2 The Collateral Agent's Duties. The powers conferred
on the Collateral Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the duty to exercise reasonable care in respect of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Collateral Agent has or is deemed to have knowledge of such matters, or as
to the taking of any necessary steps to preserve rights against prior parties.
The Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Collateral Agent
accords property it holds as collateral generally. Except as provided in this
Section 4.2 and except to the extent of any gross negligence or willful
misconduct of the Collateral Agent or the other Secured Parties, the Collateral
Agent shall not have any duty or liability to protect or preserve any
Collateral or to preserve rights pertaining thereto. Nothing contained in this
Agreement shall be construed as requiring or obligating the Collateral Agent,
and the Collateral Agent shall not be required or obligated, to (i) present or
file any claim or notice or take any action, with respect to any Collateral or
in connection therewith or (ii) notify the Debtor of any decline in the value
of any Collateral.
Section 4.3 Remedies. If any Event of Default shall have
occurred and be continuing:
(a) The Collateral Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Texas at
that time (the "UCC") (whether or not the UCC applies to the affected
Collateral), and also may (i) require the Debtor to, and the Debtor hereby
agrees that it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral which is capable of being
assembled as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent which is
reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Collateral or any portion thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may reasonably deem commercially reasonable. The
Debtor agrees that, to the extent notice of sale shall be required by law, ten
days' written notice to the Debtor of the time and
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place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification, provided that ten days' written
notice does not violate any Applicable Law. The Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Collateral Agent may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned.
(b) All cash proceeds received by the Collateral Agent upon any
sale of, collection of, or other realization upon, all or any part of the
Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and
expenses incurred in connection with the sale of, collection of or
other realization upon Collateral, including reasonable attorneys'
fees and disbursements;
Second: To the payment of the Obligations as provided in the
Intercreditor Agreement and in such order and in such manner as
provided in the Intercreditor Agreement (with the Debtor remaining
liable for any deficiency); and
Third: To the extent of the balance (if any) of such proceeds, to the
payment to the Debtor or other Person legally entitled thereto.
(c) All payments received by the Debtor under or in connection
with any Collateral shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Debtor and, after
receipt of written notice from the Collateral Agent, shall be forthwith paid
over to the Collateral Agent in the same form as so received (with any
necessary indorsement).
(d) Because of the Securities Act of 1933, as amended ("Securities
Act"), and other laws, including without limitation state "blue sky" laws, or
contractual restrictions or agreements, there may be legal restrictions or
limitations affecting the Collateral Agent in any attempts to dispose of the
Collateral and the enforcement of its rights hereunder. For these reasons, the
Collateral Agent is hereby authorized by the Debtor, but not obligated, during
the continuance of any Event of Default, to sell or otherwise dispose of any of
the Collateral at private sale, subject to an investment letter, or in any
other manner which will not require the Collateral, or any part thereof, to be
registered in accordance with the Securities Act, or the rules and regulations
promulgated thereunder, or any other law. The Debtor clearly understands that
the Collateral Agent may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Collateral than would otherwise be obtainable if same were
registered and sold in the open market. No sale so made in good faith by the
Collateral Agent shall be deemed to be not "commercially reasonable" because so
made. The Debtor agrees that in the event the Collateral Agent shall, during
the continuance of an Event of Default, sell the Collateral or any portion
thereof at any private sale or sales, the Collateral Agent shall have the right
to rely upon the advice and opinion of appraisers and other Persons, which
appraisers and other Persons are acceptable to
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the Collateral Agent, as to the best price reasonably obtainable upon such a
private sale thereof. In the absence of actual fraud, such reliance shall be
conclusive evidence that the Collateral Agent handled such matter in a
commercially reasonable manner under Applicable Law.
(e) If the Collateral Agent shall determine to exercise its right
to sell any or all of the Collateral, and if in the opinion of counsel for the
Collateral Agent it is necessary, or if in the opinion of the Collateral Agent
it is advisable, to have the Collateral or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Debtor will, to the
fullest extent it has the capability to do so, cause the issuers of the
Collateral contemplated to be sold to execute and deliver, and cause the
directors and officers of each thereof to execute and deliver, all at the
Debtor's reasonable expense, all such instruments and documents, and to do or
cause to be done all such other acts and things, as may be necessary or, in the
opinion of the Collateral Agent, advisable to register the Collateral or that
portion thereof to be sold, under the provisions of the Securities Act and to
cause the registration statement relating thereto to become effective and to
remain effective for such period as the Collateral Agent may deem reasonably
necessary to facilitate the sale or other disposition of such Collateral from
the date of the first public offering of the Collateral or that portion thereof
to be sold, and to make all amendments thereto and/or to the related prospectus
which, in the opinion of the Collateral Agent, are reasonably necessary, all in
conformity with the requirements of the Securities Act. The Debtor shall use
its reasonable best efforts to cause each issuer of Collateral to comply with
the provisions of the securities or "blue sky" laws of any jurisdiction which
the Collateral Agent shall designate and to cause each issuer to make available
to its security holders, as soon as practicable, an earnings statement which
will satisfy the provisions of the Securities Act and applicable "blue sky"
laws.
(f) (i) The Debtor will maintain the accounts listed as
restricted and blocked accounts on Schedule 3 (the "Restricted
Accounts") with the Collateral Agent, in the name of the Debtor, but
such Restricted Accounts shall be under the sole control and dominion
of the Collateral Agent.
(ii) It shall be a term and condition of each Restricted
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to such Restricted Account, that no amount
(including interest and other proceeds of the cash and other property
in the Restricted Account) shall be paid or released to or for the
account of, or withdrawn by or for the account of, the Debtor or any
other Person from such Restricted Account.
(iii) After the occurrence and continuance of an Event of
Default, the Debtor will promptly instruct each account debtor in
respect of Receivables arising from any sale of Inventory in the
ordinary course of business to make payment to the Restricted
Accounts.
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The Debtor understands and acknowledges that the Collateral Agent may and
permits the Collateral Agent to remove amounts from the Restricted Accounts
from time to time and use the amounts to reduce the Obligations.
Section 4.4 Further Approvals Required.
(a) In connection with the exercise by the Collateral Agent of its
rights hereunder that effects the disposition of or use of any Collateral, it
may be necessary to obtain the prior consent or approval of Tribunals and other
Persons to a transfer or assignment of Collateral.
(b) The Debtor hereby agrees, during the continuance of an Event
of Default, to execute, deliver, and file, and hereby appoints the Collateral
Agent as its attorney-in-fact, during the continuance of an Event of Default,
to execute, deliver, and file on the Debtor's behalf and in the Debtor's name,
all applications, certificates, filings, instruments, and other documents
(including without limitation any application for an assignment or transfer of
control or ownership) that may be necessary, in the Collateral Agent's
reasonably opinion, to obtain such consents, waivers, or approvals. Upon
request by the Collateral Agent, the Debtor further agrees to use its
reasonable best efforts to obtain the foregoing consents, waivers, and
approvals. The Debtor acknowledges that there is no adequate remedy at law for
failure by it to comply with the provisions of this Section 4.4 and that such
failure would not be adequately compensable in damages, and therefore agrees
that this Section 4.4 may be specifically enforced. This appointment as
attorney-in-fact shall terminate upon the termination of this Agreement
pursuant to Section 5.3 hereof.
SECTION 4.5 INDEMNITY AND EXPENSES. (a) THE DEBTOR AGREES TO
INDEMNIFY THE COLLATERAL AGENT AND EACH OTHER SECURED PARTY FROM AND AGAINST
ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE ATTORNEYS'
FEES) ARISING OR RESULTING FROM THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION,
ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES OR
LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF THE COLLATERAL AGENT OR ANY OTHER
SECURED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED FROM THE
COLLATERAL AGENT'S OR ANY OTHER SECURED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, BUT EXCLUDING (I) ANY CLAIM OR LIABILITY THAT ARISES AS A DIRECT
RESULT OF THE OPERATION OF ANY COLLATERAL BY THE COLLATERAL AGENT OR ANY OF THE
OTHER SECURED PARTIES AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING ON OR WITH RESPECT TO SUCH COLLATERAL PRIOR TO
FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), (II) MATTERS RAISED
EXCLUSIVELY BY A PARTICIPANT AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED
PARTY, AND
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(iii) MATTERS RAISED BY ONE LENDER AGAINST A LENDER OR BY ANY SHAREHOLDERS OF A
LENDER AGAINST A LENDER OR ITS MANAGEMENT.
(b) The Debtor will upon demand pay to the Collateral Agent the
amount of any and all reasonable out-of- pocket expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder or (iv) the failure by the Debtor to perform or observe any of the
provisions hereof.
ARTICLE 5
Miscellaneous
Section 5.1 Cumulative Rights. All rights of the Collateral
Agent and each other Secured Party under the Loan Documents are cumulative of
each other and of every other right which the Collateral Agent and each other
Secured Party may otherwise have at law or in equity or under any other
contract or other writing for the enforcement of the security interest herein
or the collection of the Obligations. The exercise of one or more rights shall
not prejudice or impair the concurrent or subsequent exercise of other rights.
Section 5.2 Modifications; Amendments; Etc. No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
the Debtor here from, shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent (and the Debtor, in case of
amendment), and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 5.3 Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the latest of the Release Dates set forth in the
Credit Agreements, (b) be binding upon the Debtor, its successors and assigns,
and (c) inure to the benefit of, and be enforceable by, the Collateral Agent
and its successors, transferee and assigns as permitted by the Intercreditor
Agreement. Upon any such termination, the Collateral Agent will, at the
Debtor's expense, execute and deliver to Debtor such documents as the Debtor
shall reasonably request to evidence such termination. The Debtor agrees that
to the extent that the Collateral Agent or any other Secured Party receives any
payment or benefit and such payment or benefit, or any part thereof, is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or is required to be repaid to a trustee, receiver, or any other party under
any Debtor Relief Law, common law or equitable cause, then to the extent of
such payment or benefit, the Obligations or part thereof intended to be
satisfied shall be revived and continued in full force and effect as if such
payment or benefit had not been made and, further, any such repayment by the
Collateral Agent or any other Secured Party, to the extent that the Collateral
Agent or any other Secured Party did not
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<PAGE> 150
directly receive a corresponding cash payment, shall be added to and be
additional Obligations payable upon demand by the Collateral Agent or any other
Secured Party and secured hereby, and, if the lien and security interest hereof
shall have been released, such lien and security interest shall be reinstated
with the same effect and priority as on the date of execution hereof all as if
no release of such lien or security interest had ever occurred, to the extent
not prohibited by Applicable Law.
SECTION 5.4 GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF
A JURISDICTION OTHER THAN THE STATE OF TEXAS.
SECTION 5.5 WAIVER OF JURY TRIAL. THE COLLATERAL AGENT AND THE
DEBTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ALL
RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 5.6 The Collateral Agent's Right to Use Agents. The
Collateral Agent may exercise its rights under this Agreement through an agent
or other designee.
Section 5.7 Waivers of Rights Inhibiting Enforcement. To the
extent not prohibited by Applicable Law, the Debtor waives all rights of
redemption, appraisal, valuation or to the marshalling of assets.
Section 5.8 Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications
provided for hereunder shall be in writing (except in those cases where giving
notice by telephone is expressly permitted) and shall be deemed to have been
given on the date personally delivered or sent by telecopy (answer back
received), or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, addressed to
the party to which such notice is directed at its address determined as
provided in this Section 5.8.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or delivered at
the following respective addresses and telecopier and telephone numbers and to
the attention of the following individuals or departments:
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<PAGE> 151
(i) if to the Debtor, to it at:
[c/o] Pillowtex Corporation
411 Mint Way
Dallas, Texas 75237
Telephone No.: (214) 333-3225
Telecopier No.: (214) 330-6016
Attention: Chief Financial Officer
(ii) if to the Collateral Agent, to it at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0280
Telecopier No.: (214) 508-0980
Attention: Suzanne Smith
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify by giving 10 days' written notice to the other
specifically captioned "Notice of Change of Address".
Section 5.9 Successors and Assigns. All of the provisions of
this Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 5.10 Loan Document. This Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 5.11 Consent to Jurisdiction; Waiver of Immunities.
(a) The Debtor and the Collateral Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or Texas
State courts sitting in Dallas, Texas in any action or proceeding arising out
of or relating to this Agreement, and the Debtor and the Collateral Agent each
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
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<PAGE> 152
(b) Nothing in this section shall limit the right of the Debtor,
the Collateral Agent or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 5.12 Severability. Any provision of this Agreement which
is for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without invalidating the
remaining provisions hereof in such jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
Section 5.13 Obligations Not Affected. To the fullest extent
permitted by Applicable Law, the obligations of the Debtor under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(a) any amendment or modification or addition or supplement to any
other Loan Document, any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Collateral Agent
or any other Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty, any collateral or the Collateral or
any part thereof provided pursuant to, this Agreement or any other Loan
Document;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement or any other Loan Document or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor, any other
Obligor or any other Person, whether or not the Debtor shall have notice or
knowledge of any of the foregoing.
Section 5.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.
[SECTION 5.15 NO NOVATION. THE EXECUTION, DELIVERY AND
EFFECTIVENESS OF THIS AGREEMENT SHALL NOT DISCHARGE OR RELEASE ANY LIEN OR
PRIORITY OF ANY SECURITY AGREEMENT, PLEDGE AGREEMENT OR OTHER INSTRUMENT
SECURING THE DEBTOR'S OBLIGATIONS FOR THE PAYMENT OF MONEY OUTSTANDING UNDER
THE EXISTING CREDIT AGREEMENT. NOTHING HEREIN CONTAINED SHALL BE CONSTRUED AS
A SUBSTITUTION, NOVATION, SATISFACTION OR DISCHARGE OF ANY COLLATERAL DOCUMENTS
(AS DEFINED IN THE EXISTING CREDIT AGREEMENT) OR THE LIENS GRANTED HEREBY, ALL
OF WHICH SHALL CONTINUE AND REMAIN IN FULL FORCE AND EFFECT, EXCEPT AS MODIFIED
HEREBY, OR BY INSTRUMENT EXECUTED CONCURRENTLY HEREWITH. THIS AGREEMENT
AMENDS, MODIFIES AND
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<PAGE> 153
RESTATES THAT CERTAIN RESTATED SECURITY AGREEMENT, DATED AS OF NOVEMBER 12,
1996, AMONG DEBTOR, CERTAIN OTHER AFFILIATES OF DEBTOR, AND NATIONSBANK OF
TEXAS, N.A.]
SECTION 5.16 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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<PAGE> 154
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.
DEBTOR:
[DEBTOR]
By:
-----------------------------------
Name: J. Mark Kirkpatrick
Title: Vice President and Treasurer
COLLATERAL AGENT:
NATIONSBANK OF TEXAS, N.A.
By:
-----------------------------------
Name: Suzanne B. Smith
Title: Vice President
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<PAGE> 155
Schedule 1
Equipment and Inventory Locations
Chief Place of Business, Chief Executive Office and
Location of Books and Records
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 156
Schedule 2
Trade Names
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 157
Schedule 3
Restricted Accounts
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 158
Schedule 4
Rolling Stock
*To Be Provided By Debtor*
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
<PAGE> 159
EXHIBIT D
================================================================================
INTELLECTUAL PROPERTY SECURITY AGREEMENT AND ASSIGNMENT
Between
--------------------------------------------------
as Debtor
and
NATIONSBANK OF TEXAS, N.A.
Collateral Agent
December 19, 1997
================================================================================
<PAGE> 160
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
Grant of Security Interest
Section 1.1 Assignment and Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Security for Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Validity and Priority of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4 Maintenance of Status of Security Interest, Collateral and Rights . . . . . . . . . . . . . 3
(a) Required Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Authorized Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.5 Debtor Remains Obligated; the Collateral Agent and Secured Parties Not Obligated . . . . . 4
Section 1.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
Representations and Warranties
Section 2.1 Authorization; Enforceability; Required Consents; Absence of Conflicts . . . . . . . . . . 4
Section 2.2 Rights of the Debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3 Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4 Registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.5 Other Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
Covenants
Section 3.1 Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.2 Preservation of Existence and Preservation of Enforceability . . . . . . . . . . . . . . . 6
Section 3.3 No Disposition of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 Additional Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
Event of Default
Section 4.1 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 161
<TABLE>
<S> <C> <C>
Section 4.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4.3 INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 5
Interpretation
Section 5.1 Definitional Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Certain Terms Defined by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.2 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 6
Miscellaneous
Section 6.1 Expenses of the Debtor's Agreements and Duties . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.2 Collateral Agent's Right to Perform on the Debtor's Behalf . . . . . . . . . . . . . . . . 12
Section 6.3 Collateral Agent's Right to Use Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.4 Limitation of the Collateral Agent's Obligations With Respect to Collateral . . . . . . . . 13
Section 6.5 Rights of the Collateral Agent under UCC and Applicable Law . . . . . . . . . . . . . . . . 13
Section 6.6 Waivers of Rights Inhibiting Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.7 Notices and Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Manner of Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.8 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 6.9 Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.11 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.12 Consent to Jurisdiction; Waiver of Immunities . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.15 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.16 Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.17 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.18 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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<PAGE> 162
INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT, dated as of December 19,
1997, between ____________________________, a _______ corporation (the
"Debtor"), and NationsBank of Texas, N.A., a national banking association, in
its capacity as collateral agent (the "Collateral Agent"), for itself, each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below) a party to the
Amended and Restated Credit Agreement described below (the "Revolving
Lenders"), NationsBank of Texas, N.A., in its capacity as administrative agent
under the Amended and Restated Credit Agreement (the "Revolving Agent"), each
lender (and affiliate thereof that has entered into a Hedge Agreement with any
Obligor (as defined in the Credit Agreements defined below) a party to the Term
Credit Agreement described below (the "Term Lenders"), and NationsBank of
Texas, N.A., in its capacity as administrative agent under the Term Credit
Agreement (the "Term ) (singularly, a "Secured Party" and collectively,
"Secured Parties").
RECITALS
(1) [The Debtor] [Pillowtex Corporation, a Texas corporation (the
"Borrower")], the Revolving Agent and the Revolving Lenders entered into that
certain Amended and Restated Credit Agreement, dated as of December 19, 1997
(as amended, modified, supplemented or restated from time to time, the "Amended
and Restated Credit Agreement").
(2) [The Debtor] [the Borrower], the Term Agent and the Term
Lenders entered into that certain Term Credit Agreement, dated as of December
19, 1997 (as amended, modified, supplemented or restated from time to time, the
"Term Credit Agreement"). The Amended and Restated Credit Agreement and the
Term Credit Agreement are herein, collectively, the "Credit Agreements."
Capitalized terms used herein and not otherwise defined herein shall have the
meanings given to them in each of the Credit Agreements or in Section 5.1.
(3) It is the intention of the parties hereto that this Agreement
create a first priority security interest in certain property of the Debtor
securing the payment of the obligations set forth in Section 1.2 hereof,
subject to only Permitted Liens.
(4) It is a condition precedent to the obligation of the Revolving
Lenders and the Term Lenders, as appropriate, to make the Advances, and issue,
or participate in the issuance of Letters of Credit under the Credit Agreements
that the Debtor shall have executed and delivered to the Collateral Agent this
Agreement.
<PAGE> 163
AGREEMENT
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and in order to induce Secured Parties, as appropriate,
to, among other things, make the Advances and issue, or participate in the
issuance of, Letters of Credit under the Credit Agreements, the Debtor hereby
agrees with the Collateral Agent for its benefit and the ratable benefit of the
other Secured Parties, as hereinafter set forth.
ARTICLE 1
Grant of Security Interest
Section 1.1 Assignment and Grant of Security Interest. The
Debtor hereby assigns to, and pledges and grants to the Collateral Agent, for
its benefit and the ratable benefit of the other Secured Parties, a security
interest in, the entire right, title and interest of the Debtor, in and to the
Collateral.
Section 1.2 Security for Obligations. This Agreement creates an
enforceable security interest in the Collateral, subject only to Permitted
Liens, as provided herein, securing the payment and performance of any and all
obligations now or hereafter existing of the Debtor and each other Obligor
under the Credit Agreements and the other Loan Documents, including any
extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal, interest, fees, expenses, indemnification or otherwise)
(all such obligations of the Debtor and each other Obligor being the
"Obligations"). Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts which constitute part of the
Obligations and would be owed by the Debtor and each other Obligor to the
Collateral Agent or any other Secured Party under any Loan Document, but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding under any Debtor Relief Law
involving the Debtor and any other Obligor (including all such amounts which
would become due or would be secured but for the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding of the Debtor, any other Obligor or any other Person under any
Debtor Relief Law). [NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IN ANY
ACTION OR PROCEEDING INVOLVING ANY STATE CORPORATE LAW, OR ANY STATE OR FEDERAL
BANKRUPTCY, INSOLVENCY, REORGANIZATION OR OTHER LAW AFFECTING THE RIGHTS OF
CREDITORS GENERALLY IF THE SECURITY INTEREST GRANTED BY THE DEBTOR HEREIN SHALL
BE HELD VOID, INVALID OR UNENFORCEABLE, OR SUBORDINATED TO THE LIENS OR CLAIMS
OF ANY OTHER CREDITORS, ON ACCOUNT OF THE AMOUNT OF THE OBLIGATIONS SECURED BY
SUCH SECURITY INTEREST THEN, THE AMOUNT OF THE OBLIGATIONS SECURED BY SUCH
SECURITY INTEREST SHALL, WITHOUT ANY ACTION BY THE DEBTOR, THE COLLATERAL
AGENT, ANY OTHER SECURED PARTY OR ANY OTHER PERSONS, BE AUTOMATICALLY LIMITED
AND REDUCED TO THE HIGHEST AMOUNT THAT IS VALID AND ENFORCEABLE AND NOT
SUBORDINATED TO THE CLAIMS OF OTHER CREDITORS AS DETERMINED IN SUCH ACTION OR
PROCEEDING.]
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<PAGE> 164
Section 1.3 Validity and Priority of Security Interest. The
Debtor agrees that the Security Interest shall at all times be valid,
perfected, continuing and binding and enforceable against the Debtor and all
other Persons, in accordance with the terms hereof, as security for the
Obligations, and that the Collateral shall not at any time be subject to any
other Lien, except Permitted Liens.
Section 1.4 Maintenance of Status of Security Interest,
Collateral and Rights.
(a) Required Action. The Debtor shall take all action that may be
necessary and that the Collateral Agent may reasonably request, so as at all
times (i) to maintain the validity, perfection, enforceability and priority of
the Security Interest in the Collateral in conformity with the requirements of
Section 1.3, and (ii) to protect and preserve, and to enable the exercise or
enforcement of, the rights of the Collateral Agent hereunder, including (A)
immediately discharging all Liens, except Permitted Liens, and (B) executing
and delivering financing or continuation statements, instruments of pledge,
notices and instructions in each case in form and substance reasonably
satisfactory to the Collateral Agent.
(b) Protection of Collateral. Except as permitted under the
Credit Agreements, the Debtor shall protect, preserve, renew and maintain, in
each case in a manner consistent with reasonably responsible business and legal
practices, all rights of the Debtor in the Collateral, including (i)
prosecuting such suits, proceedings or other actions for infringement, unfair
competition, dilution or other damage as the Debtor in its reasonable business
judgment deems appropriate under the circumstances or (ii) appearing in and
defending any action or proceeding that may materially adversely affect the
Debtor's title to or the Collateral Agent's security interest in all or any
material part of the Collateral, when such action is in the Debtor's reasonable
business judgment necessary to protect the Debtor's Collateral. Any expenses
incurred by the Debtor in protecting, preserving, renewing and maintaining the
Collateral shall be borne by the Debtor. To the maximum extent permitted by
Laws, during the continuance of an Event of Default, the Collateral Agent shall
have the right, without taking title to any Collateral, to bring suit to
enforce any or all Collateral or its Security Interest in any or all of the
Collateral, in which event the Debtor shall, at the reasonable request of the
Collateral Agent, do any and all lawful acts and execute any and all proper
documents reasonably required by the Collateral Agent in aid of such
enforcement. All reasonable costs, reasonable expenses and other moneys
reasonably advanced by the Collateral Agent in connection with the foregoing
shall, whether or not there are then outstanding any amounts under the Credit
Agreements, be treated as Obligations, but the making of any advances by the
Collateral Agent or any other Secured Party shall not relieve the Debtor of any
default hereunder.
(c) Authorized Action. The Collateral Agent is hereby authorized
to file one or more continuation statements, and during the continuance of an
Event of Default, financing statements, amendments thereto and instruments of
pledge, notices and instructions without the signature of or in the name of the
Debtor when permitted by Applicable Law provided that the Collateral Agent. A
carbon, photographic or other reproduction of this Agreement or of any
financing
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<PAGE> 165
statement filed in connection with this Agreement shall be sufficient as a
financing statement where permitted by Applicable Law.
(d) Registrations. Except as permitted under the Credit
Agreements, the Debtor shall renew or maintain, as specified in and permitted
by any Applicable Law, and shall make any filings necessary to renew or
maintain the Registrations referred to in Section 2.4.
Section 1.5 Debtor Remains Obligated; the Collateral Agent and
Secured Parties Not Obligated. The grant by the Debtor to the Collateral Agent
of the Security Interest shall not relieve the Debtor from the performance of
any term, covenant, condition or agreement on its part to be performed or
observed (including by virtue of the exercise by the Collateral Agent of any of
its rights hereunder), or from any liability to any Person, under or in respect
of any of the Collateral or impose any obligation on the Collateral Agent or
any Secured Party or impose any liability on the Collateral Agent or any other
Secured Party for any act or omission on the part of the Debtor relative
thereto.
Section 1.6 Termination.
(a) After the latest of the Release Dates set forth in the Credit
Agreements, (i) this Agreement shall terminate and be of no further force and
effect (except as provided in Section 1.6(b)) and all rights to the Collateral
shall revert to the Debtor, and (ii) the Collateral Agent will, at the Debtor's
expense, execute and deliver to the Debtor such documents as the Debtor shall
reasonably request to evidence such termination.
(b) The Debtor agrees that, to the extent permitted by Applicable
Law, if at any time all or any part of any payment theretofore applied by the
Collateral Agent and the other Secured Parties to any of the Obligations is or
must be rescinded or returned by any Person for any reason whatsoever
(including the insolvency, bankruptcy or reorganization of the Debtor or any
other Person), such Obligations shall, for the purposes of this Agreement, to
the extent that such payment is or must be rescinded or returned, be deemed to
have continued in existence, notwithstanding such application by the Collateral
Agent or any other Secured Party, and the Security Interest granted hereunder
shall continue to be effective or be reinstated, as the case may be, as to such
Obligations, all as though such application by the Collateral Agent or any
other Secured Party had not been made.
ARTICLE 2
Representations and Warranties
The Debtor represents and warrants as follows:
Section 2.1 Authorization; Enforceability; Required Consents;
Absence of Conflicts. The Debtor has the legal power, and has taken all
necessary legal action to authorize it, to
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<PAGE> 166
execute, deliver and perform in accordance with its terms this Agreement and to
execute and deliver all financing statements and other filings contemplated
hereby, including those supplementary or additional filings referred to in
Section 3.5. This Agreement has been duly executed and delivered by the Debtor
and is the legal, valid and binding obligation of the Debtor, enforceable in
accordance with its terms subject to (i) equitable principles generally and
(ii) the Debtor Relief Laws (insofar as such laws relate to the bankruptcy,
insolvency or similar event of the Debtor). The execution, delivery and
performance in accordance with its terms by the Debtor of this Agreement does
not and (absent any change in any Law) will not (a) except for the filing in
the jurisdiction set forth in Schedule 1 hereto and acceptance of financing
statements and continuation statements in connection therewith delivered to the
Collateral Agent describing this Agreement and the Collateral under the UCC,
the timely filing of this Agreement with the United States Patent and Trademark
Office and acceptance thereof to the extent permitted by Applicable Law and
those supplementary or additional filings referred to in Section 3.5, require
any consent or approval on or prior to the Agreement Date not already obtained,
including any consent or approval of any shareholder or partner of or other
holder of an equity interest in the Debtor except to the extent that the
failure to obtain such consent or approval could not reasonably be expected to
have a Material Adverse Effect, (b) violate or conflict with its organizational
documents, or (c) violate or conflict with, result in a breach of, constitute a
default under, or result in or require the creation of any Lien (other than the
Security Interest) upon any assets of the Debtor under any contract or
agreement or Applicable Laws, in each case the effect of which could reasonably
be expected to have a Material Adverse Effect.
Section 2.2 Rights of the Debtor. The Debtor is the legal and
beneficial owner of the Collateral free and clear of any Lien, except for the
Security Interest and Permitted Liens. No effective financing statement or
other instrument similar in effect naming the Debtor as "debtor" covering all
or any part of the Collateral is on file in any recording office, except such
as (a) may have been filed in favor of the Collateral Agent relating to this
Agreement, (b) may be filed in respect of Permitted Liens, and (c) may be filed
in connection with respect to which the requirements of Section 3.1(i) of each
of the Credit Agreements have been notified.
Section 2.3 Perfection. This Agreement, together with the
filings referred to in Section 2.1(a) above, will create in favor of the
Collateral Agent valid and perfected security interests in the Collateral and
such security interests will be a first priority security interest on existing
Registrations, subject only to Permitted Liens; provided that additional
actions may be required with respect to the perfection of proceeds of the
Collateral held on the date hereof.
Section 2.4 Registrations. Annexes A-1, A-2, B-1 and B-2, as
applicable, set forth a true and complete list of all material Registrations in
the United States Patent and Trademark Office and related state filings owned
by the Debtor as of the date hereof.
Section 2.5 Other Property. On the date hereof, the Debtor has
no interest in any Copyright that is material to the operation of the Debtor's
existing and anticipated business and that are registered or subject to any
application for registration, except where the failure to do
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so could not reasonably be expected to have a Material Release Effect, and the
Debtor does not believe, after appropriate review of all relevant facts and
circumstances, that any registration or filing with respect to any interest the
Debtor may have in any property which may constitute Copyrights is material to
the operation of the Debtor's existing and anticipated business.
ARTICLE 3
Covenants
Section 3.1 Chief Executive Office. The Debtor shall maintain
its chief executive office and the office where the books and records relating
to the Collateral are kept only at the location specified on Schedule 1 to the
Security Agreement executed by the Debtor pursuant to the Credit Agreements.
Section 3.2 Preservation of Existence and Preservation of
Enforceability. The Debtor shall, so long as any of the Obligations remain
outstanding, take all reasonable action and obtain all material Necessary
Authorizations reasonably required so that its obligations under this Agreement
will at all times be legal, valid and binding and enforceable in accordance
with its terms, subject to (i) equitable principles generally and (ii) the
Debtor Relief Laws (insofar as such laws relate to the bankruptcy, insolvency
or similar event of the Debtor), except, in each case, where the failure to
obtain such Necessary Authorizations could not reasonably be expected to have a
Material Adverse Effect.
Section 3.3 No Disposition of Collateral. Except to the extent
permitted by the Credit Agreements, the Debtor shall not sell, transfer or
otherwise dispose of any of the Collateral or any interest therein that is
material to the Debtor's business, or grant any license thereunder, except for
licenses granted or other dispositions in the ordinary course of business.
Section 3.4 Additional Property. If after the date hereof, the
Debtor uses or acquires any interest in any Registration which is within the
definition of "Collateral" or modification, reformulation or other alteration
to any Registration that is material to the Debtor's business, the Debtor shall
execute and deliver to the Collateral Agent all documents and instruments the
Collateral Agent may reasonably require to grant to the Collateral Agent a
perfected first priority Lien therein (subject only to Permitted Liens) and to
subject all of such interest to this Agreement, including but not limited to
any new, supplementary or additional filings.
ARTICLE 4
Event of Default
Upon the occurrence and during the continuance of an Event of Default:
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Section 4.1 Application of Proceeds. All cash proceeds received
by the Collateral Agent upon any sale of, collection of, or other realization
upon, all or any part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket costs and
expenses incurred in connection with the sale of, collection of or other
realization upon Collateral, including reasonable attorneys' fees and
disbursements;
Second: To the payment of the Obligations as provided in the
Intercreditor Agreement and in such order and in such manner as provided in the
Intercreditor Agreement (with the Debtor remaining liable for any deficiency);
and
Third: To the extent of the balance (if any) of such proceeds, to the
payment to the Debtor or other Person legally entitled thereto.
Section 4.2 Remedies.
(a) If an Event of Default has occurred and is continuing, the
Collateral Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the Uniform
Commercial Code in effect in the State of Texas at that time (the "UCC")
(whether or not the Uniform Commercial Code applies to the affected
Collateral), and also may (i) require the Debtor to, and the Debtor hereby
agrees that it will at its expense and upon request of the Collateral Agent
forthwith, assemble all or part of the Collateral (to the extent capable of
being assembled) as directed by the Collateral Agent and make it available to
the Collateral Agent at a place to be designated by the Collateral Agent, which
is reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Collateral or any portion thereof in one or more
parcels at public or private sale, at any of the Collateral Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent may deem commercially reasonable. The Debtor
agrees that, to the extent notice of sale shall be required by Applicable Law,
ten days' written notice to the Debtor of the time and place of any public sale
or the time after which any private sale is to be made shall constitute
reasonable notification, provided that ten days' written notice does not
violate any Applicable Law. The Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
The Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Collateral Agent may be the purchaser at any sale of the
Collateral and pay all or any part of the purchase price thereof by cancelling
part or all of the Obligations.
(b) If an Event of Default has occurred and is continuing, the
Collateral Agent may obtain the appointment of a receiver of the Collateral.
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(c) If an Event of Default has occurred and is continuing, the
Collateral Agent may without notice to the Debtor and at such time or times as
the Collateral Agent in its reasonable discretion may determine, exercise any
or all of the Debtor's rights in, to and under, or in any way connected with or
related to, any or all of the Collateral in accordance with Section 6.4,
including (i) enforcing the performance of, and exercising any or all of the
Debtor's rights with respect to the Collateral, in each case by legal
proceedings or otherwise and (ii) settling, adjusting, compromising, extending,
renewing, discharging and releasing any or all of, and any legal proceedings
brought with respect to any or all of, the Debtor's rights with respect to the
Collateral.
(d) If an Event of Default has occurred and is continuing, the
Collateral Agent may exercise any other right or remedy available under any
other Loan Document or Applicable Laws.
(e) The Debtor agrees that, in any sale of any of the Collateral
after an Event of Default that has occurred and is continuing, the Collateral
Agent is authorized to comply with any limitation or restriction in connection
with such sale as counsel may advise the Collateral Agent is necessary in order
to avoid any violation of applicable Law (including compliance with such
procedures as may restrict the number of prospective bidders or purchasers,
require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to Persons
who will represent and agree that they are purchasing for their own account or
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchase by any Tribunal, and the Debtor further agrees that such compliance
shall not result in such sale being considered or deemed not to have been made
in a commercially reasonable manner, nor shall the Collateral Agent or any
other Secured Party be liable or accountable to the Debtor for any discount
allowed solely by reason of the fact that such Collateral was sold in
compliance with any such limitation or restriction.
(f) Upon written demand of the Collateral Agent, after an Event of
Default has occurred and in continuing the Debtor shall execute and deliver to
the Collateral Agent an assignment or assignments of the Collateral and such
other documents as are reasonably necessary to carry out the intent and
purposes of this Agreement. The Debtor agrees that such an assignment and/or
recording shall be applied to reduce the Obligations outstanding only to the
extent that the Collateral Agent or any other Secured Party receives cash
proceeds in respect of the sale of, or realization upon, the Collateral.
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<PAGE> 170
(g) For the purpose of enabling the Collateral Agent to exercise
rights and remedies under this Section 4.2 at such time as the Collateral Agent
shall be lawfully entitled to exercise such rights and remedies, and for no
other purpose, the Debtor hereby grants to the Collateral Agent, an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to the Debtor) to use, assign, license or sublicense any of
the Collateral now owned or hereafter acquired by the Debtor, wherever the same
may be located, including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
programs used for the compilation or printout thereof.
SECTION 4.3 INDEMNITY AND EXPENSES.
(a) THE DEBTOR AGREES TO INDEMNIFY (WHICH SHALL BE PAYABLE FROM
TIME TO TIME ON DEMAND) THE COLLATERAL AGENT AND OTHER SECURED PARTIES FROM AND
AGAINST ANY AND ALL CLAIMS, LOSSES AND LIABILITIES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THIS AGREEMENT (INCLUDING
ENFORCEMENT OF THIS AGREEMENT), EXPRESSLY INCLUDING SUCH CLAIMS, LOSSES, OR
LIABILITIES ARISING OUT OF MERE NEGLIGENCE OF THE COLLATERAL AGENT OR ANY OTHER
SECURED PARTY, EXCEPT CLAIMS, LOSSES OR LIABILITIES AS FINALLY JUDICIALLY
DETERMINED BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED SOLELY FROM
THE COLLATERAL AGENT'S OR ANY SECURED PARTY'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, BUT EXCLUDING (i) ANY CLAIM OR LIABILITY THAT ARISES AS A DIRECT
RESULT OF THE OPERATION OF ANY COLLATERAL BY THE COLLATERAL AGENT OR ANY OF THE
OTHER SECURED PARTIES AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING ON OR WITH RESPECT TO SUCH COLLATERAL PRIOR TO
FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), (ii) MATTERS RAISED
EXCLUSIVELY BY A PARTICIPANT AGAINST THE COLLATERAL AGENT OR ANY OTHER SECURED
PARTY, AND (iii) MATTERS RAISED BY ONE LENDER AGAINST A LENDER OR BY ANY
SHAREHOLDERS OF A LENDER AGAINST A LENDER OR ITS MANAGEMENT.
(b) The Debtor will upon demand pay to the Collateral Agent the
amount of any and all reasonable out-of- pocket expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Collateral Agent
hereunder, or (iv) the failure by the Debtor to perform or observe any of the
provisions hereof.
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ARTICLE 5
Interpretation
Section 5.1 Definitional Provision.
(a) Certain Terms Defined by Reference. The terms "collateral",
"inventory", "rights", and "security interest" shall have the meanings ascribed
thereto in the UCC, or, when capitalized, the meanings specified in subsection
(b) below.
(b) Other Defined Terms. For purposes of this Agreement:
"Agreement" means this Agreement, including all schedules, annexes and
exhibits hereto.
"Collateral" means the Debtor's rights, title and interests, (whatever
they may be) in each of the following, in each case whether now or hereafter
existing or now owned or hereafter acquired by the Debtor and whether or not
the same is subject to Article 9 of the UCC, and wherever the same may be
located, but only to the extent such assets are not presently encumbered:
(i) the Trademarks and Goodwill;
(ii) the Patents;
(iii) all registrations or letters patent issued or applied
for (now or hereafter) with respect to the Trademarks and Patents and
renewals thereof in the United States and any state thereof (the
"Registrations");
(iv) any renewal, reissue, re-examination certificate,
extension or the like with respect to the Trademarks and Patents;
(v) all rights to use the Trademarks as trade names or
assumed names in all aspects of its business;
(vi) all inventions, processes, production methods,
proprietary information, know-how and trade secrets related to the
Patents;
(vii) all licenses, sublicenses or user or other agreements
granted in favor of or from the Debtor with respect to any of the
foregoing to the extent assignable without violation thereof, together
with any Goodwill connected with or symbolized by any such licenses
and agreements and the right to prepare for sale and sell any and all
inventory of the Debtor now or hereafter covered by such licenses and
agreements;
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<PAGE> 172
(viii) all proceeds and products of the foregoing. The
inclusion of "proceeds" of Collateral in the definition of
"Collateral" shall not be deemed a consent by the Collateral Agent to
any sale or other disposition of any Collateral not otherwise
specifically permitted by the terms hereof or by the Credit
Agreements.
"Copyright" means any copyright, copyright registration and
applications for such registration, all subject matter related to such
copyrights, in any and all forms, and all copyrights and applications for
registration of copyrights related to such copyrights.
"Goodwill" means the goodwill of the businesses connected with the use
of (or associated with) and symbolized by the Trademarks, but not any other
goodwill.
"Governmental Approval" means any authorization, consent, approval,
license or exemption of, registration or filing with, or report or notice to,
any Tribunal.
"Information" means data, certificates, reports, statements (including
financial statements), documents and other information in form (including
electronic media) reasonably acceptable to the Collateral Agent.
"Patents" means all patents, all inventions and subject matter related
to such patents, in any and all forms, and all patents and applications for
patents related to such patents, including but not limited to the patents
listed on Annex A-1 attached hereto, all inventions and all subject matter
related to such patents, in any and all forms, and all patents and applications
for patents related to such patents, including those patents and applications
listed on Annex A-2 attached hereto, together with the reissues, divisions,
continuations, renewals, extensions and continuations- in-part thereof, all
income, royalties, damages and payments now or hereafter due and payable under
and with respect thereto, including, without limitation, damages for past or
future infringements thereof and the right to sue for past, present and future
infringements thereof.
"Security Interest" means the continuing security interest of the
Collateral Agent in the Collateral intended to be effected by the terms of this
Agreement or any financing and continuation statements or other filings
contemplated hereby.
"Trademarks" means all trade names, trademarks, and service marks, in
any and all forms, and all trade name, trademark and service mark registrations
and applications for registration related to such trademarks, trade names and
service marks, including but not limited to the registered trade names,
trademarks, and service marks listed on Annex B- 1 attached hereto, and all
applications for registration of trade names, trademarks, and service marks,
including those applications listed on Annex B-2 attached hereto, all common
law rights to such trade names, trademarks and service marks, the right to
recover for all past, present and future infringements thereof, and all other
rights of any kind whatsoever accruing thereunder or pertaining thereto.
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<PAGE> 173
"UCC" means Article 9 of the Uniform Commercial Code as in effect from
time to time in the State of Texas.
(c) Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein (A) to any Person shall be deemed to include such Person's
successors and assigns, (B) to any Applicable Law referred to herein
shall be deemed references to such Applicable Law as the same may have
been or may be amended or supplemented from time to time and (C) to
this Agreement or other agreement defined or referred to herein shall
be deemed a reference to this Agreement or other agreement as the
terms thereof may have been or may be amended, supplemented, waived or
otherwise modified from time to time.
(ii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, the masculine gender includes the
feminine, and the singular number includes the plural, and vice versa.
(iii) Except as otherwise indicated, any reference herein
to the "Collateral", the "Obligations" or any other collective or
plural term shall be deemed to be a reference to each and every item
included within the category described by such collective or plural
term, so that a reference to the "Collateral" or the "Obligations"
shall be deemed a reference to any or all of the Collateral or the
Obligations, as the case may be.
(iv) Capitalized Terms not otherwise defined herein have
the meaning specified in the Credit Agreements, and, to the extent of
any conflict, terms as defined in the Credit Agreements shall control
(provided, that a more expansive or explanatory definition shall not
be deemed a conflict).
Section 5.2 Power of Attorney. Each power of attorney, license
and other authorization in favor of the Collateral Agent or any other Person
granted by or pursuant to this Agreement shall be deemed to be irrevocable and
coupled with an interest.
ARTICLE 6
Miscellaneous
Section 6.1 Expenses of the Debtor's Agreements and Duties. The
Collateral Agent and the other Secured Parties shall not be liable for the
costs and expenses of the Debtor arising out of the Debtor's performance or
observance of the terms, conditions, covenants and agreements to be observed or
performed by the Debtor under this Agreement.
Section 6.2 Collateral Agent's Right to Perform on the Debtor's
Behalf. If the Debtor shall fail to observe or perform any of the terms,
conditions, covenants and agreements to be
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<PAGE> 174
observed or performed by it under this Agreement, the Collateral Agent may (but
shall not be obligated to) do the same or cause it to be done or performed or
observed, either in its name or in the name and on behalf of the Debtor, and in
the event that the Debtor shall have failed to observe or perform any of the
terms, conditions, covenants and agreements to be observed or performed by it
under this Agreement, then the Debtor hereby authorizes the Collateral Agent to
do so, and the Debtor hereby appoints the Collateral Agent, and any other
Person the Collateral Agent may designate, as the Debtor's attorney-in-fact
(exercisable during the continuance of an Event of Default) to do, or cause to
be done, in the name, place and stead of the Debtor in any way in which the
Debtor itself could do, or cause to be done, any or all things necessary to
observe or perform the terms, conditions, covenants and agreements to be
observed or performed by the Debtor under this Agreement. In addition, the
Debtor hereby irrevocably appoints the Collateral Agent as the Debtor's
attorney-in-fact (exercisable during the continuance of an Event of Default) to
execute and deliver in the Debtor's name and stead to any purchaser at any sale
held under Section 4.2 hereof any and all documents and instruments of
assignment, transfer and conveyance necessary or appropriate to transfer to
such purchaser the Collateral sold at such sale. This appointment as
attorney-in-fact shall terminate upon the termination of this Agreement.
Section 6.3 Collateral Agent's Right to Use Agents. The
Collateral Agent may exercise its rights under this Agreement through an agent
or other designee.
Section 6.4 Limitation of the Collateral Agent's Obligations With
Respect to Collateral.
(a) Except for (i) exercising reasonable care in respect of
Collateral held by the Collateral Agent and (ii) accounting for moneys actually
received by it hereunder, the Collateral Agent shall not have any duty or
liability to protect or preserve any Collateral or to preserve rights
pertaining thereto, except to the extent of any gross negligence or willful
misconduct of the Collateral Agent or other Secured Parties.
(b) Nothing contained in this Agreement shall be construed as
requiring or obligating the Collateral Agent, and the Collateral Agent shall
not be required or obligated, to (i) present or file any claim or notice or
take any action, with respect to any Collateral or in connection therewith or
(ii) notify the Debtor of any decline in the value of any Collateral.
Section 6.5 Rights of the Collateral Agent under UCC and
Applicable Law. The Collateral Agent shall have, with respect to the
Collateral, in addition to all of their rights under this Agreement, (a) the
rights of a secured party under the UCC, whether or not the UCC would otherwise
apply to the collateral in question, and (b) the rights of a secured party
under all other Applicable Laws.
Section 6.6 Waivers of Rights Inhibiting Enforcement. To the
extent not prohibited by Applicable Law, the Debtor waives all rights of
redemption, appraisement, or marshalling of assets.
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Section 6.7 Notices and Deliveries.
(a) Manner of Delivery. All notices and other communications
provided for hereunder shall be in writing (except in those cases where giving
notice by telephone is expressly permitted) and shall be deemed to have been
given on the date personally delivered or sent by telecopy (answer back
received), or three days after deposit in the mail, designated as certified
mail, return receipt requested, postage prepaid, or one day after being
entrusted to a reputable commercial overnight delivery service, addressed to
the party to which such notice is directed at its address determined as
provided in this Section 5.9.
(b) Addresses. All notices, communications and materials to be
given or delivered pursuant to this Agreement shall be given or delivered at
the following respective addresses and telecopier and telephone numbers and to
the attention of the following individuals or departments:
(i) if to the Debtor, to it at:
Pillowtex Corporation
411 Mint Way
Dallas, Texas 75237
Telephone No.: (214) 333-3225
Telecopier No.: (214) 330-6016
Attention: Chief Financial Officer
(ii) if to the Collateral Agent, to it at:
NationsBank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Telephone No.: (214) 508-0280
Telecopier No.: (214) 508-0980
Attention: Suzanne Smith
or at such other address or, telecopier or telephone number or to the attention
of such other individual or department as the party to which such information
pertains may hereafter specify by giving 10 days' written notice to the other
specifically captioned "Notice of Change of Address".
Section 6.8 Rights and Remedies Cumulative. Each of the
Collateral Agent's rights and remedies under this Agreement shall be in
addition to all of its other rights and remedies under this Agreement and
Applicable Law, and nothing herein shall be construed as limiting any such
rights or remedies.
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<PAGE> 176
Section 6.9 Amendments; Waivers. Any term, covenant, agreement
or condition of this Agreement may be amended, and any right under this
Agreement may be waived, if, but only if, such amendment or waiver is in
writing and is signed by the Collateral Agent and, in the case of an amendment,
by the Debtor. Unless otherwise specified in such waiver, a waiver of any
right under this Agreement shall be effective only in the specific instance and
for the specific purpose for which given. No election not to exercise, failure
to exercise or delay in exercising any right, nor any course of dealing or
performance, shall operate as a waiver of any right of the Collateral Agent
under this Agreement or Applicable Law, nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or
the exercise of any other right of the Collateral Agent under this Agreement or
Applicable Law.
SECTION 6.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS
(WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS) AND THE UNITED STATES OF
AMERICA, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE REQUIRED TO BE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF TEXAS.
SECTION 6.11 WAIVER OF JURY TRIAL. THE COLLATERAL AGENT AND THE
DEBTOR HEREBY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL
BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR INDIRECTLY, ANY
MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR
RELATED TO, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 6.12 Consent to Jurisdiction; Waiver of Immunities.
(a) The Debtor and the Collateral Agent each hereby irrevocably
submits to the non-exclusive jurisdiction of any United States Federal or Texas
State courts sitting in Dallas, Texas, in any action or proceeding arising out
of or relating to this Agreement, and the Debtor and the Collateral Agent
hereby irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such court or that such
court is an inconvenient forum.
(b) Nothing in this section shall limit the right of the Debtor,
the Collateral Agent or any other Secured Party to bring any action or
proceeding against any other party or its property in the courts of any other
jurisdictions.
Section 6.13 Severability. Any provision of this Agreement which
is for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without
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<PAGE> 177
invalidating the remaining provisions hereof in such jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 6.14 Counterparts. This Agreement may be signed in any
number of counterparts, each of which when so executed and delivered shall be
deemed to be an original, but all such counterparts together shall constitute
but one and the same instrument.
Section 6.15 Successors and Assigns. All of the provisions of
this Agreement shall be binding and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
Section 6.16 Loan Documents. This Agreement is a Loan Document
executed pursuant to the Credit Agreements and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
Section 6.17 Obligations Not Affected. To the fullest extent
permitted by Applicable Law, the obligations of the Debtor under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(a) any amendment or modification or addition or supplement to any
Loan Documents or any instrument delivered in connection therewith or any
assignment or transfer thereof;
(b) any exercise, non-exercise, or waiver by the Collateral Agent
or any other Secured Party of any right, remedy, power or privilege under or in
respect of, or any release of any guaranty or the Collateral or any part
thereof provided pursuant to, this Agreement or any other Loan Documents;
(c) any waiver, consent, extension, indulgence or other action or
inaction in respect of this Agreement, any other Loan Documents or any
assignment or transfer of any thereof; or
(d) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Debtor or any other
Person, whether or not the Debtor shall have notice or knowledge of any of the
foregoing.
SECTION 6.18 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT, TOGETHER
WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL
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AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL ARGUMENTS BETWEEN THE
PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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<PAGE> 179
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers all as of the date first above
written.
DEBTOR:
-------------------------------------
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
- -----------------------------------
- -----------------------------------
Telephone No.:
------------------
Telecopier No.:
------------------
Attention:
------------------
------------------
SECURED PARTY:
NATIONSBANK OF TEXAS, N.A., as the
Collateral Agent
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
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<PAGE> 180
Annex A-1
Patents
<TABLE>
<CAPTION>
Nature of Interest Country of
(e.g. owner, licensee) Patent No. Issue Date Issue
---------------------- ---------- ---------- ------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 181
Annex A-2
Patent Applications
<TABLE>
<CAPTION>
Nature of Interest Serial Country of
(e.g. owner, licensee) No. Filing Date Issue
---------------------- ------ ----------- ------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 182
Annex B-1
Registered Trademarks
<TABLE>
<CAPTION>
Nature of
Interest of Goods or
(e.g. owner, Registered Registration Int'l Class Services Date Country of
licensee Trademark No. Covered Covered Registered Reg.
------------ ---------- ------------ ----------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 183
Annex B-2
Trademark Applications
<TABLE>
<CAPTION>
Trademark
Nature of Application
Interest of relates to Int'l Goods or Country
(e.g. owner, following Serial Class Services Date of of
licensee Trademark No. Covered Covered Appl. Appl.
------------ ----------- ------ ------- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 184
EXHIBIT E
COMPLIANCE CERTIFICATE
To: NationsBank of Texas, N.A., as Administrative Agent
From: Pillowtex Corporation
Date: ______________ ____, ____
Re: Term Credit Agreement, dated as of December 19, 1997 ("Credit
Agreement"), among Pillowtex Corporation (the "Borrower"), certain
Lenders, and NationsBank of Texas, N.A., as Administrative Agent
This Compliance Certificate is delivered pursuant to Section 6.3 of
the Credit Agreement. All capitalized terms used herein and defined in the
Credit Agreement shall be used as so defined. For purposes hereof, section
references herein related to sections of the Credit Agreement and bracketed
amounts or ratios refer to the maximum or minimum amounts or ratios required
under the relevant sections of the Credit Agreement.
<TABLE>
<S> <C> <C> <C>
I. Leverage Ratio
A. Total Debt, determined for the Borrower and its Subsidiaries on a
consolidated basis
1. Indebtedness for borrowed money $
------------
2. Obligations evidenced by bonds, debentures, notes or $
------------
other similar instruments
3. Non-contingent obligations to pay the deferred purchase $
------------
price of property or services other than trade payables
incurred in the ordinary course of business
4. Capitalized Lease Obligations $
------------
5. Total Debt [(1) + (2) + (3) + (4)] $
--------------
B. EBITDA, calculated for the four consecutive Fiscal Quarters
ending on the date of calculation (adjusted on a pro forma basis
to exclude from any period under consideration personnel costs
that have been eliminated concurrent with, or during the twelve-
month period subsequent to, the Agreement Date)
1. Earnings from Operations $
------------
2. Depreciation $
------------
</TABLE>
<PAGE> 185
<TABLE>
<S> <C>
3. Amortization $
------------
4. Other non-cash charges (to the extent included in $
------------
determining Earnings from Operations)
5. EBITDA [(1) + (2) + (3) + (4)] $
--------------
C. Leverage Ratio [(A) to (B)] to 1
----------
II. Covenant Calculations. [To be completed quarterly except for M] Demonstration of compliance with certain
covenants contained in Article 7 of the Credit Agreement for the period ended ____________________.
A. Section 7.1(c) Indebtedness of the Borrower and its Domestic $
Subsidiaries, including in respect of Capitalized Lease --------------
Obligations, incurred to purchase, or to finance the purchase
of, assets which constitute property, plant and equipment
1. Maximum in aggregate principal amount outstanding, $35,000,000
when aggregated with Section 7.1(o)
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
B. Section 7.1(h) Indebtedness assumed in connection with
Acquisitions permitted under Section 7.6 (excluding the
Fieldcrest Cannon Transaction)
1. Maximum in aggregate principal amount outstanding $20,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
C. Section 7.1(o) Other Indebtedness of the Borrower and its
Domestic Subsidiaries
1. Maximum in aggregate principal amount outstanding, $35,000,000
when aggregated with Section 7.1(c)
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
D. Section 7.3(g) Investments consisting of non-cash
consideration received in connection with a sale of assets
permitted by Section 7.5
1. Maximum in aggregate amount outstanding at any time $25,000,000
</TABLE>
2
<PAGE> 186
<TABLE>
<S> <C> <C> <C>
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
E. Section 7.3(i) Loans or advances to directors, officers and
employees of the Borrower or any of its Subsidiaries
1. Maximum in aggregate amount outstanding at any time $5,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
F. Section 7.3(j) Other Investments
1. Maximum in aggregate amount outstanding at any time $25,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
G. Section 7.5(c) Net Cash Proceeds from the disposition of
assets (to the extent not applied pursuant to Section 2.5(b))
outstanding and pending reinvestment pursuant to Section
7.5(c)
1. Maximum at any time $5,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
H. Section 7.7 Capital Expenditures
1. Maximum after the Agreement Date in aggregate amount
a. 3.25% of cumulative net revenues of the $
Borrower and its Subsidiaries from and after --------------
the Agreement Date
b. Maximum [$175,000,000 + (a)] $
--------------
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
I. Section 7.8(b) Dividends payable by the Borrower
1. Maximum in aggregate amount during any Fiscal Year $10,000,000
2. Actual $
--------------
3. Difference [(1) - (2)] $
--------------
</TABLE>
3
<PAGE> 187
<TABLE>
<S> <C> <C> <C> <C>
J. Section 7.11 Maximum Leverage Ratio
1. Maximum
a. From and including the last Fiscal Quarter of 5.75 to 1
Fiscal Year 1997 to but not including the
last Fiscal Quarter of Fiscal Year 1998
b. From and including the last Fiscal Quarter of 5.25 to 1
Fiscal Year 1998 to but not including the
last Fiscal Quarter of Fiscal Tear 1999
c. From and including the last Fiscal Quarter of 4.75 to 1
Fiscal Year 1999 to but not including the
last Fiscal Quarter of Fiscal Year 2000
d. From and including the last Fiscal Quarter of 4.25 to 1
Fiscal Year 2000 and thereafter
2. Actual (see I.C. above) to 1
-----------
K. Section 7.12 Minimum Fixed Charge Coverage Ratio
1. Minimum at the end of each Fiscal Quarter commencing 1.10 to 1
with the last Fiscal Quarter of Fiscal Year 1997
2. Actual
a. Pretax Cash Flow, for the four consecutive Fiscal
Quarters ending on the date of calculation
(1) EBITDA (see I.B.5. above) $
---------------
(2) Capital Expenditures $
---------------
(3) Net Cash Proceeds received from the $
sale of assets pursuant to Section ---------------
7.5(d)
(4) Pretax Cash Flow [(1) - (2) + (3)] $
--------------
</TABLE>
4
<PAGE> 188
<TABLE>
<S> <C> <C> <C>
b. Fixed Charges, calculated for Borrower and its
Subsidiaries on a consolidated basis; for the first
three Fiscal Quarters of Fiscal Year 1998, on an
annualized basis, and for each Fiscal Quarter
thereafter, for the four consecutive Fiscal Quarters
ending on the date of calculation
(1) Scheduled principal payments in $
respect of Indebtedness --------------
(2) Cash interest expense (including $
interest expense pursuant to --------------
Capitalized Lease Obligations)
(3) Cash Dividends paid $
---------------
(4) Fixed Charges [(1) + (2) + (3)] $
--------------
c. Fixed Charge Coverage Ratio [(a) to (b)] to 1
----------
L. Section 7.13 Minimum Net Worth
1. Minimum
a. Fixed amount
(1) From the Agreement Date to but not $250,000,000
including the last Fiscal Quarter of
Fiscal Year 1998
(2) From and including the last Fiscal $260,000,000
Quarter of Fiscal Year 1998 to but
not including the last Fiscal
Quarter of Fiscal Year 1999
(3) From and including the last Fiscal $280,000,000
Quarter of Fiscal Year 1999 to but
not including the last Fiscal
Quarter of Fiscal Year 2000
(4) From and including the last Fiscal $300,000,000
Quarter of Fiscal Year 2000 to but
not including the last Fiscal
Quarter of Fiscal Year 2001
(5) From and including the last Fiscal $320,000,000
Quarter of Fiscal Year 2001 to but
not including the last Fiscal
Quarter of Fiscal Year 2002
</TABLE>
5
<PAGE> 189
<TABLE>
<S> <C> <C> <C>
(6) From and including the last Fiscal $340,000,000
Quarter of Fiscal Year 2002 and
thereafter
b. An amount equal to the net worth of any $
Person that, on or after the Agreement Date --------------
becomes a Subsidiary of the Borrower or any
of its Subsidiaries or is merged into or
consolidated with the Borrower or any of its
Subsidiaries or substantially all of the
assets of which are acquired by the Borrower
or any of its Subsidiaries to the extent that
the purchase price therefor is paid in
Capital Stock of the Borrower or any of its
Subsidiaries
c. An amount equal to 100% of any increase in $
Net Worth pursuant to offerings of Capital --------------
Stock of the Borrower or any of its
Subsidiaries or pursuant to the conversion or
exchange of any convertible subordinated debt
or redeemable preferred stock into Capital
Stock of the Borrower or any of its
Subsidiaries
(excluding any such increase in b. and c. above as a
result of the Fieldcrest Cannon Transaction)
d. Minimum Net Worth [(a) + (b) + (c)] $
--------------
2. Actual $
--------------
3. Difference [(2) - (1)] $
--------------
M. Excess Cash Flow [To be completed annually]
1. Net Operating Cash Flow determined on a consolidated
basis for the Borrower and its Subsidiaries
a. Net Income $
---------------
b. Depreciation $
---------------
c. Amortization $
---------------
d. Other non-cash charges (to the extent $
included in determining Net Income) ---------------
</TABLE>
6
<PAGE> 190
<TABLE>
<S> <C> <C>
e. Net losses on sale of assets and non-cash $
write down of assets (to the extent included ---------------
in determining Net Income)
f. Capital Expenditures $
---------------
g. Scheduled principal payments on Indebtedness $
---------------
h. Net gains on sale of assets (to the extent $
included in determining Net Income) ---------------
i. Net Operating Cash Flow [(a) + (b) + (c) + $
(d) + (e) - (f) - (g) - (h)] --------------
2. Voluntary prepayments of Indebtedness which cannot be $
reborrowed, for the four Fiscal Quarters immediately --------------
preceding the date of calculation
3. Excess Cash Flow [(1) - (2)] $
--------------
</TABLE>
III. Compliance Certificate. [To be completed quarterly] The undersigned
hereby certifies to you as follows:
(a) I am the duly elected qualified and acting chief financial
officer [or chief accounting officer] of Borrower.
(b) I have reviewed the provisions of the Credit Agreement and the
other Loan Documents, and a review of the activities of
Borrower during the period from _____________ ___, ____ to
__________ ___, ____ (the "Reporting Period") has been made
under my supervision with a view toward determining whether,
during the Reporting Period, Borrower has kept, observed,
performed and fulfilled all its obligations under the Credit
Agreement and such other Loan Documents.
(c) The representations and warranties made in the Loan Documents
are true and correct in all material respects as of the date
hereof as though made at and of the date hereof, except for
such representations and warranties which relate to a
particular date or which fail to be true and correct as a
result of events or occurrences permitted under the Loan
Documents, and no Default or Event of Default has occurred or
is continuing or is imminent.
7
<PAGE> 191
This Compliance Certificate is executed and delivered on the
____________ day of ______________________, ____.
PILLOWTEX CORPORATION
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
8
<PAGE> 192
EXHIBIT F
ASSIGNMENT AND ACCEPTANCE
Dated _______________, _____
Reference is made to the Term Credit Agreement dated as of December
19, 1997 (as amended, modified or supplemented, the "Credit Agreement") among
Pillowtex Corporation, a Texas corporation ("Borrower"), NationsBank of Texas,
N.A. as Administrative Agent ("Administrative Agent"), and the lenders parties
thereto. Capitalized terms used but not defined herein shall have the meanings
set forth in the Credit Agreement and the Intercreditor Agreement.
____________________________("Assignor") and ________________________
("Assignee") agree as follows:
1. Subject to the terms and conditions of this Assignment and
Acceptance, Assignor hereby sells and assigns to Assignee, and Assignee hereby
purchases and assumes from Assignor the following:
a. $____________ in aggregate principal amount of the Facility A
Term Loan Advances outstanding on the Effective Date and the
related pro rata share in the Facility A Term Loan Note held
by Assignor; and
b. $____________ in aggregate principal amount of the Facility B
Term Loan Advances outstanding on the Effective Date and the
related pro rata share in the Facility B Term Loan Note held
by Assignor; and
2. Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to (i) any statements,
warranties, or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of the Credit Agreement or any other Loan Document or
(ii) the financial condition of the Borrower or any other Obligor or the
performance or observance by the Borrower or any other Obligor of any of their
respective obligations under the Credit Agreement or any other Loan Document;
and (c) attaches the Promissory Notes referred to in Paragraph 1 above to
exchange such Promissory Notes for new Promissory Notes as provided in Section
11.6(f) of the Credit Agreement.
3. Assignee (a) confirms that it has received a copy of the
Credit Agreement and the other Loan Documents, together with copies of the
financial statements referred to in Sections 4.1(j), 6.1 and 6.2 of the Credit
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this
<PAGE> 193
Assignment and Acceptance; (b) agrees that it will, independently and without
reliance upon the Administrative Agent, Assignor, or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement and the other Loan Documents; (c) appoints and
authorizes the Administrative Agent and the Collateral Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement, the other Loan Documents, and this Assignment and Acceptance as are
delegated to the Administrative Agent and the Collateral Agent by the terms
thereof and hereof, together with such powers as are reasonably incidental
thereto and hereto; (d) agrees that it will perform in accordance with its
terms all of the obligations which by the terms of the Credit Agreement, the
other Loan Documents, and this Assignment and Acceptance are required to be
performed by it as a Lender; (e) certifies that it is an Eligible Assignee; and
(f) specifies the addresses set forth in Schedule I attached hereto as its
address for the receipt of notices and as its initial LIBOR Lender Office,
respectively[; and (g) attaches the forms prescribed by the IRS certifying as
to Assignee's status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to Assignee under
the Credit Agreement, the other Loan Documents, and this Assignment and
Acceptance].
4. The effective date for this Assignment and Acceptance shall be
___________________, (the "Effective Date").
5. Upon such acceptance as of the Effective Date, the recordation
of the information herein in the Register and upon the remittance of a $3,500
processing fee to the Administrative Agent (less any processing fee paid in
respect of a simultaneous assignment under the Amended and Restated Credit
Agreement), (a) Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (b) Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of Texas. Without excluding
any other jurisdiction, Assignee agrees that the courts of Texas will have
jurisdiction over proceedings in connection herewith.
7. After giving effect to this Assignment and Acceptance (and all
other assignments under the Credit Agreement to be effective as of the
Effective Date):
a. Assignee's Facility A Term Loan Specified Percentage shall be
_____%.
b. Assignee's Facility B Term Loan Specified Percentage shall be
_____%.
c. Assignee's Total Specified Percentage shall be _____%.
-2-
<PAGE> 194
d. Assignee's Voting Specified Percentage shall be _____%.
e. Assignor's Facility A Term Loan Specified Percentage shall be
_____%.
f. Assignor's Facility B Term Loan Specified Percentage shall be
_____%.
g. Assignor's Total Specified Percentage shall be _____%.
h. Assignor's Voting Specified Percentage shall be _____%.
8. This Assignment and Acceptance may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
[NAME OF ASSIGNOR]
By:
______________________________
Name:_________________________
Title:________________________
[NAME OF ASSIGNEE]
By:
______________________________
Name:_________________________
Title:________________________
Accepted this ___ day of ____________, _____
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
By: ___________________________________________________
Name:______________________________________________
Title:_____________________________________________
-3-
<PAGE> 195
PILLOWTEX CORPORATION
By: ___________________________________________________
Name:______________________________________________
Title:_____________________________________________
-4-
<PAGE> 196
Schedule I
ASSIGNEE'S ADDRESS
1. Address for the Advances and Receipt of Notices
2. Initial LIBOR Lending Office
<PAGE> 197
EXHIBIT G
SUBSIDIARY GUARANTY
GUARANTY, dated _____________________________, made by each of the
parties listed on the signature pages hereof (collectively, the "Guarantors",
and each, a "Guarantor"), in favor of the Guarantied Parties referred to below.
W I T N E S S E T H:
WHEREAS, Pillowtex Corporation, a Texas corporation (the "Borrower"),
has entered into a Term Credit Agreement, dated as of December 19, 1997, the
financial institutions party thereto, and NationsBank of Texas, N.A., as the
administrative agent for said financial institutions (said Term Agreement, as
it may be amended, supplemented or otherwise modified from time to time, being
the "Credit Agreement", and capitalized terms not defined herein but defined
therein being used herein as therein defined); and
WHEREAS, the Borrower, directly or indirectly, owns beneficially and
of record 100% of the capital stock or other equity interests of the
Guarantors, and the Borrower and each of the Guarantors are members of the same
consolidated group of companies and are engaged in related businesses, and the
Guarantors will derive direct and indirect economic benefit from the Advances;
and
WHEREAS, it is a condition precedent to the obligation of the Lender
to make Advances under [THE REQUIREMENT OF SECTION 5.12 OF] the Credit
Agreement that the Guarantors shall have executed and delivered this Guaranty;
and
WHEREAS, the Lenders and the Administrative Agent are herein referred
to as the "Guarantied Parties";
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to make Advances and issue Letters of Credit, the Guarantors hereby
agree as follows:
SECTION 1. Guaranty. Each Guarantor hereby unconditionally and
irrevocably guarantees the full and prompt payment when due, whether at stated
maturity, by acceleration or otherwise, of, and the performance of, the
Obligations, whether now or hereafter existing and whether for principal,
interest, fees, expenses or otherwise, and any and all reasonable out-of-pocket
expenses (including, without limitation, reasonable counsel fees and expenses)
incurred by any of the Guarantied Parties in enforcing any rights under this
Guaranty. This Guaranty is an absolute guaranty of payment and performance and
not a guaranty of collection. In any action or proceeding involving any state
corporate Law, or any state or federal bankruptcy, insolvency, reorganization
or other Law affecting the rights of creditors generally (collectively,
<PAGE> 198
the "Fraudulent Transfer Laws") if the obligations of any Guarantor hereunder
would otherwise, in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of such
Guarantor in respect of intercompany indebtedness to the Borrower, other
Affiliates of the Borrower or other Obligors to the extent that such
indebtedness would be discharged in an amount equal to the amount paid by such
Guarantor hereunder) and after giving effect as assets to the value (as
determined under the applicable provisions of Fraudulent Transfer Laws) of any
agreement providing for an equitable allocation among such Guarantor and other
Obligors of obligations arising under guaranties by such parties (including,
without limitation, Section 10 of this Guaranty), be held or determined to be
void, invalid or unenforceable or subordinated to the claims of any other
creditors, on account of the amount of its liability under this Guaranty, then,
notwithstanding any other provision hereof to the contrary, the amount of such
liability shall, without any further action by such Guarantor, any Lender, the
Administrative Agent or any other Person, be automatically limited and reduced
to the highest amount that is valid and enforceable and not subordinated to the
claims of other creditors as determined in such action or proceeding.
SECTION 2. Guaranty Absolute. Each Guarantor guaranties that the
Obligations will be paid strictly in accordance with the terms of the Credit
Agreement, the Notes and the other Loan Documents, without set-off or
counterclaim, and regardless of any Law now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Guarantied
Parties with respect thereto. The liability of each Guarantor under this
Guaranty shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of any
other Loan Document or any other agreement or instrument relating to any Loan
Document, or avoidance or subordination of any of the Obligations;
(b) any change in the time, manner or place of payment of, or in
any other term of, or any increase in the amount of, all or any of the
Obligations, or any other amendment or waiver of any term of, or any consent to
departure from any requirement of, the Credit Agreement, the Notes or any of
the other Loan Documents;
(c) any exchange, release or non-perfection of any Lien on any
collateral for, or any release or amendment or waiver of any term of any other
guaranty of, or any consent to departure from any requirement of any other
guaranty of, all or any of the Obligations;
(d) the absence of any attempt to collect any of the Obligations
from the Borrower or from any other Guarantor or any other action to enforce
the same or the election of any remedy by any of the Guarantied Parties;
(e) any waiver, consent, extension, forbearance or granting of any
indulgence by any of the Guarantied Parties with respect to any provision of
any other Loan Document;
- 2 -
<PAGE> 199
(f) the election by any of the Guarantied Parties in any
proceeding under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") of the application of section 1111(b)(2) of the Bankruptcy
Code;
(g) any borrowing or grant of a security interest by the Borrower,
as debtor-in-possession, under section 364 of the Bankruptcy Code;
(h) the disallowance, under section 502 of the Bankruptcy Code, of
all or any portion of the claims of any of the Guarantied Parties for payment
of any of the Obligations; or
(i) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a borrower or a guarantor.
SECTION 3. Waiver. (a) Each Guarantor hereby (i) waives (A)
promptness, diligence, notice of acceptance and any and all other notices with
respect to any of the Obligations or this Guaranty, (B) any requirement that
any of the Guarantied Parties protect, secure, perfect or insure any security
interest in or other Lien on any property subject thereto or exhaust any right
or take any action against the Borrower or any other Person or any Collateral,
(C) the filing of any claim with a court in the event of receivership or
bankruptcy of the Borrower, (D) protest or notice with respect to nonpayment of
all or any of the Obligations, (E) the benefit of any statute of limitation,
(F) all demands whatsoever (and any requirement that same be made on the
Borrower as a condition precedent to much Guarantor's obligations hereunder)
and (G) all rights by which it might be entitled to require suit on an accrued
right of action in respect of any of the Obligations or require suit against
the Borrower or any other guarantor, whether arising pursuant to Section 34.02
of the Texas Business and Commerce Code, as amended, Section 17.001 of the
Texas Civil Practice and Remedies Code, as amended, Rule 31 of the Texas Rules
of Civil Procedure, as amended, or otherwise; and (ii) covenants and agrees
that, except as set forth in Section 11 hereof, this Guaranty will not be
discharged except by complete performance of the Obligations and any other
obligations of such Guarantor contained herein.
(b) If, in the exercise of any of its rights and remedies, any of
the Guarantied Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the
Borrower or any other Person, whether because of any applicable law pertaining
to "election of remedies" or the like, each Guarantor hereby consents to such
action by such Guarantied Party and waives any claim based upon such action.
Any election of remedies which results in the denial or impairment of the right
of such Guarantied Party to seek a deficiency judgment against the Borrower
shall not impair the obligation of such Guarantor to pay the full amount of the
Obligations or any other obligation of such Guarantor contained herein.
(c) In the event any of the Guarantied Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Loan Documents, such Guarantied Party may bid all or less than the
amount of the Obligations and the amount of such bid, if successful, need not
be paid by such Guarantied Party but shall be credited against the
- 3 -
<PAGE> 200
Obligations. The amount of the successful bid at any such sale, whether such
Guarantied Party or any other Person is the successful bidder, shall be
conclusively deemed to be the fair market value of the Collateral and the
difference between such bid amount and the remaining balance of the Obligations
shall be deemed to be the amount of the Obligations guaranteed under this
Guaranty, subject to any present or future law or court decision or ruling may
have the effect of reducing the amount of any deficiency claim to which any of
the Guarantied Parties might otherwise be entitled by reason of such bidding at
any such sale; provided, however, that the terms of such sale are commercially
reasonable and in accordance with the provisions of the Loan Documents.
(d) Each Guarantor agrees that notwithstanding the foregoing and
without limiting the generality of the foregoing if, after the occurrence and
during the continuance of an Event of Default, the Guarantied Parties are
prevented by Applicable Law from exercising their respective rights to
accelerate the maturity of the Obligations, to collect interest on the
Obligations, or to enforce or exercise any other right or remedy with respect
to the Obligations, or the Administrative Agent is prevented from taking any
action to realize on the Collateral, such Guarantor agrees to pay to the
Administrative Agent for the account of the Guarantied Parties, upon demand
therefor, the amount that would otherwise have been due and payable had such
rights and remedies been permitted to be exercised by the Guarantied Parties.
(e) Each Guarantor hereby assumes responsibility for keeping
itself informed of the financial condition of the Borrower and of each other
guarantor of all or any part of the Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Obligations or any part thereof,
that diligent inquiry would reveal. Each Guarantor hereby agrees that the
Guarantied Parties shall have no duty to advise any Guarantor of information
known to any of the Guarantied Parties regarding such condition or any such
circumstance. In the event that any of the Guarantied Parties in its sole
discretion undertakes at any time or from time to time to provide any such
information to any Guarantor, such Guarantied Party shall be under no
obligation (i) to undertake any investigation not a part of its regular
business routine, (ii) to disclose any information which, pursuant to accepted
or reasonable banking or commercial finance practices, such Guarantied Party
wishes to maintain confidential, or (iii) to make any other or future
disclosures of such information or any other information to such Guarantor.
(f) Each Guarantor consents and agrees that the Guarantied Parties
shall be under no obligation to marshall any assets in favor of any Guarantor
or otherwise in connection with obtaining payment of any or all of the
Obligations from any Person or source.
SECTION 4. Representations and Warranties. Each Guarantor hereby
represents and warrants to the Guarantied Parties as follows:
(a) Such Guarantor (i) is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of the state of
its organization, (ii) is duly qualified as a foreign corporation or other
legal organization and in good standing under the laws of each jurisdiction in
which the character of its properties or the nature of its business requires
such
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qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect, (iii) has all requisite power and
authority to own its properties, to lease the property it operates under lease
and to conduct its business as now or currently proposed to be conducted, (iv)
is in compliance with its certificate of incorporation, by-laws, or other
similar organizational and governance documents, (v) is in compliance with all
other applicable requirements of Law except for such noncompliances as in the
aggregate would have no Material Adverse Effect, and (vi) has all Necessary
Authorizations, except for Necessary Authorizations which can be obtained by
the taking of ministerial action to secure the grant or transfer thereof or
failures which in the aggregate would not have any reasonable likelihood of
having a Material Adverse Effect.
(b) The execution, delivery and performance by such Guarantor of
this Guaranty:
(i) is within its legal powers;
(ii) has been duly authorized by all necessary legal
action, including, without limitation, the consent of stockholders,
partners or other equity holders where required; and
(iii) does not and will not (A) contravene its certificate
of incorporation or by-laws or other comparable governing documents,
(B) violate any other applicable requirement of Applicable Law
(including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System), or any order or decree of
any Tribunal or arbitrator except to the extent that any such
violation could not reasonably be expected to have a Material Adverse
Effect, (C) conflict with or result in the breach of, or constitute a
default under, or result in or permit the termination or acceleration
of, any of its agreements, (D) result in the creation or imposition of
any Lien upon any of its property (other than Liens in favor of the
Collateral Agent for the benefit of the Administrative Agent and the
Lenders and the administrative agent and the lenders under the Amended
and Restated Credit Agreement), or (E) require the consent or approval
of any Tribunal or any other Person necessary on or prior to the
Agreement Date not already obtained, except to the extent that the
failure to obtain such consent or approval could not reasonably be
expected to have a Material Adverse Effect.
(c) This Guaranty has been duly executed and delivered by such
Guarantor and is the legal, valid and binding obligation of such Guarantor
enforceable against it in accordance with its terms, subject to Debtor Relief
Laws (insofar as any such law relates to the bankruptcy, insolvency or similar
event of the Guarantor) and general principles of equity.
(d) Except as reflected on Schedule 4 to the Credit Agreements as
of the Agreement Date, there is no Litigation pending against such Guarantor or
any of its Subsidiaries, or in any other manner relating directly and adversely
to such Guarantor or any of its Subsidiaries, or any of their properties, in
any court, Tribunal or arbitrator with respect to which there is a reasonable
likelihood of an adverse determination and that, if adversely determined, is
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reasonably likely to have a Material Adverse Effect. The performance by such
Guarantor under this Guaranty is not restrained or enjoined (either
temporarily, preliminarily or permanently).
SECTION 5. Amendments. Etc. No amendment or waiver of any provision
of this Guaranty nor consent to any departure by any Guarantor herefrom shall
in any event be effective unless the same shall be in writing, approved by the
Determining Lenders (or by all the Lenders where the approval of each Lender is
required under the Credit Agreement) and signed by the Administrative Agent,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (except in those
cases where giving notice by telephone is expressly permitted) and shall be
deemed to have been given on the date personally delivered or sent by telecopy
(answer back received), or three days after deposit in the mail, designated as
certified mail, return receipt requested, postage prepaid, or one day after
being entrusted to a reputable commercial overnight delivery service, if to any
Guarantor, addressed to it at its address specified on the signature pages
hereof, and if to any Guaranteed Party, addressed to it at the address of such
Guaranteed Party specified in the Credit Agreement.
SECTION 7. No Waiver; Remedies. (a) No failure on the part of any
Guarantied Party to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by Law or any of the other Loan
Documents.
(b) Failure by any of the Guarantied Parties at any time or times
hereafter to require strict performance by the Borrower, any Guarantor or any
other Person of any of the provisions, warranties, terms or conditions
contained in any of the Loan Documents now or at any time or times hereafter
executed by the Borrower, any Guarantor or such other Person and delivered to
any of the Guarantied Parties shall not waive, affect or diminish any right of
any of the Guarantied Parties at any time or times hereafter to demand strict
performance thereof, and such right shall not be deemed to have been modified
or waived by any course of conduct or knowledge of any of the Guarantied
Parties or any agent, officer, employee of any of the Guarantied Parties.
(c) No waiver by the Guarantied Parties of any default shall
operate as a waiver of any other default or the same default on a future
occasion, and no action by any of the Guarantied Parties permitted hereunder
shall in way affect or impair any of the rights of the Guarantied Parties or
the obligations of any Guarantor under this Guaranty or under any of the other
Loan Documents, except as specifically set forth in any such waiver. Any
determination by a court of competent jurisdiction of the amount of any
principal and/or interest or other amount constituting any of the Obligations
shall be conclusive and binding on each Guarantor irrespective of whether such
Guarantor was a party to the suit or action in which such determination was
made.
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SECTION 8. Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, each of the Guarantied Parties, subject to
the Intercreditor Agreement, is hereby authorized at any time and from time to
time, to the fullest extent permitted by Law, to set off and apply any and all
deposits (general or special (except trust and escrow accounts), time or
demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Guarantied Party to or for the credit or the account of each
Guarantor against any and all of the obligations of each Guarantor now or
hereafter existing under this Guaranty, irrespective of whether or not such
Guarantied Party shall have made any demand under this Guaranty and although
such obligations may be contingent and unmatured. Each of the Guarantied
Parties agrees promptly to notify each Guarantor after any such set-off and
application made by such Guarantied Party; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of each Guarantied Party under this Section 8 are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which such Guarantied Party may have.
SECTION 9. Continuing Guaranty; Transfer of Notes. Subject to
Section 11, this Guaranty is a continuing guaranty and shall remain in full
force and effect until the Release Date, (ii) be binding upon each Guarantor,
its successors and assigns, and (iii) inure to the benefit of and be
enforceable by the Guarantied Parties and their respective successors,
transferees, and permitted assigns. Without limiting the generality of the
foregoing clause (iii), each of the Guarantied Parties may assign or otherwise
transfer any Note held by it or Obligations owing to it to any other Person,
and such other Person shall thereupon become vested with all the rights in
respect thereof granted to such Guarantied Party herein or otherwise with
respect to such of the Notes and Obligations so transferred or assigned,
subject, however, to compliance with the provisions of Section 11.6 of the
Credit Agreement in respect of assignments.
SECTION 10. Reimbursement. To the extent that any Guarantor shall be
required to repay a portion of the Advances which shall exceed the greater of
(a) the amount of such Advances actually received by such Guarantor and (b) the
amount which such Guarantor would otherwise have paid if such Guarantor had
repaid the aggregate amount of such Advances (excluding the amount thereof
repaid by the Borrower) in the same proportion as such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty bears to the aggregate net worth of the
Guarantors (calculated for each Guarantor based on such Guarantor's net worth
immediately after the later of the Agreement Date or the date such Guarantor
becomes a party to this Guaranty), then such Guarantor shall be reimbursed by
the other Guarantors for the amount of such excess, pro rata, based on their
respective net worth immediately after the Agreement Date or the date such
Guarantor becomes a party to this Guaranty, as applicable. This Section 10 is
intended only to define the relative rights of the Guarantors, and nothing set
forth in this Section 10 is intended to or shall impair the obligations of the
Guarantors, jointly and severally, to pay to the Guarantied Parties the
Obligations as and when the same shall become due and payable in accordance
with the terms hereof.
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<PAGE> 204
SECTION 11. Reinstatement. This Guaranty shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Obligor for liquidation or reorganization, should any Obligor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Obligor's assets, and shall, to the fullest extent permitted by Applicable Law,
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to Applicable Law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligees of the Obligations or such part thereof,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall, to the fullest extent permitted by law, be reinstated and
deemed reduced only by such amount paid and not so rescinded, reduced, restored
or returned.
SECTION 12. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND
BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 13. Submission to Jurisdiction; Jury Trial. (a) Any legal
action or proceeding with respect to this Guaranty or any document related
thereto may be brought in the courts of the State of Texas or the United States
of America for Dallas, Texas, and, each of the Guarantors and Guarantied
Parties hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Each of the
Guarantors and Guarantied Parties hereby irrevocably waives any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which it may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(b) Nothing contained in this Section 13 shall affect the right of
any Guarantor or Guarantied Party to serve process in any other manner
permitted by law or commence legal proceedings or otherwise proceed against any
other party or its property in any other jurisdiction.
(c) THE GUARANTORS AND GUARANTIED PARTIES EACH, TO THE MAXIMUM
EXTENT PERMITTED BY APPLICABLE LAW, WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED ON OR ARISING OUT OF THIS GUARANTY OR
ANY OTHER LOAN DOCUMENT.
SECTION 14. Section Titles. The Section titles contained in this
Guaranty are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of this Guaranty.
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<PAGE> 205
SECTION 15. Execution in Counterparts. This Guaranty may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute one and the
same Guaranty.
SECTION 16. Miscellaneous. All references herein to the Borrower or
to any Guarantor shall include their respective successors and assigns,
including, without limitation, a receiver, trustee or debtor-in-possession of
or for the Borrower or such Guarantor. All references to the singular shall be
deemed to include the plural where the context so requires.
SECTION 17. Subrogation and Subordination.
(a) Subrogation. Notwithstanding any reference to subrogation
contained herein to the contrary, until the Release Date, each Guarantor hereby
irrevocably waives any claim or other rights which it may have or hereafter
acquire against the Borrower that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under this Guaranty,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of any Lender against the Borrower or any collateral which any
Lender now has or hereafter acquires, whether or not such claim, remedy or
right arises in equity, or under contract, statutes or common law, including
without limitation, the right to take or receive from the Borrower, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim or other rights. If any amount
shall be paid to any Guarantor in violation of the preceding sentence and the
Obligations shall not have been paid in full, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in trust for the
benefit of, the Lenders, and shall forthwith be paid to the Administrative
Agent to be credited and applied upon the Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement. Each
Guarantor acknowledges that it will receive direct and indirect benefits from
the financing arrangements contemplated by the Credit Agreement and that the
waiver set forth in this Section 17(a) is knowingly made in contemplation of
such benefits.
(b) Subordination. All debt and other liabilities of the Borrower
to any Guarantor ("Borrower Debt") are expressly subordinate and junior to the
Obligations and any instruments evidencing the Borrower Debt to the extent
provided below.
(i) Until the Release Date, each Guarantor agrees that it
will not request, demand, accept, or receive (by set-off or other
manner) any payment amount, credit or reduction of all or any part of
the amounts owing under the Borrower Debt or any security therefor,
except as specifically allowed pursuant to clause (ii) below of the
Credit Agreements;
(ii) Notwithstanding the provisions of clause (i), the
Borrower may pay to the Guarantors and the Guarantors may receive and
retain from the Borrower regularly scheduled payments due and owing
under the terms of the Borrower Debt, provided that
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the Borrower's right to pay and the Guarantor's right to receive any
such regularly scheduled amount shall automatically and be immediately
suspended and cease (A) upon the occurrence of a Default (as defined
in the Loan Documents) or (B) if, after taking into account the effect
of such payment, a Default would occur and be continuing. The
Guarantors' right to receive amounts under this clause (ii) (including
any amounts which theretofore may have been suspended) shall
automatically be reinstated in such time as the Default which was the
basis of such suspension has been cured to the Lenders' satisfaction
(provided that no subsequent Default has occurred) or such earlier
date, if any, and the Administrative Agent gives notice to the
Guarantors of reinstatement by the Determining Lenders, in the
Determining Lenders' sole discretion;
(iii) If any Guarantor receives any payment on the Borrower
Debt in violation of this Guaranty, such Guarantor will hold such
payment in trust for the Lenders and will immediately deliver such
payment to the Administrative Agent;
(iv) Until the Release Date, no Guarantor will demand or
accelerate the maturity of all or any part of the Borrower Debt, nor
collect or enforce, or attempt to collect or enforce, from the
Borrower all or any part of the Borrower Debt, whether through the
commencement or joinder of a suit, action or proceeding of any type
(judicial or otherwise) or proceeding under any Debtor Relief Laws
(the "Insolvency Proceeding"), the enforcement of any rights against
any property of the Borrower, or otherwise, except where any
Guaranteed Party shall request such Guarantor to file a claim in
connection with any such proceeding and except as set forth in clause
(v); and
(v) In the event of any Insolvency Proceeding, the
Obligations shall first be paid, discharged and performed in full
before any payment or performance is made upon the Borrower Debt
notwithstanding any other provisions which may be made in such
Insolvency Proceeding. In the event of any Insolvency Proceeding,
each Guarantor will at any time prior to the Release Date (A) file, at
the request of any Guarantied Party, any claim, proof of claim or
similar instrument necessary to enforce the Borrower's obligation to
pay the Borrower Debt, and (B) hold in trust for and pay to the
Guarantied Parties any and all monies, obligations, property, stock
dividends or other assets received in any such proceeding on account
of the Borrower Debt in order that the Guarantied Parties may apply
such monies or the cash proceeds of such other assets to the
Obligations. In the event that any Guarantor fails to take such
action upon any Guarantied Party's request, such Guarantied Party
shall be deemed to have been appointed the attorney-in-fact for such
Guarantor with respect to the Borrower Debt, and such Guarantied Party
may in that capacity (i) demand, sue for, collect and receive any and
all such monies, dividends or other assets, (ii) file any claim, proof
of claim or similar instrument, and (iii) institute such other
proceedings which such Guarantied Party, may deem reasonably necessary
for the collection of the Obligations and the enforcement of the terms
of this Guaranty. Upon request of any Guarantied Party, each
Guarantor will execute and deliver to such Guarantied Party such other
and further powers of attorney or other instruments as such Guarantied
Party may reasonably request
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to effect the purposes of this Guaranty. If in any proceeding to
enforce the payment of the Obligations it becomes necessary that any
Guarantor itself prove such claims, such Guarantor shall do so upon
reasonable request by such Guarantied Party. In proving these claims,
however, such Guarantor shall act as the collection agent of such
Guarantied Party and shall promptly pay any funds so received to such
Guarantied Party.
SECTION 18. Guarantor Insolvency. Should any Guarantor voluntarily
seek, consent to, or acquiesce in the benefits of any Debtor Relief Law or
become a party to or be made the subject of any proceeding provided for by any
Debtor Relief Law (other than as a creditor or claimant) that could suspend or
otherwise adversely affect the rights of any Lender granted hereunder, then,
the obligations of such Guarantor under this Guaranty shall be, as between such
Guarantor and such Lender, a fully-matured, due, and payable obligation of such
Guarantor to such Lender (without regard to whether the Borrower is then in
default under the Credit Agreement or whether any part of the Obligations is
then due and owing by the Borrower to such Lender), payable in full by such
Guarantor to such Lender upon demand, which shall be the estimated amount owing
in respect of the contingent claim created hereunder.
SECTION 19. Rate Provision. It is not the intention of any Lender to
make an agreement violative of the laws of any applicable jurisdiction relating
to usury. Regardless of any provision in this Guaranty, no Lender shall ever
be entitled to contract, charge, receive, collect or apply, as interest on the
Obligations, any amount in excess of the Highest Lawful Rate. In no event
shall any Guarantor be obligated to pay any amount in excess of the Highest
Lawful Rate. If from any circumstance the Administrative Agent or any Lender
shall ever receive, collect or apply anything of value deemed excess interest
under Applicable Law, an amount equal to such excess shall be applied to the
reduction of the principal amount of outstanding Advances, and any remainder
shall be promptly refunded to the payor. In determining whether or not
interest paid or payable with respect to the Obligations, under any specified
contingency, exceeds the Highest Lawful Rate, the Guarantors and the Lenders
shall, to the maximum extent permitted by Applicable Law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(b) amortize, prorate, allocate and spread the total amount of interest
throughout the full term of such Obligations so that the interest paid on
account of such Obligations does not exceed the Highest Lawful Rate and/or (c)
allocate interest between portions of such Obligations; provided that if the
Obligations are paid and performed in full prior to the end of the full
contemplated term thereof, and if the interest received for the actual period
of existence thereof exceeds the Highest Lawful Rate, the Lenders shall refund
to the payor the amount of such excess or credit the amount of such excess
against the total principal amount owing, and, in such event, no Lender shall
be subject to any penalties provided by any laws for contracting for, charging
or receiving interest in excess of the Highest Lawful Rate.
Section 20. Severability. Any provision of this Guaranty which is
for any reason prohibited or found or held invalid or unenforceable by any
court or governmental agency shall be ineffective to the extent of such
prohibition or invalidity or unenforceability, without
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<PAGE> 208
invalidating the remaining provisions hereof in such jurisdiction or affecting
the validity or enforceability of such provision in any other jurisdiction.
SECTION 21. ENTIRE AGREEMENT. THIS GUARANTY REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
--------------------------------
Notice Address for all Guarantors
for this Guaranty:
By:
----------------------------
Name:
- ---------------------------- -----------------------
Title:
- ---------------------------- ----------------------
- ----------------------------
Telephone:
------------------
Telecopier:
-----------------
Accepted and Acknowledged:
NATIONSBANK OF TEXAS, N.A., as
the Administrative Agent
By:
----------------------------------
Name:
-----------------------------
Title:
----------------------------
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EXHIBIT H
NOTICE OF BORROWING
NationsBank of Texas, N.A., as
the Administrative Agent
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Marie T. Lancaster
Re: Pillowtex Corporation
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Pillowtex Corporation,
pursuant to the Term Credit Agreement, dated as of December 19, 1997, among the
undersigned, the financial institutions party thereto and NationsBank of Texas,
N.A., as the Administrative Agent (said Term Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement" and capitalized terms not defined herein but defined therein
being used herein as therein defined), hereby gives you notice, irrevocably,
pursuant to Section 2.2 of the Credit Agreement, that the undersigned hereby
requests a [Facility A Term Loan Advance] [Facility B Term Loan Advance] under
the Credit Agreement, and in that connection sets forth below the information
relating to such borrowing (the "Proposed Borrowing") as required by Section
2.2 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is __________, ____.
(ii) The aggregate amount of the [Facility A Term Loan Advance]
[Facility B Term Loan Advance] constituting the Proposed Borrowing is
$___________, of which amount $_______ consists of Base Rate Advances,
$_________ consists of LIBOR Rate Advances having an initial Interest
Period of _____ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(A) the representations and warranties of the Borrower contained
in Article 4 of the Credit Agreement and in each of the other Loan
Documents to which it is a party (other than those representations and
warranties that specifically relate to an earlier date) are true and
correct as though made on and as of such date, except as otherwise
expressly provided in Section 4.2 of the Credit Agreement; and
<PAGE> 211
(B) no Default or Event of Default is continuing, or will result
from the Proposed Borrowing.
Very truly yours,
PILLOWTEX CORPORATION
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE> 212
EXHIBIT I-1
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Gene L. Jameson
DONOHOE, JAMESON & CARROLL, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
LEASEHOLD DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
THE STATE OF NORTH CAROLINA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF CATAWBA )
THAT, BEACON MANUFACTURING COMPANY, a North Carolina corporation
("Grantor"), for and in consideration of the sum of Ten Dollars to Grantor in
hand paid by MICHAEL F. HORD, Trustee, of 901 Main Street, 67th Floor, Dallas,
Dallas County, Texas 75202 ("Trustee"), in order to secure the payment of the
indebtedness hereinafter referred to and the performance of the obligations,
covenants, agreements and undertakings of Grantor hereinafter described, does
hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to Trustee,
WITH POWER OF SALE, for the benefit of NationsBank of Texas, N.A., a national
banking association ("NationsBank"), having its principal office at 901 Main
Street, 67th Floor, Dallas, Texas 75202, as the collateral agent (in such
capacity NationsBank is called "Collateral Agent") on behalf of NationsBank and
each other lender (and affiliate of each other lender) which is now or
hereafter a party to the Credit Agreements (as defined below) (collectively,
"Lenders" and singly, a "Lender") all of Grantor's leasehold interest in the
real estate situated in the State of North Carolina, in the Counties set forth
in Exhibit A attached hereto and described in Exhibit A attached hereto and
made a part hereof (the "Land"), together with (i) all rights, power and
privileges of Grantor as lessee under those certain Lease Agreements with the
lessors (the "Lessors") as described on Exhibit B attached hereto and made a
part hereof, and memoranda of which are, or will be simultaneously herewith,
recorded in the office of County Clerk of Catawba County, State of North
Carolina (such Lease Agreements, together with any amendments, modifications,
renewals, extensions, amendments and restatements thereof, collectively, the
"Leases" and individually, a "Lease"); (ii) all of Grantor's interest in the
buildings and other improvements ("Improvements") now on or that may be
hereafter placed on said Land; (iii) Grantor's interest in all materials,
equipment, fixtures or other property whatsoever, now or hereafter attached to,
installed in, or used in connection with the buildings and other improvements
now erected or hereafter to be erected on said Land, including, but not limited
to, all heating, plumbing, lighting, water heating, cooking,
<PAGE> 213
laundry, refrigerating, incinerating, ventilating and air conditioning
equipment, disposals, dishwashers, refrigerators and ranges, utility lines and
equipment (whether owned individually or jointly with others), sprinkler
systems, fire extinguishing apparatus and equipment, tanks, engines, pipers,
fittings, dynamos, generators, machines, elevators, motors, cabinets, shades,
blinds, partitions, window screens, screen doors, storm windows, awnings,
drapes, and rugs and other floor coverings, and all fixtures, accessions and
appurentances thereto, and all renewals or replacements of or substitutions for
any of the foregoing, all of which property and things are hereby declared to
be permanent fixtures and accessions to the leasehold and part of the realty
conveyed herein as security for the indebtedness herein mentioned; (iv) all
interests now or hereafter of Grantor in and to all easements and rights of way
now or hereafter used in connection with any of the foregoing real estate or as
a means of ingress to or egress from said real estate; (v) all interests now or
hereafter of Grantor in and to any streets, ways, alleys and/or strips of land
adjoining said Land or any part thereof; (vi) all licenses of Grantor necessary
for the operation and maintenance of the foregoing; and (vii) all rights,
estates, hereditaments, powers and privileges of Grantor appurtenant or
incident to the foregoing. This conveyance shall include and the lien,
security interest and assignment created hereby shall encumber and extend to
all other, further or additional title, estates, interest or rights which may
exist now or at any time be acquired by Grantor in or to the property demised
under any lease creating a leasehold estate related to or covering all or any
of the foregoing property and including Grantor's rights, if any, to purchase
the property demised under any such lease and, if fee simple title to any of
such property shall ever become vested in Grantor, such fee simple interest
shall be encumbered by this Deed of Trust in the same manner as if Grantor had
fee simple title to such property as of the date of execution hereof.
TO HAVE AND TO HOLD the foregoing property (the "Mortgaged Property")
unto Trustee and his successors or substitutes in this trust and to his or
their successors and assigns, IN TRUST, WITH POWER OF SALE, for the benefit of
Collateral Agent, however, upon the terms, provisions and conditions herein set
forth.
In order to secure the payment of the indebtedness described in this
Leasehold Deed of Trust, Assignment of Leases and Rents, Security Agreement and
Financing Statement ("Deed of Trust") and the performance of the obligations,
covenants, agreements and undertakings of Grantor described in this Deed of
Trust, Grantor hereby grants to Collateral Agent a security interest and lien
in all of Grantor's right, title and interest in and to all present and future
(i) goods, inventory, equipment (excluding, however, any equipment or other
property which is financed with Indebtedness permitted to be incurred pursuant
to Sections 7.1(c) and 7.1(h) of the Credit Agreements), furnishings, fixtures,
furniture, chattels and personal property of whatever nature owned by Grantor
now or hereafter attached or affixed to or used in or about the building or
buildings now erected or hereafter to be erected on the Mortgaged Property, or
otherwise located on the Mortgaged Property, (ii) fixtures, accessions and
appurtenances to any of the foregoing or following, (iii) renewals or
replacements of or substitutions for any of the foregoing or following, (iv)
building materials and equipment now or hereafter delivered to said premises
and intended to be installed therein, (v) occupancy agreements, leases, rents
(including security deposits and advance rentals under lease agreements now or
at any time hereafter
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covering or affecting any of the Mortgaged Property and all property described
in this Paragraph and held by or for the benefit of Grantor), fees, royalties,
bonuses, issues, room rents, profits, revenues or other income or benefits of
whatever nature received or due in connection with the Mortgaged Property and
all property described in this Paragraph, (vi) monetary deposits which Grantor
has been required to give to any public or private utility with respect to
utility services furnished to the Mortgaged Property or to the Lessor or other
lessor of the Real Property, (vii) permits, licenses, franchises, certificates
and agreements related to the foregoing, and other rights and privileges
obtained in connection with, or necessary for the operation and maintenance of,
the foregoing, and all other rights and privileges obtained in connection with
the Mortgaged Property and all property described in this Paragraph, (viii)
plans, specifications, maps, surveys, reports, operating, management and
maintenance contracts, architectural, engineering and construction contracts,
books of account, insurance policies, guarantees, warranties and other
documents, of whatever kind or character, relating to the use, construction
upon, occupancy, leasing, sale or operation of the Mortgaged Property and all
property described in this Paragraph, (ix) all proceeds from the taking of any
of the Mortgaged Property and any property described in this Paragraph or any
rights appurtenant thereto by right of eminent domain or by private or other
purchase in lieu thereof, (x) all proceeds (including premium refunds) of each
policy of insurance relating to the Mortgaged Property and any property
described in this Paragraph, (xi) all guarantees, sureties and other agreements
assuring performance of any obligation of any tenant of the Mortgaged Property
and all property described in this Paragraph, and (xii) all proceeds arising
from or by virtue of the sale, lease or other disposition of the Mortgaged
Property and any property described in this Paragraph (all of the property
described in this Paragraph hereinafter collectively called the "Personal
Property") and all proceeds and products of the Personal Property. (The
Mortgaged Property and the Personal Property are hereinafter sometimes
collectively called the "Property").
ARTICLE I
Secured Indebtedness
1.1. Secured Indebtedness. This Deed of Trust is made to secure
and enforce the payment of the following, agreements, documents, obligations,
indebtedness and liabilities: (a) all present and future obligations,
indebtedness and liabilities, and all renewals and extensions of all or any
part thereof of Grantor to Lenders or any Lender arising from, by virtue of, or
pursuant to (i) that certain Amended and Restated Credit Agreement dated as of
December 19, 1997, among the [Grantor][Pillowtex Corporation, a Texas
corporation (the "Borrower)], NationsBank of Texas, N.A., in its capacity as
Administrative Agent, and certain of the (said Amended and Restated Credit
Agreement, as amended, modified, renewed, extended, restated or refinanced from
time to time, the "Amended and Restated Credit Agreement"), (ii) that certain
Term Credit Agreement dated as of December 19, 1997, among [Grantor] [the
Borrower], NationsBank of Texas, N.A., in its capacity as Administrative Agent,
and certain of the Lenders (said Term Credit Agreement, as amended, modified,
renewed, extended, restated or refinanced from time to time, the "Term Credit
Agreement") (The Amended and Restated
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Credit Agreement and the Term Credit Agreement are herein, collectively, called
the "Credit Agreements"), (iii) the Notes (as defined in the Credit
Agreements), and (iv) the other Loan Documents (as defined in the Credit
Agreements), including, without limitation, interest, fees and other charges
that would accrue or become owing both prior to and subsequent to and but for
the commencement of any proceeding against or with respect to Grantor under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et. seq. whether
or not a claim is allowed for the same in any such proceeding, and (b) all
indebtedness and obligations incurred or arising pursuant to the provisions of
this Deed of Trust. The indebtedness referred to in this Paragraph 1.1 is
hereinafter sometimes called the "Secured Indebtedness". Initially-capitalized
terms used herein and not otherwise herein defined shall have the meaning given
to such terms in the Credit Agreements.
1.2 Obligations Secured; Future Advances. The following obligations
("Secured Obligations") are secured by this Deed of Trust:
This Deed of Trust is given wholly or partially to secure future
obligations which may be incurred hereunder and which are evidenced by the
Notes. The amount of present obligations secured hereby is Three Million Three
Hundred Sixty Thousand and 00/100 Dollars ($3,360,000) and the maximum
principal amount, including present and future obligations, which may be
secured at any one time is Three Million Three Hundred Sixty Thousand and
00/100 Dollars ($3,360,000). All such future obligations shall be incurred no
later than December 1, 2012, but in no event later than fifteen (15) years from
the date hereof.
ARTICLE II.
Representations and Warranties
2.1. Representations and Warranties. Grantor represents and
warrants to the Trustee, the Collateral Agent and the Lenders as follows:
(a) Title and Authority. Grantor is the lawful owner of
good title to the Leases, and has good right and authority to grant,
bargain, sell, transfer, assign and mortgage the Mortgaged Property,
subject to Lessor's consent, and to grant a security interest in the
Personal Property.
(b) Warranty. For so long as any of the Secured
Indebtedness shall be outstanding, Grantor will warrant and defend the
title to the Mortgaged Property against the claims of all persons
whomsoever claiming or to claim the same or any part thereof, subject
to Permitted Liens.
(c) Leases. The Leases on the Land are in full force and
effect; no default (nor any event, which with notice or lapse of time
or both, could cause such a default) has occurred and is continuing
thereunder and there have been no renewals and/or
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extensions of, or supplements, modifications, or amendments to any
Lease. Grantor is in the possession of the premises covered by, and
leased under the Leases. No other lease or rental agreement, oral or
written, relates to Grantor's use or occupancy of the Mortgaged
Property other than the Leases.
2.2. Covenants and Agreements. So long as the Secured Indebtedness
or any part thereof remains unpaid, Grantor covenants and agrees with the
Trustee, the Collateral Agent and the Lenders as follows:
(a) Taxes on Lien.
In the event of the enactment after the date hereof of any
Applicable Law deducting from the value of property for the purpose of
taxation any lien or security interest thereon, or imposing upon the
Trustee, the Collateral Agent or any Lender the payment of the whole
or any part of the taxes (excluding income, franchise, gross receipts
or similar taxes imposed on the Lenders, the Trustee or the Collateral
Agent) or assessments or charges or liens herein required to be paid
by Grantor, or changing in any way the laws relating to the taxation
of deeds of trust or mortgages or security agreements or debts secured
by deeds of trust or mortgages or security agreements or the interest
of the trustee or beneficiary or mortgagee or secured party in the
property covered thereby, or the manner of collection of such taxes,
so as to affect this Deed of Trust or any of the Secured Indebtedness
or the Trustee, the Collateral Agent or any Lender, then, and in any
such event, Grantor, upon demand by the Trustee, the Collateral Agent
or any Lender, shall to the extent not prohibited by Applicable Law,
pay such taxes, assessments, charges or liens, or reimburse the
Trustee, the Collateral Agent or such Lender therefor.
(b) Insurance. Grantor will maintain insurance with
respect to the Mortgaged Property in accordance with the Credit
Agreements. Collateral Agent understands and acknowledges that the
Lease may require that all property insurance maintained with respect
to the leased premises provide that the proceeds of such insurance be
payable to the Lessors or the Lessors' mortgagees, subject to all
applicable provisions of the Leases with respect to the use of such
proceeds to restore the Improvements.
(c) Protection and Defense of Lien. If the validity of
this Deed of Trust or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Property or
any part thereof shall be attacked directly or indirectly or if any
legal proceedings are instituted against Grantor with respect thereto,
Grantor will give prompt written notice thereof to the Collateral
Agent and at Grantor's own cost and expense diligently will endeavor
to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal proceedings,
including but not limited to the employment of counsel, the
prosecution or defense of litigation and the release or discharge of
all adverse claims, other than Permitted Liens, and the Trustee and
Collateral Agent, or either of them (whether or not named as parties
to legal
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proceedings with respect thereto) are hereby authorized and empowered
to take such additional steps as in their judgment and discretion
reasonably may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity of this Deed of
Trust and the rights, titles, liens and security interests created or
evidenced hereby, including but not limited to the employment of
counsel, the prosecution or defense of litigation, the compromise or
discharge of any adverse claims made with respect to the Property,
other than Permitted Liens, the purchase of any tax title and the
removal of prior liens or security interests which do not constitute
Permitted Liens, and all reasonable expenses so incurred of every kind
and character shall be a demand obligation owing by Grantor, and the
party incurring such expenses shall be subrogated to all rights of the
person receiving such payment. Should the Trustee or the Collateral
Agent intend to take any such action described in the immediately
preceding sentence, the Trustee or the Collateral Agent, as
appropriate, shall, subject to the immediately succeeding proviso,
prior to taking any such action notify Grantor of such intention and
give Grantor a reasonable opportunity to provide such defense or
protection; provided, however, if in the reasonable opinion of the
Trustee or the Collateral Agent the giving of such notice and
opportunity to provide such defense or protection would materially
impair or materially hinder such defense or protection or would
otherwise be materially disadvantageous to rights or interests of the
Trustee or the Collateral Agent hereunder or the rights, title, liens
or security interests created or evidenced hereby, the Trustee and the
Collateral Agent shall have no obligation to give such notice and
opportunity to provide such defense or protection prior to the taking
of any such action, but after taking any such action Trustee or
Collateral Agent shall give notice thereof to Grantor.
(d) Permitted Liens. Grantor will comply with and will
perform all of the covenants, agreements and obligations imposed upon
it or the Property in the Permitted Liens in accordance with their
respective terms and provisions if the failure to do so would have a
Material Adverse Effect. Grantor will not modify or permit any
modification of any Permitted Lien against the Mortgaged Property the
result of which would have a Material Adverse Effect without the prior
written consent of Collateral Agent.
(e) [Intentionally omitted.]
(f) Leases. Grantor may not lease or enter into any
other occupancy agreement authorizing the occupancy of any portion of
any of the Mortgaged Property by third parties without the prior
written consent of Collateral Agent, which consent shall not be
unreasonably withheld.
(g) Estoppel Certificate. Grantor shall at any time and
from time to time furnish promptly upon request a written statement in
such form as may be reasonably required by Collateral Agent stating
(if it is the fact) that the Leases are in full force and effect; that
the Leases have not been released, subordinated or modified; that
there are no offsets or defenses against the enforcement of any Lease;
that this Deed of Trust is
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a valid and binding obligation of Grantor, enforceable against Grantor
in accordance with its terms, subject to Debtor Relief Laws (as such
term is defined in the Credit Agreement); that this Deed of Trust has
not been released, subordinated or modified; and that to the best of
Grantor's knowledge there are no offsets or defenses against the
enforcement of this Deed of Trust, or if any of the foregoing
statements are untrue, specifying the reasons therefor.
(h) Compliance with Laws. Grantor shall, and shall use
reasonable efforts to cause any tenant of the Property to, comply with
all applicable restrictive covenants and all Applicable Laws except
where failure to do so could not be reasonably expected to have a
Material Adverse Effect.
(i) Tax and Insurance Escrow. Upon the occurrence and
during the continuance of a Default, Grantor will upon written request
of Collateral Agent, deposit with Collateral Agent a sum equal to
accrued and unpaid ad valorem taxes, assessments and charges (which
charges for the purpose of this subparagraph shall include without
limitation ground rents and water and sewer rents and any other
recurring charge which could create or result in a lien against the
Property) against the Property for the then current year and the
accrued and unpaid premiums for such policies of insurance for the
then current year, all as reasonably estimated by Collateral Agent and
prorated to the end of the calendar month following the month during
which such Default occurred, and thereafter will deposit with
Collateral Agent sufficient funds (as reasonably estimated from time
to time by Collateral Agent) to permit the Collateral Agent to pay, at
least 5 days prior to the delinquency date thereof, the next maturing
ad valorem taxes, assessments and charges and premiums for such
policies of insurance. Collateral Agent shall have the right to rely
upon tax information furnished by applicable taxing authorities in the
payment of such taxes or assessments and shall have no obligation to
make any protest of any such taxes or assessments. Any excess over
the amounts required for such purposes shall be held by Collateral
Agent for payment of future taxes, assessments, charges and premiums,
applied to any Secured Indebtedness, or refunded to Grantor, at
Collateral Agent's option; and any deficiency in such funds so
deposited shall be made up by Grantor upon demand of Collateral Agent.
All such funds so deposited shall bear interest at the normal interest
rate for money market deposits at NationsBank, may be mingled with the
general funds of Collateral Agent and shall be applied by Collateral
Agent toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to Collateral Agent by
Grantor (which statements shall be presented by Grantor to Collateral
Agent a reasonable time before the applicable amount is due);
provided, however, that if Collateral Agent has made demand for
payment of all of the Secured Indebtedness, such funds may at
Collateral Agent's option be applied to the payment of the Secured
Indebtedness in the order determined by Collateral Agent and that
Collateral Agent may at any time, in its discretion, apply all or any
part of such funds toward the payment of any such taxes, assessments,
charges or premiums which are past due, together with any penalties or
late charges with respect thereto. The conveyance or transfer of
Grantor's interest in the Property for any reason
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(including without limitation the foreclosure of a subordinate lien or
security interest or a transfer by operation of law) shall constitute
an assignment of transfer of Grantor's interest in and rights to such
funds held by Collateral Agent under this subparagraph (i) but subject
to the rights of Collateral Agent hereunder.
(j) Further Assurances. Grantor will, on request of
Collateral Agent, (i) promptly correct any defect or error which may
be discovered in the contents of this Deed of Trust or in any other
instrument executed in connection herewith or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver and record
or file such further instruments (including without limitation further
deeds of trust, security agreements, financing statements,
continuation statements and assignments of rents or leases) and do
such further acts as may be reasonably necessary or proper to carry
out more effectively the purposes of this Deed of Trust and such other
instruments and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof and thereof to
be covered hereby and thereby including specifically, but without
limitation, any renewals, additions, substitutions, replacements, or
appurtenances to the Property; (iii) execute, acknowledge, deliver,
procure and record or file any document or instrument (including
specifically any financing statement) deemed reasonable by Collateral
Agent to protect the lien or the security interest hereunder against
the rights or interests of third persons, and Grantor will pay all
reasonable costs connected with any of the foregoing; and (iv) use
reasonable efforts to cause any tenant under any lease agreement of
any of the Property to furnish, in the manner and to the extent
required under the Lease, any instrument or perform, in the manner and
to the extent required under the Lease, any act reasonably deemed
advisable by Collateral Agent to protect the lien or the security
interest hereunder.
(k) Leases. To the extent that a contrary action or
omission would be reasonably likely to cause a Material Adverse
Effect: (1) Grantor shall punctually and properly perform, observe,
and otherwise comply with each and every covenant, agreement,
requirement and condition set forth in the Leases, and do or cause to
be done all things necessary or appropriate to keep the Leases in full
force and effect and to preserve and keep unimpaired the rights of
Grantor, Trustee and Collateral Agent thereunder, and Grantor shall
neither do nor suffer to be done any act of commission or omission
which would justify the Lessor under any Lease to cancel same, evict
Grantor, or declare due and payable all or any part of the rental and
other sums payable thereunder in advance of the time specified therein
for the payment thereof; (2) Grantor will not, without the express
written consent of Collateral Agent, surrender, forfeit, cancel or
terminate, or permit the surrender, forfeiture, cancellation, or
termination of any Lease in whole or in part, whether or not a default
shall have occurred and shall be continuing thereunder; and (3)
Grantor will not, without the express prior written consent of
Collateral Agent, amend, modify or impair, or permit the amendment,
modification or impairment of any Lease in any manner which would
materially adversely affect rights of Grantor, Trustee or Collateral
Agent thereunder. Grantor shall promptly notify Collateral Agent in
writing upon receipt or delivery by Grantor of any written notice of
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default under any Lease. If for any reason Grantor cannot timely make
any payment under any Lease or perform or comply with any of its
obligations under any Lease, Grantor shall notify Collateral Agent in
sufficient time to enable Collateral Agent (but Collateral Agent shall
not be obligated) to timely make such payments and/or to perform or
comply with such other obligations.
2.3. Right of Collateral Agent to Perform. Grantor agrees that, if
after any applicable notice or grace period, Grantor fails to perform any act
or to take any action which hereunder Grantor is required to perform or take,
or to pay any money which hereunder Grantor is required to pay, Collateral
Agent, in Grantor's name or in its own name and after the giving of any
required notice and expiration of any applicable cure period, may but shall not
be obligated to perform or cause to be performed such act or take such action
or pay such money, and any reasonable expenses so incurred by Collateral Agent,
and any money so paid by Collateral Agent, shall be a demand obligation owing
by Grantor to Collateral Agent and Collateral Agent, upon making such payment,
shall be subrogated to all of the rights of the person or entity receiving such
payment. Any amounts due and owing by Grantor to Collateral Agent pursuant to
this Deed of Trust shall bear interest from the date such amount becomes due
until paid at a rate of interest per annum equal to the lesser of (i) the
Default Rate or (ii) the Highest Lawful Rate, and shall be a part of the
Secured Indebtedness and shall be secured by this Deed of Trust and by any
other Loan Document. Should Collateral Agent intend to perform or cause to be
performed such act or take such action or pay such money, Collateral Agent
shall, subject to the immediately succeeding proviso, prior to taking any such
action notify Grantor of such intention and give Grantor a reasonable
opportunity to take such action; provided, however, if in the reasonable
opinion of Collateral Agent the giving of such notice and opportunity to take
action would materially impair the validity or priority of this Deed of Trust,
the rights or interests of the Trustee or Collateral Agent hereunder or any
rights, titles, liens or security interests created or evidenced hereby,
Collateral Agent shall have no obligation to give such notice and opportunity
to take action prior to taking of such action, but, nevertheless, shall give
prompt written notice of the taking of such action to Grantor.
ARTICLE III.
Remedies in Event of Default
3.1. Defaults. The term "Default" as used in this Deed of Trust
shall mean the occurrence and continuance of an "Event of Default" as defined
in the Credit Agreements.
3.2. Acceleration. Upon the occurrence and during the continuance
of a Default, Collateral Agent shall have the option of declaring all Secured
Indebtedness in its entirety to be immediately due and payable, and the liens
and security interests evidenced hereby shall be subject to foreclosure in any
manner provided for herein or provided for by law as Collateral Agent may
elect.
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3.3. Possession. Upon the occurrence and during the continuance of
a Default, Collateral Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Property, including
the right to rent the same for the account of Grantor and to deduct from such
rents all reasonable costs, expenses and liabilities of every reasonable
character incurred by Collateral Agent in collecting such rents and in
managing, operating, maintaining, protecting or preserving the Property and to
apply the remainder of such rents on the Secured Indebtedness in such manner as
Collateral Agent may elect. All such costs, expenses and liabilities incurred
by Collateral Agent in collecting such rents and in managing, operating,
maintaining, protecting or preserving the Property, if not paid out of rents as
hereinabove provided, shall constitute a demand obligation owing by Grantor and
shall bear interest from the date of expenditure until paid at a rate of
interest per annum equal to the Default Rate, all of which shall constitute a
portion of the Secured Indebtedness. If necessary to obtain the possession
provided for above, Collateral Agent may invoke any and all legal remedies to
dispossess Grantor, including specifically one or more actions for forcible
entry and detainer, trespass to try title and restitution. In connection with
any action taken by Collateral Agent pursuant to this Paragraph 3.3, Collateral
Agent shall not be liable for any loss sustained by Grantor resulting from any
failure to let the Property, or any part thereof, or from any other act or
omission of Collateral Agent in managing the Property, including without
limitation, the negligence of Collateral Agent, unless such loss is caused by
the gross negligence or willful misconduct of Collateral Agent, and Collateral
Agent shall not be obligated to perform or discharge any obligation, duty or
liability under any lease agreement covering the Property or any part thereof
or under or by reason of this instrument or the exercise of rights or remedies
hereunder. Should Collateral Agent incur any such liability, the amount
thereof, including reasonable costs, expenses and reasonable attorneys' fees,
shall be secured hereby, and Grantor shall reimburse Collateral Agent therefor
immediately upon demand. Nothing in this Paragraph 3.3 shall impose any duty,
obligation or responsibility upon Collateral Agent for the control, care,
management or repair of the Property, or shall operate to make Collateral Agent
responsible or liable for any waste committed on the Property or by any other
parties or for any dangerous or defective condition of the Property, or for any
negligence in the management, upkeep, operation, repair or control of the
Property resulting in loss or injury or death to any tenant, licensee, employee
or stranger, unless such waste, dangerous or defective condition or injury or
death is directly a result of gross negligence or willful misconduct by
Collateral Agent, and not just Collateral Agent's own ordinary negligence.
3.4. Foreclosure. During a Default, Trustee, his successor or
substitute, is authorized and empowered and it shall be his special duty at the
request of Collateral Agent to take all actions necessary to sell the Mortgaged
Property in accordance with the statutes of the State where the Land is
located, as such statutes are then in force governing sales of real estate
under powers conferred by deed of trust. Any sale made by Trustee hereunder
may be of the entire Mortgaged Property or in such parcels as Collateral Agent
may request, and any sale may be adjourned by announcement at the time and
place appointed for such sale without further notice
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except as may be required by law. The sale by Trustee of less than the whole
of the Mortgaged Property shall not exhaust the power of sale herein granted,
and Trustee is specifically empowered to make successive sale or sales under
such power until the whole of the Mortgaged Property shall be sold; and, if the
proceeds of such sale of less than the whole of the Mortgaged Property shall be
less than the aggregate of the Secured Indebtedness and the expense of
executing this trust as provided herein, this Deed of Trust and the lien hereof
shall remain in full force and effect as to the unsold portion of the Mortgaged
Property just as though no sale had been made; provided, however, that Grantor
shall never have any right to require the sale of less than the whole of the
Mortgaged Property but Collateral Agent shall have the right, at its sole
election, to request Trustee to sell less than the whole of the Mortgaged
Property. After each sale, Trustee shall make to the purchaser or purchasers
at such sale good and sufficient conveyances in the name of Grantor, conveying
the Mortgaged Property so sold to the purchaser or purchasers with general
warranty of leasehold title, and shall receive the proceeds of said sale or
sales and apply the same as herein provided. Payment of the purchase price to
Trustee shall satisfy the obligation of purchaser at such sale therefor, and
such purchaser shall not be responsible for the application thereof. The power
of sale granted herein shall not be exhausted by any sale held hereunder by
Trustee or his substitute or successor, and such power of sale may be exercised
from time to time and as many times as Collateral Agent may deem necessary
until all of the Mortgaged Property has been duly sold and all of the Secured
Indebtedness has been fully paid. In the event any sale hereunder is not
completed or is defective in the opinion of Collateral Agent, such sale shall
not exhaust the power of sale hereunder and Collateral Agent shall have the
right to cause a subsequent sale or sales to be made hereunder. Any and all
statements of fact or other recitals made in any deed or deeds given by Trustee
or any successor or substitute appointed hereunder as to nonpayment of the
Secured Indebtedness, or as to the occurrence of any Default, or as to
Collateral Agent having declared all of such indebtedness to be due and
payable, or as to the request to sell, or as to notice of time, place and terms
of sale and of the properties to be sold having been duly given, or as to the
refusal, failure or inability to act of Trustee or any substitute or successor,
or as to the appointment of any substitute or successor trustee, or as to any
other act or thing having been duly done by Collateral Agent or by such
Trustee, substitute or successor, shall be taken as prima facie evidence of the
truth of the facts so stated and recited. Trustee, his successor or
substitute, may appoint or delegate any one or more persons as agent to perform
any act or acts necessary or incident to any sale held by Trustee, including
the posting of notices and the conduct of sale, but in the name and on behalf
of Trustee, his successor or substitute.
3.5. Judicial Foreclosure. This instrument shall be effective as a
mortgage as well as a deed of trust and during a Default may be foreclosed as
to any of the Property in any manner permitted by the laws of any State in
which any part of the Property is situated, and any foreclosure suit may be
brought by the Trustee or by Collateral Agent. In the event a foreclosure
hereunder shall be commenced by the Trustee or his or her substitute or
successor, Collateral Agent may at any time before the sale of the Property
direct the said Trustee to abandon the sale, and may then institute suit for
the collection of the Notes and the other Secured Indebtedness, and for the
foreclosure of this Deed of Trust. It is agreed that if Collateral Agent
should institute a suit for the collection of the Notes or any other Secured
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Indebtedness and for the foreclosure of this Deed of Trust, Collateral Agent
may at any time before the entry of a final judgment in said suit dismiss the
same, and require the Trustee or his or her substitute or successor to sell the
Property in accordance with the provisions of this Deed of Trust.
3.6. Receiver. In addition to all other remedies herein provided
for, Grantor agrees that during a Default, subject to any mandatory
requirements of applicable law, Collateral Agent shall as a matter of right be
entitled to the appointment of a receiver or receivers for all or any part of
the Property, whether such receivership be incident to a proposed sale of such
Property or otherwise, and without regard to the value of the Property or the
solvency of any person or persons liable for the payment of the Secured
Indebtedness, and Grantor does hereby consent to the appointment of such
receiver or receivers, waives any and all defenses to such appointment and
agrees not to oppose any application therefor by Collateral Agent, but nothing
herein is to be construed to deprive Collateral Agent of any other right,
remedy or privilege it may now or hereafter have under the law to have a
receiver appointed; provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of Collateral Agent to
receive payment of the rents and income from the Property. Any money advanced
by Collateral Agent in connection with any such receivership shall be a demand
obligation owing by Grantor to Collateral Agent and shall bear interest from
the date of making such advancement by Collateral Agent until paid at a rate of
interest per annum equal to the lesser of (i) the Base Rate Basis plus 2%, or
(ii) the Highest Lawful Rate, and shall be secured by this Deed of Trust and by
any other instrument securing the Secured Indebtedness.
3.7. Proceeds of Sale. The proceeds of any sale held by the
Trustee or any receiver or public officer in foreclosure of the liens evidenced
hereby shall be applied:
first, to the payment of all necessary reasonable costs and
expenses incident to such foreclosure sale, including but not limited
to all court costs and charges of every character in the event
foreclosed by suit, and a reasonable fee to the Trustee acting under
the provisions of Paragraph 3.4 if foreclosed by power of sale as
provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness
(including specifically without limitation the principal, interest and
reasonable attorneys' fees due and unpaid on the Notes and the amounts
due and unpaid and owed to Collateral Agent under this Deed of Trust),
to be distributed in accordance with the Intercreditor Agreement; and
third, the remainder, if any, shall be paid to Grantor or
other party legally entitled thereto.
3.8. The Collateral Agent as Purchaser. Collateral Agent shall
have the right to become the purchaser at any sale held by any Trustee or
substitute or successor or by any receiver or public officer, and Collateral
Agent purchasing at such sale shall have the right to
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credit upon the amount of the bid made therefor, to the extent necessary to
satisfy such bid, the Secured Indebtedness owing to the Collateral Agent and/or
Lenders for the equal and ratable benefit of Lenders.
3.9. Uniform Commercial Code.
(a) During a Default, the Collateral Agent may exercise
its rights of enforcement with respect to the Personal Property under
the Uniform Commercial Code as adopted in the State of Texas, as
amended, and in conjunction with, in addition to or in substitution
for those rights and remedies, and all rights and remedies granted to
Lenders under any Loan Document executed by Grantor governing security
interests in personal property of Grantor.
(b) any sale made pursuant to the provisions of this
Paragraph 3.9 shall be deemed to have been a public sale conducted in
a commercially reasonable manner if held contemporaneously with the
sale of the Mortgaged Property under power of sale as provided herein
upon giving the same notice with respect to the sale of the Personal
Property hereunder as is required for such sale of the Mortgaged
Property under power of sale; and
(c) any and all statements of fact or other recitals made
in any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Secured
Indebtedness, or as to the occurrence of any Default, or as to
Collateral Agent and/or Lenders having declared all of such
indebtedness to be due and payable, or as to notice of time, place and
terms of sale and of the properties to be sold having been duly given,
or as to any other act or thing having been duly done by Collateral
Agent and/or Lenders, shall be taken as prima facie evidence of the
truth of the facts so stated and recited; and
(d) Collateral Agent may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or incident
to any sale held by Collateral Agent, including the sending of notices
and the conduct of the sale, but in the name and on behalf of
Collateral Agent.
3.10. Partial Foreclosure. During a Default, Collateral Agent shall
have the right to proceed with foreclosure of the liens and security interests
evidenced hereby without declaring the entire Secured Indebtedness due, and in
such event any such foreclosure sale may be made subject to the unmatured part
of the Secured Indebtedness; and any such sale shall not in any manner affect
the unmatured part of the Secured Indebtedness, but as to such unmatured part
this Deed of Trust shall remain in full force and effect just as though no sale
had been made. The proceeds of any such sale shall be applied as provided in
Paragraph 3.7 except that the amount paid under subparagraph second thereof
shall be only the matured portion of the Secured Indebtedness and any proceeds
of such sale in excess of those provided for in subparagraphs first and second
(modified as provided above) shall be applied to installments of principal of
and
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interest on the Notes in the inverse order of maturity. Several sales may be
made hereunder without exhausting the right of sale for any unmatured part of
the Secured Indebtedness.
3.11. Remedies Cumulative. All remedies herein expressly provided
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Indebtedness, or any part
thereof, or otherwise benefiting the Trustee, the Collateral Agent and the
Lenders, and the Trustee, the Collateral Agent and the Lenders shall, in
addition to the remedies herein provided, be entitled to avail themselves of
all such other remedies as may now or hereafter exist at law or in equity for
the collection of the Secured Indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and security interests evidenced
hereby, and the resort to any remedy provided for hereunder or under any such
other instrument or provided for by law shall not prevent the concurrent or
subsequent employment of any other appropriate remedy or remedies, except as
may be provided under applicable law.
3.12. Resort to Any Security. Collateral Agent may resort to any
security given by this Deed of Trust or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to Collateral
Agent in its sole and uncontrolled discretion, and any such action shall not be
considered as a waiver of any of the rights, benefits, liens or security
interests evidenced by this Deed of Trust, except as may be provided under
applicable law.
3.13. Waiver. To the full extent Grantor may do so, Grantor agrees
that Grantor will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension or redemption, and Grantor, for Grantor and Grantor's heirs,
devisees, representatives, successors and assigns, and for any and all persons
ever claiming any interest in the Property, to the extent permitted by law and
except with respect to rights set forth herein or in the other Loan Documents,
hereby waives and releases all rights of redemption, valuation, appraisement,
stay of execution, notice of intention to mature or declare due the whole of
the Secured Indebtedness and all rights to a marshaling of the assets of
Grantor, including the Property, or to a sale in inverse order of alienation in
the event of foreclosure of the liens and security interests hereby created.
Grantor shall not have or assert any right under any statute or rule of law
pertaining to the marshaling of assets, sale in inverse order of alienation,
the exemption of homestead, the administration of estates of decedents or other
matters whatever to defeat, reduce or affect the rights of the Trustee or
Collateral Agent under the terms of this Deed of Trust to a sale of the
Property for the collection of the Secured Indebtedness without any prior or
different resort for collection, or the rights of the Trustee or Collateral
Agent under the terms of this Deed of Trust to the payment of such indebtedness
out of the proceeds of sale of the Property in preference to every other
claimant whatever. If any law referred to in this Paragraph 3.13 and now in
force, of which Grantor or Grantor's successors and assigns and such other
persons claiming any interest in the Property might take advantage despite this
Paragraph 3.13 shall hereafter be repealed or cease to be in force, such law
shall not thereafter be deemed to preclude the application of this Paragraph
3.13. TO THE
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EXTENT NOT PROHIBITED BY APPLICABLE LAWS, IF THE PROPERTY IS SOLD IN ACCORDANCE
WITH THE TERMS OF THIS DEED OF TRUST FOR AN AMOUNT LESS THAN THE OBLIGATIONS OF
GRANTOR TO TRUSTEE, LENDERS OR COLLATERAL AGENT, THE DEFICIENCY SHALL BE
DETERMINED BY THE PURCHASE PRICE AT THE SALE.
3.14. Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale Grantor or
Grantor's successors or assigns or any other persons claiming any interest in
the Property by, through or under Grantor are occupying or using the Property,
or any part thereof, each and all shall immediately become the tenant of the
purchaser at such sale, which tenancy shall be a tenancy from day-to-day,
terminable at the will of either landlord or tenant, at a reasonable rental per
day based upon the value of the property occupied, such rental to be due daily
to the purchaser. In the event the tenant fails to surrender possession of
said property upon demand, the purchaser shall be entitled to institute and
maintain an action for forcible entry and detainer of said property in the
Justice of the Peace Court in the Justice Precinct in which such property, or
any part thereof, is situated.
3.15. Insurance Premiums. Subject to the terms of the Leases, upon
any foreclosure of the Mortgaged Property pursuant to this Deed of Trust,
Collateral Agent shall have the right to cancel any policy of insurance
covering all or any part of the Mortgaged Property and shall be entitled to
receive any unearned premiums from such policy. The unearned premiums received
by Collateral Agent shall be applied in the same manner as provided in
Paragraph 3.7 above regarding the application of proceeds of sale of the
Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
Contracts and Bonds
4.1. Assignment. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to Collateral Agent all rents,
income, profits and proceeds to be derived from the Property, including without
limitation the immediate and continuing right, subject to the license granted
below, to collect and receive all of the rents, income, receipts, revenues,
issues, profits and other sums of money that may now or at any time hereafter
become due and payable to Grantor under the terms of any present or future
leases now or hereafter covering the Property, or any part thereof, including
but not limited to minimum rents, additional rents, percentage rents,
deficiency rents and liquidated damages following default, all proceeds payable
under any policy of insurance covering the loss of rents resulting from
untenantability caused by destruction or damage to the Property, and liens and
rights, whether constitutional, statutory, contractual or otherwise, in favor
of Grantor as the lessor of any of the Property, and all of Grantor's rights to
recover monetary amounts from any lessee in bankruptcy including, without
limitation, rights of recovery for use and occupancy and damage claims arising
out of lease defaults, including rejections, under the Bankruptcy Reform Act of
1978, as amended, or any other present or
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future federal or state insolvency, bankruptcy or similar law (all of the
foregoing hereinafter collectively called "Applicable Bankruptcy Law"),
together with any sums of money that may now or at any time hereafter become
due and payable to Grantor by virtue of any and all royalties, overriding
royalties, bonuses, delay rentals and any other amount of any kind or character
arising under any and all present and future oil, gas and mining leases
covering the Property or any part thereof; and all proceeds and other amounts
paid or owing to Grantor under or pursuant to any and all contracts and bonds
relating to the construction, erection or renovation of the Property; subject
however to a license hereby granted by Collateral Agent to Grantor to collect
and receive and expend all of the foregoing, subject to the terms and
conditions hereof. Upon the occurrence and continuance of any Default,
Collateral Agent shall have the right, power and privilege (but shall be under
no duty) to terminate such license whereupon Collateral Agent shall have the
right and authority, whether or not it takes possession of the Property, to
seek enforcement of any such lease, contract or bond and to demand, collect,
receive, sue for and recover in its own name any and all of the above described
amounts assigned hereby and to apply the sum(s) collected, first to the payment
of reasonable expenses incident to the collection of the same, second to the
payment of the Secured Indebtedness, and the balance, if any, to Grantor or
other party legally entitled thereto; provided, however, that Collateral Agent
shall not be deemed to have taken possession of the Property except on the
exercise of its option to do so, evidenced by its demand and overt act for such
purpose. Grantor shall make no assignment or other disposition of the above
described amounts assigned hereby, nor, unless permitted under the Credit
Agreement, shall Grantor cancel or amend any such lease, contract, bond or any
other instrument under which such amounts are to be paid or waive, excuse,
condone, discount, set off, compromise or in any manner release any obligation
thereunder if to do so could reasonably be expected to have a Material Adverse
Effect, nor shall Grantor during the existence of a Default receive or collect
any such amount thus assigned for a period of more than one month in advance of
the date on which payment thereof is due and Grantor shall duly and punctually
observe and perform every obligation to be performed by it under each such
lease, contract, bond or other instrument if the failure to do so could
reasonably be expected to have a Material Adverse Effect, and shall not do or
permit to be done anything to impair the security thereof and shall enforce if
the failure to do so could reasonably be expected to have a Material Adverse
Effect, every obligation of each other party thereto. The assignment contained
in this Paragraph 4.1. shall become null and void upon the release of this Deed
of Trust. It shall never be necessary for Collateral Agent to institute legal
proceedings of any kind whatsoever to enforce the provisions of this Paragraph
4.1.
ARTICLE V.
Hazardous Materials
5.1. Definitions. For the purpose of this Deed of Trust, Grantor,
Collateral Agent and Trustee agree that, unless the context otherwise specifies
or requires, the following terms shall have the meaning specified below:
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(a) "Hazardous Materials" means (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), as amended from time to time, and
regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as
amended from time to time, and regulations promulgated thereunder; (c)
asbestos; (d) polychlorinated biphenyls; (e) underground storage
tanks, whether empty, filled or partially filled with any substance,
(f) any substance the presence of which on the Land and Improvements
is prohibited by any Governmental Requirements (as defined below); and
(g) any other substance which by any Governmental Requirements
requires special handling or notification of any federal, state or
local governmental entity in its collection, storage, treatment, or
disposal.
(b) "Hazardous Materials Contamination" means the
contamination (whether presently existing or with respect to Sections
5.3, 5.4 and 5.5 only, hereafter occurring) of the buildings,
facilities, soil, groundwater, air or other elements on or of the Land
and Improvements by Hazardous Materials, or the contamination of the
buildings, facilities, soil, groundwater, air or other elements on or
of any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Deed of Trust) emanating
from the Land and Improvements, in either case, in a manner violating
applicable Governmental Requirements.
(c) "Governmental Requirements" means all laws,
ordinances, rules, and regulations of any Governmental Authority (as
defined below) applicable to Grantor or the Land and Improvements.
(d) "Governmental Authority" means the United States, the
state, county, city, or any other political subdivision in which the
Land and Improvements is located, and any other political subdivision,
agency, or instrumentality exercising jurisdiction over Grantor or the
Land and Improvements.
5.2. [Intentionally omitted.]
5.3. Grantor's Covenants. Grantor agrees to (a) give notice to
Collateral Agent promptly upon Grantor's acquiring knowledge of the presence of
any Hazardous Materials which would have a Material Adverse Effect on the Land
and Improvements or of any Hazardous Materials Contamination which would have a
Material Adverse Effect with a full description thereof; and (b) promptly
comply with any Governmental Requirements requiring the removal, treatment or
disposal of such Hazardous Materials or Hazardous Materials Contamination and
provide Collateral Agent with reasonably satisfactory evidence of such
compliance, except to the extent that Grantor's liability for such removal,
treatment and disposal of such Hazardous Materials or Hazardous Materials
Contamination is being contested in good faith by Grantor.
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5.4. Site Assessments. Grantor will permit Collateral Agent (by
its officers, employees and agents) from time to time, but not more frequently
than once in any twelve-month period (unless otherwise required by any Tribunal
having supervisory authority over Collateral Agent) to contract for the
services of persons (the "Site Reviewers") to perform environmental site
assessments (the "Site Assessments") on the Land and Improvements for the
purpose of determining whether there exists on the Land and Improvements any
environmental condition which could reasonably be expected to result in any
liability, cost or expense to the owner, occupier or operator of the Land and
Improvements arising under any Governmental Requirements relating to Hazardous
Materials. Subject to the consent of the Lessor and subject to the provisions
of the Lease, the Site Assessments may be performed at any time or times, upon
reasonable notice, and under reasonable conditions established by Grantor which
do not impede the performance of the Site Assessments. Site Assessments shall
be conducted in accordance with Governmental Requirements. Subject to the
consent of the Lessor and subject to the provisions of the Lease, the Site
Reviewers are hereby authorized to enter upon the Land and Improvements for
such purposes. Subject to the consent of the Lessor and subject to the
provisions of the Lease, the Site Reviewers are further authorized to perform
both above and below the ground testing for environmental damage or the
presence of Hazardous Materials on the Land and Improvements and such other
tests on the Land and Improvements as may be necessary to conduct the Site
Assessments in the reasonable opinion of the Site Reviewers. Grantor will
supply to the Site Reviewers such historical and operational information
regarding the Land and Improvements as Grantor has in its possession or control
and as may be reasonably requested by the Site Reviewers to facilitate the Site
Assessments and will make available for meeting with the Site Reviewers
appropriate personnel employed by Grantor having knowledge of such matters.
The costs of performing such Site Assessments, except during a Default, shall
be paid by Collateral Agent. During a Default, the reasonable cost of
performing such Site Assessments shall be paid by Grantor upon demand of
Collateral Agent and any such expenses borne by Collateral Agent and not
promptly reimbursed by Grantor shall be secured by this Deed of Trust.
5.5. [Intentionally omitted.]
ARTICLE VI.
Miscellaneous
6.1. Release. Upon the Release Date, (as defined in the Term
Credit Agreement) the Property shall become wholly clear of the liens, security
interests, conveyances and assignments evidenced hereby, which shall be
released of record by Collateral Agent at Grantor's cost.
6.2. Successor Trustee. The Trustee may resign by an instrument in
writing addressed to Collateral Agent, or the Trustee may be removed at any
time with or without cause by an instrument in writing executed by Collateral
Agent. In case of the death, resignation, removal or disqualification of the
Trustee or if for any reason Collateral Agent shall deem it desirable
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to appoint a substitute or successor trustee to act instead of the herein named
trustee or any substitute or successor trustee, then Collateral Agent shall
have the right and hereby is authorized and empowered to appoint a successor
trustee, or a substitute trustee, without other formality than appointment and
designation in writing executed by Collateral Agent and the authority hereby
conferred shall extend to the appointment of other successor and substitute
trustees successively until the Secured Indebtedness finally has been paid in
full or until the Property is sold hereunder. In the event the Secured
Indebtedness is owned by more than one person or entity, the holder or holders
of not less than a majority in the amount of such indebtedness shall have the
right and authority to make the appointment of a successor or substitute
trustee provided for in the preceding sentence. Such appointment and
designation by Collateral Agent or by the holder or holders of not less than a
majority of the Secured Obligations shall be full evidence of the right and
authority to make the same and of all facts therein recited. If Collateral
Agent is a corporation and such appointment is executed in its behalf by an
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the
corporation. Upon the making of any such appointment and designation, all of
the estate and title of the Trustee in the Property shall vest in the named
successor or substitute trustee and thereupon he shall succeed to and shall
hold, possess and execute all the rights, powers, privileges, immunities and
duties herein conferred upon the Trustee; but, nevertheless, upon the written
request of Collateral Agent or of the successor or substitute Trustee, the
Trustee ceasing to act shall execute and deliver an instrument transferring to
such successor or substitute Trustee all of the estate and title in the
Property of the Trustee so ceasing to act, together with all the rights,
powers, privileges, immunities and duties herein conferred upon the Trustee,
and shall assign, transfer and deliver any of the properties and moneys held by
said Trustee hereunder to said successor or substitute Trustee. All references
herein to the Trustee shall be deemed to refer to the Trustee (including any
successor or substitute appointed and designated as herein provided) from time
to time acting hereunder. Grantor hereby ratifies and confirms any and all
acts which the herein named Trustee or her successor or successors, substitute
or substitutes, in this trust, lawfully shall do by virtue hereof.
6.3. Liability and Indemnification of Trustee. The Trustee shall
not be liable for any error of judgment or act done by the Trustee in good
faith, or be otherwise responsible or accountable under any circumstances
whatsoever, except for the Trustee's gross negligence or willful misconduct.
The Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by
him or her hereunder, believed by him or her in good faith to be genuine. All
moneys received by the Trustee, until used or applied as herein provided, shall
be held in trust for the purposes for which they were received, but need not be
segregated in any manner from any other moneys (except to the extent required
by law), and the Trustee shall be under no liability for interest on any monies
received by him or her hereunder, except to the extent required hereunder or
under Applicable Law. Grantor will reimburse the Trustee for, and indemnify
and save harmless him or her against, any and all liability and expenses which
reasonably may be incurred by him or her in the performance of his or her
duties hereunder, except for such liability and expenses
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attributable to the Trustee's gross negligence or willful misconduct. The
foregoing indemnity shall not terminate upon release, foreclosure or other
termination of this Deed of Trust.
6.4. Waiver by Collateral Agent. Collateral Agent may, subject to
the Credit Agreement, at any time and from time to time in writing (a) waive
compliance by Grantor with any covenant herein made by Grantor to the extent
and in the manner specified in such writing; (b) consent to Grantor doing any
act which Grantor hereunder is prohibited from doing, or consent to Grantor
failing to do any act which Grantor hereunder is required to do, to the extent
and in the manner specified in such writing; (c) release any part of the
Property, or any interest therein, from the lien and security interest of this
Deed of Trust without the joinder of the Trustee, or (d) release any party
liable, either directly or indirectly, for the Secured Indebtedness or for any
covenant herein or in any other instrument now or hereafter securing the
payment of the Secured Indebtedness, without impairing or releasing the
liability of any other party. No such act shall in any way impair the rights
of Trustee or Collateral Agent hereunder except to the extent specifically
agreed to by Collateral Agent in such writing.
6.5. Actions by Trustee or Collateral Agent. The lien, security
interest and other security rights of Trustee, Collateral Agent and Lenders
hereunder shall not be impaired by any indulgence, moratorium or release
granted by Collateral Agent (except as provided in Section 6.1), including but
not limited to (a) any renewal, extension, increase or modification which
Collateral Agent or any Lender may grant with respect to any Secured
Indebtedness, (b) any surrender, compromise, release, renewal, extension,
exchange or substitution which Collateral Agent or any Lender may grant in
respect of the Property, or any part thereof or any interest therein (except to
the extent specifically surrendered, compromised, released, renewed, extended,
exchanged or substituted), or (c) any release or indulgence granted to any
endorser, guarantor or surety of any Secured Indebtedness. The taking of
additional security by Trustee or Collateral Agent shall not release or impair
the lien, security interest or other security rights of Trustee or Collateral
Agent hereunder or affect the liability of Grantor or of any endorser or
guarantor or other surety or improve the right of any permitted junior
lienholder in the Property.
6.6. Rights of Collateral Agent. Collateral Agent may, subject to
the Credit Agreement, waive any Default or other default without waiving any
other prior or subsequent Default or other default. Collateral Agent may
remedy any Default or other default without waiving the Default or other
default remedied. Neither the failure by Collateral Agent to exercise, nor the
delay by Collateral Agent in exercising, any right, power or remedy upon any
Default or other default shall be construed as a waiver of such Default or
other default or as a waiver of the right to exercise any such right, power or
remedy at a later date. No single or partial exercise by Collateral Agent of
any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification
or waiver of any provision hereof or consent to any departure by Grantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by Collateral Agent, and then such waiver or consent shall be
effective only in the specific instances, for the purpose for which given and
to the extent therein specified. No notice to or demand on Grantor in any case
shall
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of itself entitle Grantor to any other or further notice or demand in similar
or other circumstances. Acceptance by Collateral Agent of any payment in an
amount less than the amount then due on any Secured Indebtedness shall be
deemed an acceptance on account only and shall not in any way affect the
existence of a Default or other default hereunder.
6.7. Reproduction as Financing Statement. A carbon, photographic
or other reproduction of this Deed of Trust or of any financing statement
relating to this Deed of Trust shall be sufficient as a financing statement.
6.8. Fixture Filing. Some of the above goods are or are to become
fixtures on the Land. This Deed of Trust shall be effective as a financing
statement filed as a fixture filing with respect to all fixtures included
within the Property and is to be filed for record in the real property records
of the county where the Land is situated. The mailing address of Grantor is
set forth below the signature of Grantor to this Deed of Trust and the address
of Collateral Agent from which information concerning the security interest may
be obtained is 901 Main Street, Suite 6700, Dallas, Texas 75202.
6.9. Filing and Recordation. Grantor will cause this Deed of Trust
and all amendments and supplements thereto and substitutions therefor and all
financing statements and continuation statements relating hereto to be
recorded, filed, re-recorded and refiled in such manner and in such places as
the Trustee or Collateral Agent shall reasonably request, and will pay all such
recording, filing, re-recording and refiling taxes, fees and other charges.
6.10. Dealing with Successor. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Grantor,
Collateral Agent may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Deed of Trust and to the Secured
Indebtedness in the same manner as with Grantor, without in any way vitiating
or discharging Grantor's liability hereunder or for the payment of the Secured
Indebtedness. Except as agreed to in writing by all Lenders and Collateral
Agent, no sale of the Property, no forbearance on the part of Collateral Agent
or any Lender and no extension of the time for the payment of any of the
Secured Indebtedness given by Collateral Agent or any Lender shall operate to
release, discharge, modify, change or affect, in whole or in part, the
liability of Grantor hereunder or for the payment of the Secured Indebtedness
or the liability of any other person hereunder or for the payment of the
Secured Indebtedness, except to the extent proceeds of any such sale are
applied as provided in Paragraph 3.7.
6.11. Place of Payment. Secured Indebtedness which may be owing
hereunder at any time by Grantor shall be payable at the place designated in
the Loan Documents, or if no such designation is made, at the office of
Collateral Agent at the address indicated in this Deed of Trust, or at such
other place in the continental United States as Collateral Agent may designate
in writing.
6.12. Subrogation. To the extent that proceeds of the Secured
Indebtedness are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior
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encumbrance against the Property, such proceeds have been advanced by Lenders
at Grantor's request and Lenders shall be subrogated to any and all rights,
security interests and liens owned or held by any owner or holder of such
outstanding liens, security interests, charges or encumbrances, irrespective of
whether said liens, security interests, charges or encumbrances are released;
provided, however, that the terms and provisions of this Deed of Trust shall
govern the rights and remedies of Lenders and shall supersede the terms,
provisions, rights and remedies under and pursuant to the instruments creating
the lien or liens to which Lenders are subrogated hereunder.
6.13. Application of Indebtedness. If any part of the Secured
Indebtedness cannot be lawfully secured by this Deed of Trust or if any part of
the Property cannot be lawfully subject to the lien and security interest
hereof to the full extent of such indebtedness, then all payments made shall be
applied on said indebtedness first in discharge of that portion thereof which
is unsecured by this Deed of Trust.
6.14. Usury. It is the intent of the Lenders and Grantor in the
execution of the Credit Agreement, this Deed of Trust, the other Loan Documents
and all other instruments now or hereafter securing the Secured Indebtedness or
executed in connection therewith or under any other written or oral agreement
by the undersigned in favor of Collateral Agent and/or Lenders to contract in
strict compliance with applicable usury law. In furtherance thereof,
Collateral Agent, Lenders and Grantor stipulate and agree that none of the
terms and provisions contained in the Credit Agreement, this Deed of Trust, the
other Loan Documents or any other instrument securing the Notes or executed in
connection herewith, or in any other written or oral agreement by Grantor in
favor of Lenders and/or Collateral Agent, shall ever be construed to create a
contract to pay for the use, forbearance or detention of money, or interest at
a rate in excess of the maximum interest rate permitted to be charged by
applicable law. Neither Grantor nor any guarantors, endorsers, sureties or
other parties now or hereafter becoming liable for the Secured Indebtedness or
any part thereof shall ever be required to pay interest on Secured Indebtedness
or arising under any instrument securing the Secured Indebtedness or under any
of the other Loan Documents, or in any other written or oral agreement by
Grantor in favor of Lenders and/or Collateral Agent, at a rate in excess of the
maximum interest that may be lawfully charged under Applicable Laws, and the
provisions of this Paragraph 6.14 shall control over all other provisions of
the Credit Agreements, this Deed of Trust, the other Loan Documents and any
other instruments now or hereafter securing the Secured Indebtedness or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. All interest paid or agreed to be paid
to Lenders and/or Collateral Agent shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full period
until payment in full of the principal of the Secured Indebtedness so that the
interest thereon for such full period shall not exceed the maximum amount
permitted by Applicable Laws. Lenders and/or Collateral Agent expressly
disavow any intention to charge or collect excessive unearned interest or
finance charges in the event the maturity of the Secured Indebtedness is
accelerated. If the maturity of the Secured Indebtedness shall be accelerated
for any reason or if the principal of the Secured Indebtedness is paid prior to
the end of the term of the Secured Indebtedness, and as a result thereof the
interest received for the actual period
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of existence of the loan evidenced by the Secured Indebtedness exceeds the
applicable maximum lawful rate, Lenders and/or Collateral Agent shall refund to
Grantor the amount of such excess or shall credit the amount of such excess
against the principal balance of the Secured Indebtedness then outstanding. In
the event that Lenders and/or Collateral Agent shall collect monies and/or any
other thing of value which are deemed to constitute interest which would
increase the effective interest rate on the Secured Indebtedness to a rate in
excess of that permitted to be charged by applicable law, an amount equal to
interest in excess of the lawful rate shall, upon such determination, at the
option of Lenders and/or Collateral Agent, be either immediately returned to
Grantor or credited against the principal balance of the other Secured
Indebtedness, without further penalty to such holder. By execution of this
Deed of Trust, Grantor acknowledges that it believes the loan to be
non-usurious and agrees that if, at any time, Grantor should have reason to
believe that such loan is in fact usurious, it will give Lenders and/or
Collateral Agent notice of such condition, and Grantor agrees that Lenders
and/or Collateral Agent shall have 90 days after receipt of such notice in
which to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. As used in this Paragraph 6.14,
"interest" means any sum that must be treated as interest under Applicable Laws
in determining whether a loan is usurious. THE TERM "APPLICABLE LAWS" AS USED
IN THIS PARAGRAPH 6.14 SHALL MEAN THE LAWS OF THE STATE OF TEXAS OR THE LAWS OF
THE UNITED STATES, WHICHEVER LAWS ALLOW THE GREATER RATE OF INTEREST, AS SUCH
LAWS NOW EXIST OR MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE.
6.15. Notice. Any notice, request, demand or other communication
required or permitted hereunder, or under the Loan Documents, or under any
other instrument securing the payment of the Loan Documents (unless otherwise
expressly provided therein) shall be given in the same manner as in Section
11.1 of the Credit Agreements.
6.16. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the representatives,
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Property, and shall inure to the
benefit of the Trustee and Collateral Agent and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the land. All references in this Deed of Trust to Grantor, Trustee or
Collateral Agent shall be deemed to include all such heirs, devisees,
representatives, successors, substitutes and assigns.
6.17. Severability. A determination that any provision of this Deed
of Trust is unenforceable or invalid shall not affect the enforceability or
validity of any other provision and any determination that the application of
any provision of this Deed of Trust to any person or circumstance is illegal or
unenforceable shall not affect the enforceability or validity of such provision
as it may apply to any other persons or circumstances.
6.18. Gender and Number. Within this Deed of Trust, words of any
gender shall be held and construed to include any other gender, and words in
the singular and plural number shall be held and construed to include the other
number, unless the context otherwise requires.
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<PAGE> 235
6.19. Counterparts. This Deed of Trust may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All such counterparts shall be construed together and shall
constitute one instrument.
6.20. Reporting Requirements. Grantor agrees to comply with any and
all reporting requirements applicable to the transaction secured by this Deed
of Trust which are set forth in any law, statute, ordinance, rule, regulation,
order or determination of any governmental authority, and further agrees upon
request of Collateral Agent to furnish Collateral Agent with evidence of such
compliance.
6.21. Headings. The paragraph headings contained in this Deed of
Trust are for convenience only and shall in no way enlarge or limit the scope
or meaning of the various and several paragraphs hereof.
6.22. Modification or Termination. The Loan Documents may only be
modified or terminated by a written instrument or instruments executed by the
party against whom enforcement of the modification or termination is asserted.
Any alleged modification or termination which is not so documented shall not be
effective as to any party.
6.23. ENTIRE AGREEMENT. THIS DEED OF TRUST, TOGETHER WITH THE
CREDIT AGREEMENTS, AND ALL OTHER LOAN DOCUMENTS (ALL AS IN EFFECT ON THE DATE
HEREOF AND AS THE SAME MAY BE AMENDED, SUPPLEMENTED, OR OTHERWISE MODIFIED
HEREAFTER FROM TIME TO TIME) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
6.24. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE REAL PROPERTY
LOANS OF ANY STATE IN WHICH ANY OF THE MORTGAGED PROPERTY MAY BE LOCATED
CONTROLS, THIS DEED OF TRUST SHALL BE CONSTRUED, INTERPRETED, ENFORCED AND
GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS
OF THE UNITED STATES APPLICABLE TO TRANSACTIONS WITHIN TEXAS.
6.25. Multiple Advance Loan. This Deed of Trust is given to secure,
among other things, a multiple advance loan and shall secure not only presently
existing indebtedness but also future advances, whether such advances are
obligatory or to be made at the option of the Collateral Agent or any Lender or
otherwise, to the same extent as if such future advances were made on the date
of execution of this Deed of Trust. The lien of this Deed of Trust shall be
valid as to all indebtedness hereby secured, including future advances, from
the time of its filing for record in the recorder's or registrar's office of
the county in which the Mortgaged Property is located.
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<PAGE> 236
IN WITNESS WHEREOF, Grantor has executed this Leasehold Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing as of the
19th day of December, 1997.
BEACON MANUFACTURING COMPANY
[Corporate Seal]
Attest:
By:
------------------------------
Name: J. Mark Kirkpatrick
- --------------------------
Title: Vice President and Treasurer
Address: 4111 Mint Way
Dallas, Texas 75237-1699
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
This ________ day of December, 1997, personally came before
me,_______________________, Notary Public of _______ ________________ County,
State of __________________, J. Mark Kirkpatrick, who being by me duly sworn,
says that he is the Vice President and Treasurer of Beacon Manufacturing
Company, a North Carolina corporation, and that the seal affixed to the
foregoing instrument in writing is the corporate seal of said corporation, and
that said writing was signed and sealed by him in behalf of said corporation by
its authority duly given. And the said Vice President and Treasurer
acknowledged the said writing to be the act and deed of said corporation.
Witness my hand and notarial seal, this the __________ day of
December, 1997.
----------------------------------
Notary Public, State of
--------
----------------------------------
Print Name of Notary here
My Commission Expires:
- ----------------------------------
(NOTARY SEAL)
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<PAGE> 237
EXHIBIT "A"
<PAGE> 238
EXHIBIT "B"
<PAGE> 239
EXHIBIT I-2
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
Gene L. Jameson
DONOHOE, JAMESON & CARROLL, P.C.
3400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
DEED TO SECURE DEBT, ASSIGNMENT OF LEASES
AND RENTS, AND SECURITY AGREEMENT
STATE OF GEORGIA )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF COLUMBUS )
THAT, _____________________________________________, a _______
corporation (hereinafter called "Grantor"), in order to secure the payment of
the indebtedness hereinafter referred to and the performance of the
obligations, covenants, agreements and undertakings of Grantor hereinafter
described, does hereby GRANT, BARGAIN, SELL, CONVEY, TRANSFER, ASSIGN and SET
OVER to NATIONSBANK OF TEXAS, N.A., a national banking association (hereinafter
called "NationsBank"), having its principal office at 901 Main Street, 67th
Floor, Dallas, Texas 75202, as the collateral agent (hereinafter in such
capacity NationsBank is called the "Collateral Agent") on behalf of NationsBank
and each other lender (and affiliate of each other lender) a party to the
Credit Agreements described below (hereinafter collectively called "Lenders"),
all of the real estate situated in the State of ___________________________, in
the Counties set forth in Exhibit "A" attached hereto and described in Exhibit
"A" attached hereto and made a part hereof (the "Land"), together with (i) all
the buildings and other improvements now on or that may be hereafter placed on
said Land; (ii) Grantor's interest in all materials, equipment, fixtures or
other property whatsoever, now or hereafter attached to, installed in, or used
in connection with the buildings and other improvements now erected or
hereafter to be erected on said Land, including, but not limited to, all
heating, plumbing, lighting, water heating, cooking, laundry, refrigerating,
incinerating, ventilating and air conditioning equipment, disposals,
dishwashers, refrigerators and ranges, utility lines and equipment (whether
owned individually or jointly with others),
THE AGGREGATE PRINCIPAL INDEBTEDNESS, EXCLUSIVE OF INTEREST AND COSTS, SECURED
BY THIS INSTRUMENT IS [spell out in letters] ($____________). THE PRINCIPAL
INDEBTEDNESS SECURED BY THIS INSTRUMENT MATURES ______________, 10__.
<PAGE> 240
sprinkler systems, fire extinguishing apparatus and equipment, tanks, engines,
pipes, fittings, dynamos, generators, machines, elevators, motors, cabinets,
shades, blinds, partitions, window screens, screen doors, storm windows,
awnings, drapes, and rugs and other floor coverings, and all fixtures,
accessions and appurtenances thereto, and all renewals or replacements of or
substitutions for any of the foregoing, all of which property and things are
hereby declared to be permanent fixtures and accessions to the freehold and
part of the realty conveyed herein as security for the indebtedness herein
mentioned; (iii) Grantor's interest in all easements and rights of way now or
hereafter used in connection with any of the foregoing real estate or as a
means of ingress to or egress from said real estate; (iv) Grantor's interest,
now or hereafter acquired, in and to any streets, ways, alleys and/or strips
and gores of land adjoining said Land or any part thereof; and (v) Grantor's
interest in and to all rights, estates, hereditaments, powers and privileges
appurtenant or incident to the foregoing.
TO HAVE AND TO HOLD the foregoing property (herein called the
"Mortgaged Property") unto Collateral Agent and its successors and assigns, in
fee simple, however, upon the terms, provisions and conditions herein set
forth.
Notwithstanding any other provision of this instrument to the
contrary, this instrument is (1) a security deed passing title to the Mortgaged
Property and made in compliance with the provisions of Section 44-14-60 et seq.
of the Official Code of Georgia Annotated, as amended, and not a mortgage, and
(2) a security agreement covering all of the fixtures located on or comprising
a part of the Property under the Uniform Commercial Code, as enacted in the
State of Georgia.
In order to secure the payment of the indebtedness hereinafter
referred to and the performance of the obligations, covenants, agreements and
undertakings of Grantor hereinafter described, Grantor further grants (to the
extent not prohibited by Applicable Law) to the Collateral Agent a security
interest and lien in Grantor's right, title and interest in and to all present
and future (i) goods, inventory, equipment (excluding, however, any equipment
or other property which is financed with Indebtedness permitted to be incurred
pursuant to Sections 7.1(c) and 7.1(h) of the Credit Agreements), furnishings,
fixtures, furniture, chattels and other personal property of whatever nature
owned by Grantor now or hereafter attached or affixed to or used in or about
the building or buildings now erected or hereafter to be erected on the
Mortgaged Property or otherwise located on the Mortgaged Property, (ii)
fixtures, accessions and appurtenances to any of the foregoing or following,
(iii) renewals or replacements of or substitutions for any of the foregoing or
following, (iv) building materials and equipment now or hereafter delivered to
said premises and intended to be installed therein, (v) occupancy agreements,
leases, rents (including security and other deposits and advance rentals under
occupancy agreements and lease agreements now or at any time hereafter covering
or affecting any of the Mortgaged Property and all property described in this
paragraph and held by or for the benefit of Grantor), fees, royalties, bonuses,
issues, room rents, profits, revenues or other income or benefits of whatever
nature received or due in connection with the Mortgaged Property and all
property described in this
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<PAGE> 241
paragraph, (vi) monetary deposits which Grantor has been required to give to
any public or private utility with respect to utility services furnished to the
Mortgaged Property, (vii) permits, licenses, franchises, certificates, and
agreements related to any of the foregoing or following, and all other rights
and privileges obtained in connection with, or necessary for the operation and
maintenance of, the foregoing, and all other rights and privileges obtained in
connection with the Mortgaged Property and all property described in this
paragraph, (viii) plans, specifications, maps, surveys, reports, operating and
management and maintenance contracts, architectural, engineering, construction
and development contracts, books of account, insurance policies, guarantees,
warranties and other documents, of whatever kind or character, relating to the
ownership, use, construction upon, occupancy, leasing, sale or operation of the
Mortgaged Property and all property described in this paragraph, (ix) oil, gas
and other hydrocarbons and other minerals produced from or allocated to the
Mortgaged Property and all products processed or obtained therefrom, the
proceeds thereof, and all accounts and general intangibles under which such
proceeds may arise, (x) all proceeds from the taking of any of the Mortgaged
Property and any property described in this paragraph or any rights appurtenant
thereto by right of eminent domain or by private or other purchase in lieu
thereof, (xi) all proceeds (including premium refunds) of each policy of
insurance relating to the Mortgaged Property and any property described in this
paragraph, (xii) all guarantees, sureties and other agreements assuring
performance of any obligation of any tenant of the Mortgaged Property and all
property described in this paragraph, and (xiii) all proceeds arising from or
by virtue of the sale, lease or other disposition of the Mortgaged Property and
any property described in this paragraph (all of the property described in this
paragraph hereinafter collectively called the "Personal Property") and all
proceeds and products of the Personal Property. (The Mortgaged Property and
the Personal Property are hereinafter sometimes collectively called the
"Property").
ARTICLE I.
Secured Indebtedness
1.1. Secured Indebtedness. This Deed to Secure Debt, Assignment of
Leases and Rents, and Security Agreement (hereinafter called this "Deed") is
made to secure and enforce the payment of the following, agreements, documents,
obligations, indebtedness and liabilities: (a) all present and future
obligations, indebtedness and liabilities, and all renewals and extensions of
all or any part thereof of Grantor to Lenders or any Lender arising from, by
virtue of, or pursuant to (i) that certain Amended and Restated Credit
Agreement dated as of December __, 1997 among [Grantor] [Pillowtex Corporation,
a Texas corporation (the "Borrower")], NationsBank of Texas, N.A., in its
capacity as Administrative Agent and certain Lenders named therein (said
Amended and Restated Credit Agreement, as amended, modified, renewed, extended
or restated from time to time, the "Amended and Restated Credit Agreement"),
(ii) that certain Term Credit Agreement dated as of December __, 1997, among
[Grantor] [the Borrower], NationsBank of Texas, N.A., in its capacity as
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<PAGE> 242
Administrative Agent, and certain Lenders named therein (said Term Credit
Agreement, as amended, modified, renewed, extended, restated or refinanced from
time to time, the "Term Credit Agreement") (the Amended and Restated Credit
Agreement and the Term Credit Agreement are herein collectively called the
"Credit Agreements"), (iii) the Notes (as defined in the Credit Agreements),
and (iv) the other Loan Documents (as defined in the Credit Agreements),
including, without limitation, interest, fees and other charges that would
accrue or become owing both prior to and subsequent to and but for the
commencement of any proceeding against or with respect to Grantor under any
chapter of the Bankruptcy Code of 1978, 11 U.S.C. Section 101 et. seq. whether
or not a claim is allowed for the same in any such proceeding, and (b) all
indebtedness and obligations incurred or arising pursuant to the provisions of
this Deed. The indebtedness referred to in this Paragraph 1.1 is hereinafter
sometimes called the "Secured Indebtedness". Initially capitalized terms used
herein and not otherwise herein defined shall have the respective meanings
given to such terms in the Credit Agreements. This Deed, the Credit
Agreements, the Notes, the other Loan Documents as defined in the Credit
Agreements, and all other instruments, certificates, affidavits or documents
evidencing, governing, securing, guaranteeing, or relating to the Secured
Indebtedness all as amended, modified, renewed, extended or restated from time
to time, are hereinafter collectively called the "Loan Documents."
ARTICLE II.
Representations and Warranties
2.1. Representations and Warranties. Grantor represents and
warrants to the Collateral Agent and the Lenders as follows:
(a) Title and Authority. Grantor is the lawful owner of
good and indefeasible fee simple title to the Property, subject only
to the matters described in Exhibit "B" attached hereto and made a
part hereof (the "Permitted Encumbrances") and has good right and
authority to grant, bargain, sell, transfer, assign and mortgage the
Mortgaged Property and to grant a security interest in the Personal
Property.
(b) Compliance with Covenants and Laws. The
construction, occupancy, operation and use of the Property and the
intended use thereof by Grantor subject to the provisions of Article V
below complies with all laws, statutes, ordinances, rules,
regulations, orders and determinations of any governmental authority
and any board of fire underwriters (or any body exercising similar
functions) and any restrictive covenants or deed restrictions (whether
recorded or otherwise), including, without limitation, all applicable
zoning, subdivision, platting, licensing, building, and flood disaster
statutes, ordinances, rules, regulations, orders and determinations of
any governmental authority (hereinafter sometimes collectively called
"Applicable Laws"), except where the failure to so comply could not
have a material adverse effect on (i) the financial condition or
prospects of Grantor, (ii) the value of the Property taken
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<PAGE> 243
as a whole, (iii) Grantor's use of, and business operations of, the
Property taken as a whole, or (iv) the validity or enforceability of
this Deed or the liens and security interests granted hereunder
(hereinafter collectively called "Material Adverse Effect"). Grantor
has obtained all requisite zoning, utility, building, health,
operating and occupancy permits from the governmental authorities
having jurisdiction over the Property, except where the failure to
obtain such zoning and permits would not have a Material Adverse
Effect.
(c) No Suits. There are no judicial or administrative
actions, suits or proceedings pending or, to the best of Grantor's
knowledge threatened, affecting the Property which, if adversely
determined, would be reasonably likely to have a Material Adverse
Effect, or involving the validity, enforceability or priority of this
Deed.
(d) Condition of Property. To the best of Grantor's
knowledge after reasonable investigation, the Mortgaged Property is
served by electric, gas, storm and sanitary sewers, sanitary water
supply, telephone and other utilities required for the Grantor's
current and anticipated uses thereof on the date hereof at or within
the boundary lines of the Mortgaged Property. To the best of
Grantor's knowledge after reasonable investigation, all streets,
alleys and easements (including without limitation easements for
ingress and egress, easements for vehicular traffic and parking and
for pedestrian traffic, easements for utilities, and easements for
reciprocal uses) necessary to serve Grantor's current and anticipated
uses of the Mortgaged Property have been completed and are
serviceable, such streets, alleys and easements have been dedicated
and accepted by applicable governmental entities, and/or all
agreements creating such easements have been filed of record in the
real property records of the County set forth on Exhibit "A" attached
hereto. The Mortgaged Property is in reasonably good condition and
repair and proper working order, and is free from damage caused by
fire or other casualty. Grantor has no actual knowledge of any latent
or patent structural or other significant defect or deficiency in the
Mortgaged Property that (i) would materially and adversely affect
Grantor's intended use of the Mortgaged Property or (ii) have a
Material Adverse Effect. None of the Mortgaged Property not covered
by flood insurance is within a flood plain. To the best of Grantor's
knowledge after reasonable investigation, none of the improvements on
the Mortgaged Property create an encroachment over, across or upon any
of the Mortgaged Property boundary lines, rights of way or easements,
and no buildings or other improvements on adjoining land create such
an encroachment, except as disclosed on the survey of the Land
delivered to the Collateral Agent. There is, to the actual knowledge
of Grantor, no condemnation proceeding pending or threatened that
would affect the Mortgaged Property.
(e) Warranty. Grantor will warrant and forever defend
the title to the Mortgaged Property against the claims of all persons
whomsoever claiming or to claim the same or any part thereof, subject
to the Permitted Encumbrances.
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<PAGE> 244
2.2. Covenants and Agreements. So long as the Secured Indebtedness
or any part thereof remains unpaid, Grantor covenants and agrees with the
Collateral Agent and the Lenders as follows:
(a) Taxes on Lien.
In the event of the enactment after the date hereof of any
Applicable Laws deducting from the value of property for the purpose
of taxation any lien or security interest thereon, or imposing upon
the Collateral Agent or any Lender the payment of the whole or any
part of the taxes (other than taxes imposed on the overall income of
Lenders or the Collateral Agent) or assessments or charges or liens
herein required to be paid by Grantor, or changing in any way the laws
relating to the taxation of deeds of trust or mortgages or security
agreements or debts secured by deeds of trust or mortgages or security
agreements or the interest of the secured party in the property
covered thereby, or the manner of collection of such taxes, so as to
affect this Deed or any of the Secured Indebtedness or the Collateral
Agent or any Lender, then, and in any such event, Grantor, upon demand
by the Collateral Agent or any Lender, shall to the extent not
prohibited by any Applicable Laws, pay such taxes, assessments,
charges or liens, or reimburse the Collateral Agent or such Lender
therefor.
(b) Ad Valorem Taxes. Grantor will cause to be paid
prior to delinquency all taxes and assessments heretofore or hereafter
levied or assessed against the Property, or any part thereof, and upon
request of the Collateral Agent will furnish the Collateral Agent with
receipts showing payment of such taxes and assessments prior to the
applicable delinquency date therefor; except that Grantor in good
faith may contest, by appropriate proceedings, the validity,
applicability or amount of any asserted tax or assessment, and,
pending such contest, Grantor shall not be deemed in Default hereunder
if, prior to delinquency of the asserted tax or assessment, Grantor
establishes an escrow, or provides security reasonably acceptable to
the Collateral Agent, or adequate reserves have been established to
cover the payment of such tax or assessment with costs, interest and
penalties and a reasonable additional sum to cover possible costs,
interest and penalties (which escrow and/or security shall be returned
to Grantor upon payment of all such taxes, assessments, costs,
interest and penalties), and if Grantor promptly causes to be paid any
amount adjudged by a court of competent jurisdiction to be due, with
all costs, interest and penalties thereon, promptly after such
judgment becomes final; provided, however, that in any event each such
contest shall be concluded and the tax assessment, costs, interest and
penalties shall be paid prior to the date any writ or order is issued
under which the Property, or any part thereof, may be sold. No
reserve (or security required in (d) below) is required until such
time that the aggregate of alleged unpaid ad valorem taxes on all
properties of Grantor and all unpaid debts described in (d) below
shall exceed $100,000.
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<PAGE> 245
(c) Operation of Property. Grantor will operate, and
will cause the operation of, the Property in a reasonably good and
workmanlike manner and in accordance with all Applicable Laws and will
pay all fees or charges of any kind in connection therewith, except
where the failure to so operate and pay such fees or charges would not
have a Material Adverse Effect. Grantor will keep, and will cause the
keeping of, the Property occupied to the extent necessary not to
impair the insurance carried thereon. Grantor will not use or occupy,
or allow the use or occupancy of, the Property in any manner which
violates any Applicable Laws, or except where the failure to so occupy
would not have a Material Adverse Effect, which constitutes a public
or private nuisance or which makes void, voidable or cancelable, any
insurance then in force with respect thereto. Grantor will not,
without the prior written consent of the Collateral Agent (which
consent shall not be unreasonably withheld), initiate or consent to
any zoning reclassification of the Property or seek or consent to any
variance under existing zoning ordinances applicable to the Property
or use or permit the use of the Property in such a manner as would
result in such use becoming a nonconforming use under applicable
zoning ordinances or other Applicable Laws. Grantor will not, without
the prior written consent of the Collateral Agent (which consent shall
not be unreasonably withheld), impose any restrictive covenant or any
encumbrance upon the Property which does not constitute a Permitted
Encumbrance, execute or file any subdivision plat affecting the
Property or consent to the annexation of the Property to any
municipality. Grantor shall not cause or permit any drilling or
exploration for, or extraction, removal or production of, minerals
from the surface or subsurface of the Property. Grantor will not do
anything to cause the value of the Property to be materially lessened.
If Grantor receives a written notice or claim from any federal, state
or other governmental entity pertaining to the Property, including,
specifically but without limitation, a notice that the Property is not
in compliance with any Applicable Law, Grantor promptly will furnish a
copy of such notice or claim to the Collateral Agent.
(d) Debts for Construction. Grantor will cause all debts
and liabilities of any character, including without limitation all
debts and liabilities for labor, material and equipment and all debts
and charges for utilities servicing the Property, incurred in the
construction, maintenance, operation or development of the Property to
be paid before the same become delinquent. Notwithstanding the
foregoing, Grantor in good faith may contest, by appropriate
proceedings, the validity, applicability or amount of any asserted
mechanics' or materialmen's liens, and, pending such contest, Grantor
shall not be deemed in Default hereunder if Grantor provides the
Collateral Agent with security reasonably satisfactory to the
Collateral Agent and if Grantor promptly causes to be paid any amount
adjudged by a court of competent jurisdiction to be due, with all
costs and interest thereon, promptly after such judgment becomes
final; provided, however, that in any event each such contest shall be
concluded and the lien, interest and costs shall be paid, bonded
around or otherwise removed prior to the date any writ or order is
issued under which the Property, or any part thereof, may be sold. No
security (or reserve required in (b) above) is required until such
time
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<PAGE> 246
that the aggregate of alleged unpaid ad valorem taxes on all
properties and all unpaid debts described in this clause (d) shall
exceed $100,000.
(e) Repair and Maintenance. Grantor will keep the
Property reasonably in good order, repair, operating condition and
appearance, causing all reasonably necessary repairs and replacements,
promptly to be made, and will not allow any of the Property to be
misused, abused or wasted or to deteriorate, normal wear and tear and
casualty excepted. Grantor promptly will replace all worn-out or
obsolete fixtures or personal property covered by this Deed that are
reasonably necessary in the operation of the Property with fixtures or
personal property comparable to the replaced fixtures or personal
property, and will repaint the Property when reasonably needed.
Notwithstanding the foregoing, Grantor will not, without the prior
written consent of the Collateral Agent do or permit to be done
anything to the Property that materially may impair its value,
including but not limited to (i) removing from the Property any
fixtures or personal property covered by this Deed (but not including
any personal property in which Grantor is the lessee thereof) which
are necessary or desirable in the operation of the Property, except
such as is replaced by Grantor by an article of equal suitability and
value, owned by Grantor, free and clear of any lien or security
interest (except that (i) created by this Deed or any other Loan
Document, (ii) otherwise permitted in the Loan Documents or (iii) in
respect of capitalized leases) or such as is permitted to be removed
by a tenant pursuant to such tenant's lease or (ii) making any
structural or other alteration to the Property that materially impairs
the value thereof. Nothing contained herein will prevent tenants of
the Property from making alterations and improvements expressly
permitted under their leases of any part of the Mortgaged Property.
Upon request of the Collateral Agent, Grantor will deliver to the
Collateral Agent an inventory describing and showing the make, model,
serial number and location of all fixtures and personal property used
in the management, maintenance and operation of the Property, with a
certification by Grantor that said inventory is a true and complete
schedule of all such fixtures and personal property used in the
management, maintenance and operation of the Property, that such items
specified in the inventory constitute all of the fixtures and personal
property required in the management, maintenance and operation of the
Property, and that all such items are owned by Grantor free and clear
of any lien or security interest (except the Permitted Encumbrances).
(f) Insurance and Casualty. Grantor will keep the
Property insured against loss or damage by fire, explosion, windstorm,
hail, flood (as to any portion of the Property which shall at any time
be located in an identified "flood prone" area in which flood
insurance has been made available pursuant to the federal Flood
Disaster Protection Act of 1973, and then in the amount of the
outstanding balance of the Notes or the maximum amount of coverage
available, whichever is less), tornado and such other hazards as
required by the Collateral Agent and consistent with industry
standards. Notwithstanding the foregoing, Grantor further covenants
and agrees to keep the Property insured by policies of fire, extended
coverage and other insurance
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<PAGE> 247
in such company or companies reasonably acceptable to the Collateral
Agent and upon such terms and provisions, and with such endorsements,
all as reasonably may be acceptable to the Collateral Agent and
consistent with industry standards. Grantor further agrees that
Grantor will deliver to the Collateral Agent receipts evidencing the
payment of all premiums, and certificates of insurance addressed to
the Collateral Agent evidencing compliance with the insurance
requirements set forth herein and, when appropriate, evidencing
renewals of all such policies of insurance before any such insurance
shall expire. All insurance policies required pursuant to this
subparagraph (f) shall contain a prohibition against cancellation,
material endorsement, material alteration or reissuance of such policy
effecting a change in coverage thereunder unless such insurer first
shall have given the Collateral Agent 30 days prior written notice
thereof. All fire, extended and other insurance coverage insurance
policies required hereunder shall be on a replacement cost basis in an
amount not less than that necessary to comply with any co-insurance
percentage stipulated in the policy, but not less than one hundred
percent (100%) of the Property's insurable value, and shall be subject
to deductibles, if any, not to exceed $250,000. Grantor further
agrees that all insurance policies shall provide that proceeds
thereunder will be jointly payable to the Collateral Agent and
Grantor, for the benefit of Grantor and Lenders as their interests may
appear pursuant and subject to a mortgagee clause (without
contribution) of standard form attached to or otherwise made a part of
the applicable policy. In the event any of the Property covered by
such insurance is destroyed or damaged by fire, explosion, windstorm,
hail or by any other casualty against which insurance shall have been
required hereunder, (i) the Collateral Agent may, but shall not be
obligated to, make proof of loss if not made promptly by Grantor, (ii)
each insurance company concerned is hereby authorized and directed to
make payment for such loss jointly to the Collateral Agent and
Grantor, and (iii) the Collateral Agent shall apply the insurance
proceeds as follows:
(A) first, to reimburse the Collateral Agent for
all costs and expenses, including reasonable attorneys' fees,
incurred in connection with the collection of such proceeds;
and
(B) second, if a Default has not occurred or, if
a Default has occurred, such Default is not then continuing,
proceeds of insurance from losses shall be used at Grantor's
option by Grantor (i) for repair or replacement of Property
and Grantor shall provide the Collateral Agent with evidence
satisfactory to the Collateral Agent of such use or (ii) to be
applied to Secured Indebtedness.
(C) third, if a Default has occurred and is
continuing, proceeds of insurance from losses shall at
Lenders' option be applied to Secured Indebtedness as provided
in the Intercreditor Agreement or to repair or replacement of
Property.
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<PAGE> 248
In any event, the unpaid portion of the Secured Indebtedness shall
remain in full force and effect and Grantor shall not be excused in
the payment thereof. If any act or occurrence of any kind or nature
(including any casualty on which insurance was not obtained or
obtainable) shall result in material damage to or material loss or
destruction of the Property, Grantor shall give prompt notice thereof
to the Collateral Agent and, if Grantor elects to restore the Property
to its prior condition (pursuant to subparagraph B of this Paragraph
2.2(f)(iii)), Grantor, at Grantor's sole cost and expense and
regardless of whether the insurance proceeds, if any, shall be
sufficient for the purpose, promptly shall restore, repair, replace
and rebuild the Property as nearly as possible to its value, condition
and character immediately prior to such damage, loss or destruction in
accordance with plans and specifications submitted to and reasonably
and promptly approved by the Collateral Agent. Grantor hereby
irrevocably appoints the Collateral Agent as Grantor's
attorney-in-fact, with full authority in place and stead of Grantor
and in the name of Grantor or otherwise, after the occurrence of any
Default and during the continuance of same to obtain any insurance
required to be obtained pursuant to this Paragraph 2.2(f) and which is
not so obtained and to receive, indorse, and collect any drafts or
other instruments, documents and chattel paper, in connection
therewith. The appointment of the Collateral Agent as
attorney-in-fact is coupled with an interest and is irrevocable prior
to final payment in full of the Secured Indebtedness.
(g) Liability and Other Insurance. Grantor shall
maintain comprehensive general liability insurance against claims for
bodily injury or death and property damage occurring in or upon or
resulting from the Property, in standard form and with such insurance
company or companies and policy coverage limits and terms as
reasonably may be acceptable to the Collateral Agent, and such other
insurance as the Collateral Agent from time to time reasonably may
require, with companies reasonably acceptable to the Collateral Agent,
upon such terms and provisions, in such amounts, and with such
endorsements, all as reasonably are approved by the Collateral Agent.
Grantor shall maintain with respect to each policy or agreement
evidencing such comprehensive general liability insurance such
endorsements as reasonably may be required by the Collateral Agent
consistent with accepted industry practice and shall at all times
following request therefor by the Collateral Agent deliver and
maintain with the Collateral Agent receipts evidencing the payment of
all premiums, and certificates of insurance addressed to the
Collateral Agent, evidencing compliance with the insurance
requirements set forth herein and, when appropriate, evidencing
renewals of all such policies of insurance 30 days before any such
insurance shall expire. All insurance policies required pursuant to
this subparagraph (g) shall contain a prohibition against
cancellation, material endorsement, material alteration or reissuance
of such policy effecting a change in coverage thereunder unless such
insurer first shall have given the Collateral Agent 30 days prior
written notice thereof. Grantor further agrees that all insurance
policies described in this Paragraph 2.2(g) shall name the Collateral
Agent, for the benefit of Lenders, as an additional insured party.
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<PAGE> 249
(h) Condemnation. Promptly upon obtaining actual
knowledge of the institution of any proceedings for the condemnation
of the Property, or any portion thereof, or any other proceedings
arising out of injury or damage to the Property, or any portion
thereof, Grantor will notify the Collateral Agent of the pendency of
such proceedings. The Collateral Agent may participate in any such
proceedings if in the reasonable opinion of the Collateral Agent such
participation is necessary to protect the rights or interests of the
Collateral Agent, and Grantor shall from time to time deliver to the
Collateral Agent all instruments reasonably requested by it to permit
such participation. Grantor shall, at its expense, diligently
prosecute any such proceedings, and shall consult with the Collateral
Agent, its attorneys and experts, and cooperate with them in the
carrying on or defense of any such proceedings. All proceeds of
condemnation awards or proceeds of sale in lieu of condemnation with
respect to the Property, or any portion thereof, and all judgments,
decrees and awards for injury or damage to the Property, or any
portion thereof, shall be paid to the Collateral Agent and shall be
applied as follows:
(i) first, to reimburse Grantor or the Collateral
Agent for all reasonable costs and expenses, including
reasonable attorneys' fees, incurred in connection with
collection of such proceeds;
(ii) second, to the payment of Secured Indebtedness
as provided in the Intercreditor Agreement; and
(iii) third, to the extent of the balance (if any)
of such proceeds, to Grantor or other party legally entitled
thereto.
Grantor hereby assigns and transfers all such proceeds, judgments,
decrees and awards to Lenders and agrees to execute such further
assignments of all such proceeds, judgments, decrees and awards as
Lenders may reasonably request; provided, however, the disbursement of
such proceeds, judgments, decrees and awards shall be applied as
provided above in this Paragraph 2.2(h). Lenders are hereby
authorized, in the name of Grantor, to execute and deliver valid
acquittances for, and to appeal from, any such judgment, decree or
award. Lenders shall not be, in any event or circumstances, liable or
responsible for failure to collect, or for failure to exercise
diligence in the collection of, any such proceeds, judgments, decrees
and/or awards.
(i) Protection and Defense of Lien. If the validity or
priority of this Deed or of any rights, titles, liens or security
interests created or evidenced hereby with respect to the Property, or
any part thereof, shall be attacked directly or indirectly or if any
legal proceedings are instituted against Grantor with respect thereto,
Grantor will give prompt written notice thereof to the Collateral
Agent and at Grantor's own cost and expense diligently will endeavor
to cure any defect that may be developed or claimed, and will take all
necessary and proper steps for the defense of such legal
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<PAGE> 250
proceedings, including but not limited to the employment of counsel,
the prosecution or defense of litigation and the release or discharge
of all adverse claims (other than Permitted Encumbrances), and the
Collateral Agent, (whether or not named as a party to legal
proceedings with respect thereto) is hereby authorized and empowered
to take such additional steps as in its judgment and discretion
reasonably may be necessary or proper for the defense of any such
legal proceedings or the protection of the validity or priority of
this Deed and the rights, titles, liens and security interests created
or evidenced hereby, including but not limited to the employment of
counsel, the prosecution or defense of litigation, the compromise or
discharge of any adverse claims (other than Permitted Encumbrances)
made with respect to the Property or any part thereof, the purchase of
any tax title and the removal of prior liens or security interests
which do not constitute Permitted Encumbrances, and all reasonable
expenses so incurred of every kind and character shall be a demand
obligation owing by Grantor, and the party incurring such expenses
shall be subrogated to all rights of the person receiving such
payment. Should the Collateral Agent intend to take any such action
described in the immediately preceding sentence, the Collateral Agent
shall, subject to the immediately succeeding proviso, prior to taking
any such action notify Grantor of such intention and give Grantor a
reasonable opportunity to provide such defense or protection;
provided, however, if in the reasonable opinion of the Collateral
Agent the giving of such notice and opportunity to provide such
defense or protection would impair or hinder such defense or
protection or would otherwise be disadvantageous to rights or
interests of the Collateral Agent hereunder or the rights, title,
liens or security interests created or evidenced hereby, the
Collateral Agent shall have no obligation to give such notice and
opportunity to provide such defense or protection prior to the taking
of any such action, but after taking any such action the Collateral
Agent shall give notice thereof to Grantor.
(j) Permitted Encumbrances. Grantor will comply with and
will perform all of the covenants, agreements and obligations imposed
upon it or the Property in the Permitted Encumbrances in accordance
with their respective terms and provisions if the failure to do so
would have a Material Adverse Effect. Grantor will not modify or
permit any modification of any Permitted Encumbrances against the
Mortgaged Property, the result of which would have a Material Adverse
Effect without the prior written consent of the Collateral Agent.
(k) Books and Records. Grantor will permit all
contracts, statements, invoices, bills and claims for labor, materials
and services supplied for the construction and operation of the
improvements forming a part of the Property to be inspected and copied
by the Collateral Agent and its representatives at all times during
reasonable business hours upon reasonable notice; provided, however,
if a Default shall have occurred and be continuing there shall be no
requirement to give reasonable notice. If applicable, such
information shall be kept confidential in accordance with the
applicable Sections of the Credit Agreements.
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<PAGE> 251
(l) Leases. Grantor may not lease or enter into any
other occupancy agreement covering any material portion of any of the
Mortgaged Property by third parties without the prior written consent
of Grantor, which consent shall not be unreasonably withheld.
(m) Fees and Expenses; Indemnification. Grantor will pay
all appraisal fees, filing and recording fees, inspection fees, survey
fees, taxes, brokerage fees and commissions, abstract fees, title
policy fees, uniform commercial code search fees, escrow fees,
reasonable attorney's fees, and all other costs and expenses of every
character reasonably and properly incurred by Grantor, the Collateral
Agent or Lenders in connection with this Deed, either at the closing
thereof or at any time during the term thereof, or otherwise
attributable or chargeable to Grantor as owner of the Property, and
will reimburse the Trustee, the Collateral Agent and Lenders for all
such costs and expenses incurred by each of them. Grantor shall pay
all reasonable and proper expenses and reimburse the Collateral Agent
and Lenders for any reasonable expenditures, including reasonable
attorney's fees and legal expenses, incurred or expended in connection
with (i) the breach, by Grantor of any covenant herein or (ii) the
Collateral Agent's or Lender's reasonable exercise of any of the
rights and remedies hereunder or the Collateral Agent's or Lenders'
reasonable protection of the Property and the lien and security
interest therein. Notwithstanding anything to the contrary contained
in this Deed, any provision requiring the payment of attorneys' fees
or reasonable attorneys' fees shall, in all instances, mean attorneys'
fees calculated at such attorneys' regular hourly rates for the actual
number of hours expended on the matter, and the parties agree that the
provisions of the Official Code of Georgia Section 13-1-11(a)(2) shall
not apply. Grantor will indemnify and hold harmless, the Collateral
Agent and Lenders (for purposes of this subparagraph (m), the terms
"Collateral Agent" and "Lenders" shall include the directors,
officers, employees and agents of the Collateral Agent and Lenders and
any persons or entities owned or controlled by or affiliated with the
Collateral Agent and Lenders) from and against, and reimburse them
for, all claims, demands, liabilities, losses, damages, judgments,
penalties, costs and expenses (including, without limitation,
reasonable attorney's fees) which may be imposed upon, asserted
against or incurred or paid by any of them by reason of, on account
of or in connection with any bodily injury or death or property damage
occurring in or upon or in the vicinity of the Property through any
cause whatsoever, or asserted against any of them on account of any
act performed or omitted to be performed hereunder or on account of
any transaction arising out of or in any way connected with the
Property or with this Deed. The foregoing indemnities shall not apply
with respect to matters caused by or arising out of the gross
negligence or willful misconduct of the Collateral Agent and/or
Lenders. Grantor agrees, however, that it expressly intends to
indemnify the Collateral Agent and Lenders from and hold each of them
harmless against any and all losses, liabilities, claims, damages or
expenses arising out of their ordinary negligence. The foregoing
indemnities, however, shall not apply with respect to any losses,
liabilities, claims, damages or expenses incurred by the Collateral
Agent, Lenders or the Trustee
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<PAGE> 252
in any action or proceeding by Grantor against the Collateral Agent,
Lenders unless the Collateral Agent or Lenders prevail in such action
or proceeding. The foregoing indemnities shall not terminate upon
release, foreclosure or other termination of this Deed but will
survive foreclosure of this Deed or conveyance in lieu of foreclosure
and the repayment of the Secured Indebtedness and the discharge and
release of this Deed and the other Loan Documents, but Grantor shall
not be liable for any damages as a result of an event that occurs
after foreclosure of the Mortgaged Property (or any portion thereof)
or the taking of a deed in lieu of foreclosure covering the Mortgaged
Property (or any portion thereof), unless such damage occurs as a
result of or arises out of a condition that existed prior to such
foreclosure or such taking of a deed in lieu of foreclosure. Any
amount to be paid hereunder by Grantor to the Collateral Agent and/or
Lenders shall be a demand obligation owing by Grantor to the
Collateral Agent and/or Lenders and shall be subject to and governed
by the provisions of Paragraph 2.3 hereof.
(n) Estoppel Certificate. Grantor shall at any time and
from time to time furnish promptly upon request a written statement in
such form as may be reasonably required by the Collateral Agent
stating that this Deed is a valid and binding obligation of Grantor,
enforceable against Grantor in accordance with its terms, subject to
Debtor Relief Laws (as such term is defined in the Credit Agreement);
that this Deed has not been released, subordinated or modified; and
that to the best of Grantor's knowledge there are no offsets or
defenses against the enforcement of this Deed, or if any of the
foregoing statements are untrue, specifying the reasons therefor.
(o) Compliance with Laws. Grantor shall, and shall use
reasonable efforts to cause any tenant of the Property to, comply with
all applicable restrictive covenants and all Applicable Laws with
respect to which the failure to so comply would have a Material
Adverse Effect.
(p) Tax and Insurance Escrow. In order to secure the
performance and discharge of Grantor's obligations under subparagraphs
(b), (f) and (g) of this Paragraph 2.2, but not in lieu of such
obligations, Grantor will upon written request of the Collateral
Agent, deposit with the Collateral Agent upon the occurrence and
continuance of a Default, a sum equal to accrued and unpaid ad valorem
taxes, assessments and charges (which charges for the purpose of this
subparagraph shall include without limitation ground rents and water
and sewer rents and any other recurring charge which could create or
result in a lien against the Property) against the Property for the
then current year and the accrued and unpaid premiums for such
policies of insurance for the then current year, all as reasonably
estimated by the Collateral Agent and prorated to the end of the
calendar month following the month during which such Default occurred,
and thereafter will deposit with the Collateral Agent, sufficient
funds (as reasonably estimated from time to time by the Collateral
Agent) to permit the Collateral Agent to pay, at least 5 days prior to
the delinquency
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<PAGE> 253
date thereof, the next maturing ad valorem taxes, assessments and
charges and premiums for such policies of insurance. The Collateral
Agent shall have the right to rely upon tax information furnished by
applicable taxing authorities in the payment of such taxes or
assessments and shall have no obligation to make any protest of any
such taxes or assessments. Any excess over the amounts required for
such purposes shall be held by the Collateral Agent for payment of
future taxes, assessments, charges and premiums, applied to any
Secured Indebtedness, or refunded to Grantor, at the Collateral
Agent's option; and any deficiency in such funds so deposited shall be
made up by Grantor upon demand of the Collateral Agent. All such
funds so deposited shall bear interest at the normal interest rate for
money market deposits at NationsBank, may be mingled with the general
funds of the Collateral Agent and shall be applied by the Collateral
Agent toward the payment of such taxes, assessments, charges and
premiums when statements therefor are presented to the Collateral
Agent by Grantor (which statements shall be presented by Grantor to
the Collateral Agent a reasonable time before the applicable amount is
due); provided, however, that if the Collateral Agent has made demand
for payment of all of the Secured Indebtedness, such funds may at the
Collateral Agent's option be, applied to the payment of the Secured
Indebtedness in the order determined by the Collateral Agent and that
the Collateral Agent may at any time, in its discretion, apply all or
any part of such funds toward the payment of any such taxes,
assessments, charges or premiums which are past due, together with any
penalties or late charges with respect thereto. The conveyance or
transfer of Grantor's interest in the Property for any reason
(including without limitation the foreclosure of a subordinate lien or
security interest or a transfer by operation of law) shall constitute
an assignment or transfer of Grantor's interest in and rights to such
funds held by the Collateral Agent under this subparagraph (p) but
subject to the rights of the Collateral Agent hereunder.
(q) Further Assurances. Grantor will, on request of the
Collateral Agent, (i) promptly correct any defect or error which may
be discovered in the contents of this Deed or in any other instrument
executed in connection herewith or in the execution or acknowledgment
thereof; (ii) execute, acknowledge, deliver and record or file such
further instruments (including without limitation further deeds of
trust, security agreements, financing statements, continuation
statements and assignments of rents or leases) and do such further
acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Deed and such other instruments and
to subject to the liens and security interests hereof and thereof any
property intended by the terms hereof or thereof to be covered hereby
or thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements, or appurtenances to
the Property; (iii) execute, acknowledge, deliver, procure and record
or file any document or instrument (including specifically any
financing statement) deemed advisable by the Collateral Agent to
protect the lien or the security interest hereunder against the rights
or interests of third persons, and Grantor will pay all reasonable
costs associated with any of the foregoing; (iv) use reasonable
efforts to cause any tenant under any lease agreement of any of the
Property to furnish any
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<PAGE> 254
instrument or perform any act deemed advisable by the Collateral Agent
to protect the lien or the security interest hereunder; and (v)
provide such certificates, documents, reports, information, affidavits
and other instruments (including but not limited to appraisals,
surveys and current title reports) and do such further acts as may be
reasonably necessary or proper in the reasonable determination of the
Collateral Agent to enable the Collateral Agent to comply with the
requirements or requests of any agency having jurisdiction over the
Collateral Agent or any of the Lenders or any examiners of such
agencies with respect to the Secured Indebtedness, Grantor or the
Property.
2.3. Right of the Collateral Agent to Perform. Grantor agrees
that, if, after any applicable notice or grace period, Grantor fails to perform
any act or to take any action which hereunder Grantor is required to perform or
take, or to pay any money which hereunder Grantor is required to pay, the
Collateral Agent, in Grantor's name or in its own name and after the giving of
any required notice and expiration of any applicable cure period, may but shall
not be obligated to perform or cause to be performed such act or take such
action or pay such money, and any reasonable expenses so incurred by the
Collateral Agent, and any money so paid by the Collateral Agent, shall be a
demand obligation owing by Grantor to the Collateral Agent and the Collateral
Agent, upon making such payment, shall be subrogated to all of the rights of
the person or entity receiving such payment. Any amounts due and owing by
Grantor to the Collateral Agent pursuant to this Deed shall bear interest from
the date such amount becomes due until paid at a rate of interest per annum
equal to the lesser of (i) the Base Rate Basis, plus 2%, or (ii) the highest
lawful rate, and shall be a part of the Secured Indebtedness and shall be
secured by this Deed and by any other Loan Document. Should the Collateral
Agent intend to perform or cause to be performed such act or take such action
or pay such money, the Collateral Agent shall, subject to the immediately
succeeding proviso, prior to taking any such action notify Grantor of such
intention and give Grantor a reasonable opportunity to take such action;
provided, however, if in the reasonable opinion of the Collateral Agent the
giving of such notice and opportunity to take action would materially impair
the validity or priority of this Deed, the rights or interests of the
Collateral Agent hereunder or any rights, titles, liens or security interests
created or evidenced hereby, the Collateral Agent shall have no obligation to
give such notice and opportunity to take action prior to taking such action,
but, nevertheless, shall give prompt written notice of the taking of such
action to Grantor.
ARTICLE III.
Remedies in Event of Default
3.1. Defaults. The term "Default" as used in this Deed shall mean
the occurrence and continuance of an "Event of Default" as defined in the
Credit Agreements.
3.2. Acceleration. Upon the occurrence and during the continuance
of a Default, the Collateral Agent shall have the option of declaring all
Secured Indebtedness in its entirety
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<PAGE> 255
to be immediately due and payable, and the liens and security interests
evidenced hereby shall be subject to foreclosure in any manner provided for
herein or provided for by law as the Collateral Agent may elect.
3.3. Possession. Upon the occurrence and during the continuance of
a Default, the Collateral Agent is authorized prior or subsequent to the
institution of any foreclosure proceedings to enter upon the Property, or any
part thereof, and to take possession of the Property and of all books, records
and accounts relating thereto and to exercise without interference from Grantor
any and all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Property, including
the right to rent the same for the account of Grantor and to deduct from such
rents all reasonable costs, expenses and liabilities of every reasonable
character incurred by the Collateral Agent in collecting such rents and in
managing, operating, maintaining, protecting or preserving the Property and to
apply the remainder of such rents on the Secured Indebtedness in such manner as
the Collateral Agent may elect. All such costs, expenses and liabilities
incurred by the Collateral Agent in collecting such rents and in managing,
operating, maintaining, protecting or preserving the Property, if not paid out
of rents as hereinabove provided, shall constitute a demand obligation owing by
Grantor and shall bear interest from the date of expenditure until paid at a
rate of interest per annum equal to the Default Rate, all of which shall
constitute a portion of the Secured Indebtedness. If necessary to obtain the
possession provided for above, the Collateral Agent may invoke any and all
legal remedies to dispossess Grantor, including specifically one or more
actions for forcible entry and detainer, trespass to try title and restitution.
In connection with any action taken by the Collateral Agent pursuant to this
Paragraph 3.3, the Collateral Agent shall not be liable for any loss sustained
by Grantor resulting from any failure to let the Property, or any part thereof,
or from any other act or omission of the Collateral Agent in managing the
Property, including without limitation, the negligence of the Collateral Agent,
unless such loss is caused by the gross negligence or willful misconduct of the
Collateral Agent, and the Collateral Agent shall not be obligated to perform or
discharge any obligation, duty or liability under any lease agreement covering
the Property or any part thereof or under or by reason of this instrument or
the exercise of rights or remedies hereunder. Should the Collateral Agent
incur any such liability, the amount thereof, including reasonable costs,
expenses and reasonable attorneys' fees, shall be secured hereby, and Grantor
shall reimburse the Collateral Agent therefor immediately upon demand. Nothing
in this Paragraph 3.3 shall impose any duty, obligation or responsibility upon
the Collateral Agent for the control, care, management or repair of the
Property, or shall operate to make the Collateral Agent responsible or liable
for any waste committed on the Property or by any other parties or for any
dangerous or defective condition of the Property, or for any negligence in the
management, upkeep, operation, repair or control of the Property resulting in
loss or injury or death to any tenant, licensee, employee or stranger, unless
such waste, dangerous or defective condition or injury or death is directly a
result of gross negligence or willful misconduct by the Collateral Agent, and
not just the Collateral Agent's own ordinary negligence. Grantor hereby
assents to, ratifies and confirms any and all actions of the Collateral Agent
with respect to the Property taken under this Paragraph 3.3.
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<PAGE> 256
3.4. Foreclosure. Collateral Agent may sell and dispose of the
Mortgaged Property at public auction, at the usual place for conducting sales
at the courthouse in the county where the Mortgaged Property or any part
thereof may be located, to the highest bidder for cash, first advertising the
time, terms and place of such sale by publishing a notice thereof once a week
for four consecutive weeks (without regard to the actual number of days) in a
newspaper in which sheriff's advertisements are published in said county, all
other notice being hereby waived by Grantor; and Collateral Agent may thereupon
execute and deliver to the purchaser at said sale a sufficient conveyance of
the Mortgaged Property in fee simple, which conveyance may contain recitals as
to the happening of the default upon which the execution of the power of sale,
herein granted, depends, the said recitals shall be presumptive evidence that
all preliminary acts prerequisite to said sale and deed were in all things duly
complied with. Grantor hereby constitutes and appoints Collateral Agent or its
assigns agent and attorney-in-fact to make such recitals, sale and conveyance,
and all of the acts of such attorney-in-fact are hereby ratified, and Grantor
agrees that such recitals shall be binding and conclusive upon Grantor and that
the conveyance to be made by Collateral Agent or its assigns (and in the event
of a deed in lieu of foreclosure, then as to such conveyance) shall be
effectual to bar all right, title and interest, equity of redemption, including
all statutory redemption, homestead, dower, curtesy and all other exemptions of
Grantor, or its successors in interest, in and to the Mortgaged Property. At
the election of Collateral Agent, the Mortgaged Property, or any part thereof,
may be sold in one parcel and as an entirety, or in such parcels, manner or
order as Collateral Agent may elect, and one or more exercises of the powers
herein granted shall not extinguish or exhaust the powers unless the entire
Mortgaged Property is sold or the indebtedness secured hereby is paid in full,
and Collateral Agent, or its assigns, shall collect the proceeds of such sale,
applying such proceeds as hereinafter provided (in the event of deficiency,
Grantor shall immediately on demand from Collateral Agent pay over to
Collateral Agent, or its nominee, such deficiency). Grantor acknowledges that
Collateral Agent may bid for and purchase the Mortgaged Property at any such
foreclosure sale and shall be entitled to apply all or any part of the
indebtedness secured hereby as a credit to the purchase price. The power and
agency hereby granted are coupled with an interest and are irrevocable by death
or otherwise.
3.5. Receiver. In addition to all other remedies herein provided
for, Grantor agrees that upon the occurrence and during the continuance of a
Default, the Collateral Agent shall as a matter of right be entitled to the
appointment of a receiver or receivers for all or any part of the Property,
whether such receivership be incident to a proposed sale of such Property or
otherwise, and without regard to the value of the Property or the solvency of
any person or persons liable for the payment of the Secured Indebtedness, and
Grantor does hereby consent to the appointment of such receiver or receivers,
waives any and all defenses to such appointment and agrees not to oppose any
application therefor by the Collateral Agent, but nothing herein is to be
construed to deprive the Collateral Agent of any other right, remedy or
privilege it may now or hereafter have under any Applicable Laws to have a
receiver appointed; provided, however, that the appointment of such receiver,
trustee or other appointee by virtue of any court order, statute or regulation
shall not impair or in any manner prejudice the rights of the Collateral Agent
to receive payment of the rents, room
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rents, deposits for lodging and income from the Property. Any money advanced
by the Collateral Agent in connection with any such receivership shall be a
demand obligation owing by Grantor to the Collateral Agent and shall bear
interest from the date of making such advancement by the Collateral Agent until
paid at a rate of interest per annum equal to the Highest Lawful Rate, and
shall be secured by this Deed and by any other instrument securing the Secured
Indebtedness.
3.6. Proceeds of Sale. The proceeds of any sale held by the
Collateral Agent or any receiver or public officer in foreclosure of the liens
evidenced hereby shall be applied:
first, to the payment of all necessary and reasonable costs
and expenses incident to such foreclosure sale, including but not
limited to all court costs and charges of every character in the event
foreclosed by suit, and a reasonable fee to the Collateral Agent
acting under the provisions of Paragraph 3.4 if foreclosed by power of
sale as provided in Paragraph 3.4;
second, to the payment in full of the Secured Indebtedness
(including specifically without limitation the principal, interest and
reasonable attorneys' fees due and unpaid on the Notes and the amounts
due and unpaid and owed to the Collateral Agent under this Deed), to
be distributed in accordance with the Intercreditor Agreement; and
third, the remainder, if any, shall be paid to Grantor or
other party legally entitled thereto.
3.7. The Collateral Agent as Purchaser. The Collateral Agent shall
have the right to become the purchaser at any foreclosure sale, and the
Collateral Agent purchasing at such sale shall have the right to credit upon
the amount of the bid made therefor, to the extent necessary to satisfy such
bid, the Secured Indebtedness owing to the Collateral Agent and/or Lenders for
the equal and ratable benefit of Lenders.
3.8. Uniform Commercial Code.
(a) Upon the occurrence and during the continuance of a
Default, the Collateral Agent may exercise its rights of enforcement
with respect to the Personal Property under the Uniform Commercial
Code as adopted in the State of Georgia, as amended from time to time,
and in conjunction with, in addition to or in substitution for those
rights and remedies, and all rights and remedies granted to the
Collateral Agent and/or Lenders under any Loan Document executed by
Grantor governing security interests in personal property of Grantor;
(b) any sale made pursuant to the provisions of this
Paragraph 3.9 shall be deemed to have been a public sale conducted in
a commercially reasonable manner if held contemporaneously with the
sale of the Mortgaged Property under power of sale
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as provided herein upon giving the same notice with respect to the
sale of the Personal Property hereunder as is required for such sale
of the Mortgaged Property under power of sale;
(c) any and all statements of fact or other recitals made
in any bill of sale or assignment or other instrument evidencing any
foreclosure sale hereunder as to nonpayment of the Secured
Indebtedness, or as to the occurrence of any Default, or as to the
Collateral Agent and/or Lenders having declared all of such
indebtedness to be due and payable, or as to notice of time, place and
terms of sale and of the properties to be sold having been duly given,
or as to any other act or thing having been duly done by the
Collateral Agent and/or Lenders, shall be taken as prima facie
evidence of the truth of the facts so stated and recited; and
(d) The Collateral Agent may appoint or delegate any one
or more persons as agent to perform any act or acts necessary or
incident to any sale held by the Collateral Agent, including the
sending of notices and the conduct of the sale, but in the name and on
behalf of the Collateral Agent.
3.9. Partial Foreclosure. During a Default, the Collateral Agent
shall have the right to proceed with foreclosure of the liens and security
interests evidenced hereby without declaring the entire Secured Indebtedness
due, and in such event any such foreclosure sale may be made subject to the
unmatured part of the Secured Indebtedness; and any such sale shall not in any
manner affect the unmatured part of the Secured Indebtedness, but as to such
unmatured part this Deed shall remain in full force and effect just as though
no sale had been made. The proceeds of any such sale shall be applied as
provided in Paragraph 3.7 hereof, except that the amount paid under
subparagraph second thereof shall be only the matured portion of the Secured
Indebtedness and any proceeds of such sale in excess of those provided for in
subparagraphs first and second (modified as provided above) shall be applied to
installments of principal of and interest on the Notes in the inverse order of
maturity. Several sales may be made hereunder without exhausting the right of
sale for any unmatured part of the Secured Indebtedness.
3.10. Remedies Cumulative. All remedies herein expressly provided
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Indebtedness, or any part
thereof, or otherwise benefiting the Collateral Agent and Lenders, and the
Collateral Agent and Lenders shall, in addition to the remedies herein
provided, be entitled to avail themselves of all such other remedies as may now
or hereafter exist at law or in equity for the collection of the Secured
Indebtedness and the enforcement of the covenants herein and the foreclosure of
the liens and security interests evidenced hereby, and the resort to any remedy
provided for hereunder or under any such other instrument or provided for by
law shall not prevent the concurrent or subsequent employment of any other
appropriate remedy or remedies.
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3.11. Resort to Any Security. The Collateral Agent may resort to
any security given by this Deed or to any other security now existing or
hereafter given to secure the payment of the Secured Indebtedness, in whole or
in part, and in such portions and in such order as may seem best to the
Collateral Agent in its sole and uncontrolled discretion, and any such action
shall not in anywise be considered as a waiver of any of the rights, benefits,
liens or security interests evidenced by this Deed, except as may be provided
to the contrary under Applicable Laws.
3.12. Waiver. To the full extent Grantor may do so, Grantor agrees
that Grantor will not at any time insist upon, plead, claim or take the benefit
or advantage of any law now or hereafter in force pertaining to the rights and
remedies of sureties or providing for any appraisement, valuation, stay,
extension, redemption or reinstatement, and Grantor, for Grantor and Grantor's
heirs, devisees, representatives, successors and assigns, and for any and all
persons ever claiming any interest in the Property, to the extent permitted by
Applicable Laws and except with respect to rights expressly set forth herein or
in the other Loan Documents, hereby waives and releases all rights of
redemption, valuation, appraisement, stay of execution, notice of intention to
mature or declare due the whole of the Secured Indebtedness and all rights to a
marshaling of the assets of Grantor, including the Property, reinstatement
(including all rights under Official Code of Georgia Annotated Section
44-14-85) or to a sale in inverse order of alienation in the event of
foreclosure of the liens and security interests hereby created. Grantor shall
not have or assert any right under any statute or rule of law pertaining to the
marshaling of assets, sale in inverse order of alienation, the exemption of
homestead, the administration of estates of decedents or other matters whatever
to defeat, reduce or affect the rights of the Collateral Agent under the terms
of this Deed to a sale of the Property for the collection of the Secured
Indebtedness without any prior or different resort for collection, or the
rights of the Trustee or the Collateral Agent under the terms of this Deed to
the payment of such indebtedness out of the proceeds of sale of the Property in
preference to every other claimant whatsoever. If the Property is sold for an
amount less than the Secured Indebtedness, the deficiency shall be determined
by the purchase price at the sale or sales. If any law referred to in this
Paragraph 3.13 and now in force, of which Grantor or Grantor's successors and
assigns and such other persons claiming any interest in the Property might take
advantage despite this Paragraph 3.13 shall hereafter be repealed or cease to
be in force, such law shall not thereafter be deemed to preclude the
application of this Paragraph 3.13. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAWS, IF THE PROPERTY IS SOLD IN ACCORDANCE WITH THE TERMS OF THIS DEED FOR AN
AMOUNT LESS THAN THE OBLIGATIONS OF GRANTOR TO COLLATERAL AGENT or LENDERS, THE
DEFICIENCY SHALL BE DETERMINED BY THE PURCHASE PRICE AT THE SALE.
3.13. Delivery of Possession After Foreclosure. In the event there
is a foreclosure sale hereunder and at the time of such sale Grantor or
Grantor's successors or assigns or any other persons claiming any interest in
the Property by, through or under Grantor are occupying or using the Property,
or any part thereof, each and all shall immediately become the tenant at
sufferance to the purchaser at such sale, which tenancy shall be terminable at
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the will of landlord. In the event the tenant fails to surrender possession of
said Property upon demand, the purchaser shall be entitled to summarily
dispossess such tenant.
3.14. Tender After Acceleration. If, following the occurrence of a
Default and the acceleration of the Secured Indebtedness but prior to the
foreclosure of this Deed against the Property, Grantor shall tender to the
Collateral Agent and/or Lenders payment of an amount sufficient to pay the
entire Secured Indebtedness, such tender shall be deemed to be a voluntary
prepayment and, consequently, Grantor shall also pay to Lenders any charge or
premium required to be paid in order to prepay principal and, if such principal
payment is made during any period when prepayment is prohibited by this Deed,
or the Loan Documents, the applicable charge or premium shall be the maximum
prepayment penalty provided for in the Loan Documents; provided, however, that
in no event shall any amount payable under this Paragraph 3.15, when added to
the interest otherwise payable on the Secured Indebtedness, exceed the maximum
interest permitted under Applicable Laws.
3.15. Insurance Premiums. Upon any foreclosure of the Mortgaged
Property pursuant to this Deed, the Collateral Agent shall have the right to
cancel any policy of insurance covering all or any part of the Mortgaged
Property and shall be entitled to receive any unearned premiums from such
policy. The unearned premiums received by the Collateral Agent shall be
applied in the same manner as provided in Paragraph 3.7 above regarding the
application of proceeds of sale of the Mortgaged Property.
ARTICLE IV.
Assignment of Rents, Profits, Income,
Contracts and Bonds
4.1. Assignment. Grantor does hereby absolutely and
unconditionally assign, transfer and set over to the Collateral Agent all
rents, income, profits and proceeds to be derived from the Property, including
without limitation the immediate and continuing right, subject to the license
granted below, to collect and receive all of the rents, income, receipts,
revenues, issues, profits and other sums of money that may now or at any time
hereafter become due and payable to Grantor under the terms of any present or
future leases now or hereafter covering the Property, or any part thereof,
including but not limited to minimum rents, additional rents, percentage rents,
deficiency rents and liquidated damages following default, all proceeds payable
under any policy of insurance covering the loss of rents resulting from
untenantability caused by destruction or damage to the Property, and liens and
rights, whether constitutional, statutory, contractual or otherwise, in favor
of Grantor as the lessor of any of the Property, and all of Grantor's rights to
recover monetary amounts from any lessee in bankruptcy including, without
limitation, rights of recovery for use and occupancy and damage claims arising
out of lease defaults, including rejections, under the Bankruptcy Reform Act of
1978, as amended, or any other present or future federal or state insolvency,
bankruptcy or similar law (all of the foregoing hereinafter collectively called
"Applicable Bankruptcy Law"), together with any sums of money that may now or
at any
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time hereafter become due and payable to Grantor by virtue of any and all
royalties, overriding royalties, bonuses, delay rentals and any other amount of
any kind or character arising under any and all present and future oil, gas and
mining leases covering the Property, or any part thereof; and all proceeds and
other amounts paid or owing to Grantor under or pursuant to any and all
contracts and bonds relating to the construction, erection or renovation of the
Property, or any part thereof; subject however, to a license hereby granted by
the Collateral Agent to Grantor to collect and receive and expend all of the
foregoing, subject to the terms and conditions hereof. Upon the occurrence and
continuance of any Default, the Collateral Agent shall have the right, power
and privilege (but shall be under no duty) to terminate such license whereupon
the Collateral Agent shall have the right and authority, whether or not it
takes possession of the Property, to seek enforcement of any such lease,
contract or bond and to demand, collect, receive, sue for and recover in its
own name any and all of the above described amounts assigned hereby and to
apply the sum(s) collected, first to the payment of reasonable expenses
incident to the collection of the same, second to the payment of the Secured
Indebtedness, and the balance, if any, to Grantor or other party legally
entitled thereto; provided, however, that the Collateral Agent shall not be
deemed to have taken possession of the Property except on the exercise of its
option to do so, evidenced by its demand and overt act for such purpose.
Grantor shall make no assignment or other disposition of the above described
amounts assigned hereby, nor, unless permitted under the Credit Agreements,
shall Grantor cancel or amend any such lease, contract, bond or any other
instrument under which such amounts are to be paid or waive, excuse, condone,
discount, set off, compromise or in any manner release any obligation
thereunder if to do so could reasonably be expected to have a Material Adverse
Effect, nor shall Grantor during the existence of a Default receive or collect
any such amount thus assigned for a period of more than one month in advance of
the date on which payment thereof is due and Grantor shall duly and punctually
observe and perform every obligation to be performed by it under each such
lease, contract, bond or other instrument if the failure to do so could
reasonably be expected to have a Material Adverse Effect and shall not do or
permit to be done anything to impair the security thereof and shall enforce, if
the failure to do so could reasonably be expected to have a Material Adverse
Effect, every obligation of each other party thereto. The assignment contained
in this Paragraph 4.1. shall become null and void upon the release of this
Deed. It shall never be necessary for the Collateral Agent to institute legal
proceedings of any kind whatsoever to enforce the provisions of this Paragraph
4.1.
ARTICLE V.
Hazardous Materials
5.1. Definitions. For the purpose of this Deed, Grantor and the
Collateral Agent agree that, unless the context otherwise specifies or
requires, the following terms shall have the meaning specified below:
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(a) "Hazardous Materials" means (a) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act of 1976 (42
U.S.C. Section 6901 et seq.), as amended from time to time, and
regulations promulgated thereunder; (b) any "hazardous substance" as
defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. Section 9601 et seq.) ("CERCLA"), as
amended from time to time, and regulations promulgated thereunder; (c)
asbestos; (d) polychlorinated biphenyls; (e) underground storage
tanks, whether empty, filled or partially filled with any substance,
(f) any substance the presence of which on the Mortgaged Property is
prohibited by any Governmental Requirements (as defined below); and
(g) any other substance which by any Governmental Requirements
requires special handling or notification of any federal, state or
local governmental entity in its collection, storage, treatment, or
disposal.
(b) "Hazardous Materials Contamination" means the
contamination (whether presently existing or hereafter occurring) of
the buildings, facilities, soil, groundwater, air or other elements on
or of the Mortgaged Property by Hazardous Materials, or the
contamination of the buildings, facilities, soil, groundwater, air or
other elements on or of any other property as a result of Hazardous
Materials at any time (whether before or after the date of this Deed)
emanating from the Mortgaged Property, in either case, in a manner
violating applicable Governmental Requirements.
(c) "Governmental Requirements" means all laws,
ordinances, rules, and regulations of any Governmental Authority (as
defined below) applicable to Grantor or the Mortgaged Property.
(d) "Governmental Authority" means the United States, the
State, county, city, or any other political subdivision in which the
Mortgaged Property is located, and any other political subdivision,
agency, or instrumentality exercising jurisdiction over Grantor or the
Mortgaged Property.
5.2. Grantor's Warranties. Grantor hereby represents and warrants
that:
(a) To Grantor's actual knowledge, no Hazardous
Materials have been collected, stored, treated or disposed of in a
manner which materially violates any Applicable Laws, and no Hazardous
Materials which would have a Material Adverse Effect are now located
on the Mortgaged Property other than Hazardous Materials used in the
ordinary course of Grantor's operations, all of which have been used
in accordance, in all material respects, with proper specifications
and procedures in accordance with Applicable Laws, and neither Grantor
nor, to Grantor's actual knowledge and belief, any other person has
ever caused or permitted any Hazardous Materials which would have a
Material Adverse Effect to be placed, held, located or disposed of on,
under or at the Mortgaged Property, or any part thereof other than
Hazardous Materials used in the ordinary course of Grantor's
operations, all of which
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have been used in accordance, in all material respects, with proper
specifications and procedures in accordance with Applicable Laws;
(b) To Grantor's actual knowledge, no part of the
Mortgaged Property is being used nor, to Grantor's actual knowledge
and belief, has been previously used for the disposal, storage,
treatment, processing or other handling of Hazardous Materials, the
effect of which would have a Material Adverse Effect, nor is any part
of the Mortgaged Property affected by any Hazardous Materials
Contamination which would have a Material Adverse Effect;
(c) To Grantor's actual knowledge and belief, no property
adjoining the Mortgaged Property is being used, or has ever been used
at any previous time for the disposal, storage, treatment, processing
or other handling of Hazardous Materials which would have a Material
Adverse Effect, nor is any other property adjoining the Mortgaged
Property affected by Hazardous Materials Contamination which would
have a Material Adverse Effect.
5.3. Grantor's Covenants. Grantor agrees to (a) give notice to the
Collateral Agent promptly upon Grantor's acquiring knowledge of the presence of
any Hazardous Materials which would have a Material Adverse Effect on the
Mortgaged Property or of any Hazardous Materials Contamination which would have
a Material Adverse Effect, with a full description thereof; (b) promptly comply
with any Governmental Requirements requiring the removal, treatment or disposal
of such Hazardous Materials or Hazardous Materials Contamination and provide
the Collateral Agent with reasonably satisfactory evidence of such compliance;
and (c) provide the Collateral Agent within thirty (30) days after demand by
the Collateral Agent, with a bond, letter of credit or similar financial
assurance evidencing to the Collateral Agent's reasonable satisfaction that the
necessary funds are available to pay the cost of removing, treating and
disposing of such Hazardous Materials or Hazardous Materials Contamination and
discharging any assessments which may be established on the Mortgaged Property
as a result thereof.
5.4. Site Assessments. Grantor will permit the Collateral Agent
(by its officers, employees and agents) at any time and from time to time, but
not more frequently than once in any twelve-month period (unless otherwise
required by any Tribunal having supervisory authority over the Collateral
Agent) to contract for the services of persons (the "Site Reviewers") to
perform environmental site assessments (the "Site Assessments") on any
Mortgaged Property for the purpose of determining whether there exists on such
Mortgaged Property any environmental condition which could reasonably be
expected to result in any liability, cost or expense to the owner, occupier or
operator of such Mortgaged Property arising under any Governmental Requirements
relating to Hazardous Materials. The Site Assessments may be performed at any
time or times, upon reasonable notice, and under reasonable conditions
established by Grantor which do not impede the performance of the Site
Assessments. Site Assessments shall be conducted in accordance with
Governmental Requirements. The Site Reviewers are hereby authorized to enter
upon any Mortgaged
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Property for such purposes. The Site Reviewers are further authorized to
perform both above and below the ground testing for environmental damage or the
presence of Hazardous Materials on any Mortgaged Property and such other tests
on any Mortgaged Property as may be necessary to conduct the Site Assessments
in the reasonable opinion of the Site Reviewers. Grantor will supply to the
Site Reviewers such historical and operational information regarding any
Mortgaged Property as may be reasonably requested by the Site Reviewers to
facilitate the Site Assessments and will make available for meeting with the
Site Reviewers appropriate personnel employed by Grantor having knowledge of
such matters. The costs of performing such Site Assessments, except during a
Default, shall be paid by the Collateral Agent. During a Default, the
reasonable cost of performing such Site Assessments after the occurrence and
during the continuance of a Default or Event of Default shall be paid by
Grantor upon demand of the Collateral Agent and any such expenses borne by the
Collateral Agent and not immediately reimbursed by Grantor shall be secured by
this Deed.
5.5. Indemnification. Regardless of whether any Site Assessments
are conducted hereunder, if any Default or Event of Default shall have occurred
and be continuing or any remedies in respect of any Mortgaged Property are
exercised by the Collateral Agent or any Lender, Grantor shall defend,
indemnify and hold harmless the Collateral Agent and Lenders from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys' fees
and expenses, and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future
(whether before or after the release of this Deed) be paid, incurred or
suffered by or asserted against the Collateral Agent or Lenders by any person
or entity or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission or release from any Mortgaged Property of any
Hazardous Materials or any Hazardous Materials Contamination or arise out of or
result from the environmental condition of any Mortgaged Property or the
applicability of any Governmental Requirements relating to Hazardous Materials
(including, without limitation, CERCLA or any federal, state or local so-called
"superfund" or "superlien" laws, or any code, rule, regulation, order or decree
promulgated thereunder); provided, however, the indemnity provided above shall
not apply to any liabilities, actions, demands, penalties, losses, costs or
expenses, suits, costs of any settlement or judgment and claims of any and
every kind whatsoever which are determined in a final, non-appealable judgment
by a court of competent jurisdiction to have been (i) caused by or within the
control of the Collateral Agent and/or Lenders as a result of actions in their
capacities as beneficiaries of this Deed and not as a result of any
determination in such judgment or otherwise that any covenants, conditions or
provisions in any of the Loan Documents give or purport to give control over
Grantor or any of the Mortgaged Property or (ii) which are the result of an
event that occurs after foreclosure of the Mortgaged Property (or any portion
thereof) or the taking of a deed in lieu of foreclosure covering the Mortgaged
Property (or any portion thereof), unless such event occurs as a result of or
arises out of a Hazardous Materials Contamination or an environmental condition
of the Mortgaged Property that occurred or existed prior to such foreclosure or
such taking of a deed in lieu of foreclosure. The covenants, warranties and
indemnifications contained in this Section 5.5
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shall survive the release of this Deed to Secure Debt and termination of the
Credit Agreement. For the purposes of this Section 5.5, the term "Collateral
Agent" and "Lenders" shall include all subsequent owners or holders of any
obligations secured by this Deed, all directors, officers, employees and agents
of such entity and any persons or entities owned or controlled by or affiliated
with the Collateral Agent or any Lender, and their respective directors,
officers, employees and agents.
ARTICLE VI.
Miscellaneous
6.1. Release. Upon the Release Date, the Property shall become
wholly clear of the liens, security interests, conveyances and assignments
evidenced hereby, which shall be released by the Collateral Agent at Grantor's
cost.
6.2. Waiver by the Collateral Agent. The Collateral Agent may at
any time and from time to time in writing (a) waive compliance by Grantor with
any covenant herein made by Grantor to the extent and in the manner specified
in such writing; (b) consent to Grantor doing any act which Grantor hereunder
is prohibited from doing, or consent to Grantor failing to do any act which
Grantor hereunder is required to do, to the extent and in the manner specified
in such writing; (c) release any part of the Property, or any interest therein,
from the lien and security interest of this Deed, or (d) release any party
liable, either directly or indirectly, for the Secured Indebtedness or for any
covenant herein or in any other instrument now or hereafter securing the
payment of the Secured Indebtedness, without impairing or releasing the
liability of any other party. No such act shall in any way impair the rights
of the Collateral Agent hereunder except to the extent specifically agreed to
by the Collateral Agent in such writing.
6.3. Actions by the Collateral Agent. The lien, security interest
and other security rights of the Collateral Agent and Lenders hereunder shall
not be impaired by any indulgence, moratorium or release granted by the
Collateral Agent (except as provided in Section 6.1), including but not limited
to (a) any renewal, extension, increase or modification which the Collateral
Agent or any Lender may grant with respect to any Secured Indebtedness, (b) any
surrender, compromise, release, renewal, extension, exchange or substitution
which the Collateral Agent or any Lender may grant in respect of the Property,
or any part thereof or any interest therein (except to the extent specifically
surrendered, compromised, released, renewed, extended, exchanged or
substituted), or (c) any release or indulgence granted to any endorser,
guarantor or surety of any Secured Indebtedness. The taking of additional
security by the Collateral Agent or any Lender shall not release or impair the
lien, security interest or other security rights of the Collateral Agent
hereunder or affect the liability of Grantor or of any endorser or guarantor or
other surety or improve the right of any permitted junior lienholder in the
Property.
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6.4. Rights of the Collateral Agent. The Collateral Agent may,
subject to the Credit Agreements, waive any Default or other default without
waiving any other prior or subsequent Default or other default. the Collateral
Agent may remedy any Default or other default without waiving the Default or
other default remedied. Neither the failure by the Collateral Agent to
exercise, nor the delay by the Collateral Agent in exercising, any right, power
or remedy upon any Default or other default shall be construed as a waiver of
such Default or other default or as a waiver of the right to exercise any such
right, power or remedy at a later date. No single or partial exercise by the
Collateral Agent of any right, power or remedy hereunder shall exhaust the same
or shall preclude any other or further exercise thereof, and every such right,
power or remedy hereunder may be exercised at any time and from time to time.
No modification or waiver of any provision hereof or consent to any departure
by Grantor therefrom shall in any event be effective unless the same shall be
in writing and signed by the Collateral Agent, and then such waiver or consent
shall be effective only in the specific instances, for the purpose for which
given and to the extent therein specified. No notice to or demand on Grantor
in any case shall of itself entitle Grantor to any other or further notice or
demand in similar or other circumstances. Acceptance by the Collateral Agent
of any payment in an amount less than the amount then due on any Secured
Indebtedness shall be deemed an acceptance on account only and shall not in any
way affect the existence of a Default or other default hereunder.
6.5. Filing and Recordation. Grantor will cause this Deed and all
amendments and supplements thereto and substitutions therefor and all financing
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as the Collateral
Agent shall reasonably request, and will pay all such recording, filing,
re-recording and refiling taxes, fees and other charges.
6.6. Dealing with Successor. In the event the ownership of the
Property or any part thereof becomes vested in a person other than Grantor, the
Collateral Agent may, without notice to Grantor, deal with such successor or
successors in interest with reference to this Deed and to the Secured
Indebtedness in the same manner as with Grantor, without in any way vitiating
or discharging Grantor's liability hereunder or for the payment of the Secured
Indebtedness. Except as agreed to in writing by all Lenders and the Collateral
Agent, no sale of the Property, no forbearance on the part of the Collateral
Agent or any Lender and no extension of the time for the payment of any of the
Secured Indebtedness given by the Collateral Agent or any Lender shall operate
to release, discharge, modify, change or affect, in whole or in part, the
liability of Grantor hereunder or for the payment of the Secured Indebtedness
or the liability of any other person hereunder or for the payment of the
Secured Indebtedness, except to the extent proceeds of any such sale are
applied as provided in Paragraph 3.7 hereof.
6.7. Place of Payment. All Secured Indebtedness which may be owing
hereunder at any time by Grantor shall be payable at the place designated in
the Loan Documents, or if no such designation is made, at the office of the
Collateral Agent at the address indicated in
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<PAGE> 267
this Deed, or at such other place in the continental United States as the
Collateral Agent may designate in writing.
6.8. Subrogation. To the extent that proceeds of the Secured
Indebtedness are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Property, such
proceeds have been advanced by Lenders at Grantor's request and Lenders shall
be subrogated to any and all rights, security interests and liens owned or held
by any owner or holder of such outstanding liens, security interests, charges
or encumbrances, irrespective of whether said liens, security interests,
charges or encumbrances are released; provided, however, that the terms and
provisions of this Deed shall govern the rights and remedies of Lenders and
shall supersede the terms, provisions, rights and remedies under and pursuant
to the instruments creating the lien or liens to which Lenders are subrogated
hereunder.
6.9. Application of Indebtedness. If any part of the Secured
Indebtedness cannot be lawfully secured by this Deed or if any part of the
Property cannot be lawfully subject to the lien and security interest hereof to
the full extent of such indebtedness, then all payments made shall be applied
on said indebtedness first in discharge of that portion thereof which is
unsecured by this Deed.
6.10. Usury. It is the intent of the Collateral Agent, the Lenders
and Grantor in the execution of the Credit Agreements, this Deed, the other
Loan Documents and all other instruments now or hereafter securing the Secured
Indebtedness or executed in connection therewith or under any other written or
oral agreement by the undersigned in favor of the Collateral Agent and/or
Lenders to contract in strict compliance with applicable usury law. In
furtherance thereof, the Collateral Agent, Lenders and Grantor stipulate and
agree that none of the terms and provisions contained in the Credit Agreements,
this Deed, the other Loan Documents or any other instrument securing the Notes
or executed in connection herewith, or in any other written or oral agreement
by Grantor in favor of Lenders and/or the Collateral Agent, shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money, interest at a rate in excess of the maximum interest rate permitted to
be charged by Applicable Laws. Neither Grantor nor any guarantors, endorsers,
sureties or other parties now or hereafter becoming liable for the Secured
Indebtedness, or any part thereof, shall ever be required to pay interest on
Secured Indebtedness, under any instrument securing the Secured Indebtedness or
under any of the other Loan Documents, or in any other written or oral
agreement by Grantor in favor of Lenders and/or the Collateral Agent, at a rate
in excess of the maximum interest that may be lawfully charged under Applicable
Laws, and the provisions of this Paragraph 6.14 shall control over all other
provisions of the Credit Agreements, this Deed, the other Loan Documents and
any other instruments now or hereafter securing the Secured Indebtedness or
executed in connection herewith or any other oral or written agreements which
may be in apparent conflict herewith. All interest paid or agreed to be paid
to Lenders and/or the Collateral Agent shall, to the extent permitted by
Applicable Laws, be amortized, prorated, allocated and spread throughout the
full period until payment in full of the principal of the
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<PAGE> 268
Secured Indebtedness so that the interest thereon for such full period shall
not exceed the maximum amount permitted by Applicable Laws. Lenders and/or the
Collateral Agent expressly disavow any intention to charge or collect excessive
unearned interest or finance charges in the event the maturity of the Secured
Indebtedness is accelerated. If the maturity of the Secured Indebtedness shall
be accelerated for any reason or if the principal of the Secured Indebtedness
is paid prior to the end of the term of the Secured Indebtedness, and as a
result thereof the interest received for the actual period of existence of the
loans evidenced by the Secured Indebtedness exceeds the applicable maximum
lawful rate, Lenders and/or the Collateral Agent shall refund to Grantor the
amount of such excess or shall credit the amount of such excess against the
principal balance of the Secured Indebtedness then outstanding. In the event
that Lenders and/or the Collateral Agent shall collect monies and/or any other
thing of value which are deemed to constitute interest which would increase the
effective interest rate on the Secured Indebtedness to a rate in excess of that
permitted to be charged by Applicable Laws, an amount equal to interest in
excess of the lawful rate shall, upon such determination, at the option of
Lenders and/or the Collateral Agent, be either immediately returned to Grantor
or credited against the principal balance of the other Secured Indebtedness,
without further penalty to such holder. By execution of this Deed, Grantor
acknowledges that it believes the loan to be non-usurious and agrees that if,
at any time, Grantor should have reason to believe that such loan is in fact
usurious, it will give Lenders and/or the Collateral Agent notice of such
condition, and Grantor agrees that Lenders and/or the Collateral Agent shall
have 90 days after receipt of such notice in which to make appropriate refund
or other adjustment in order to correct such condition if in fact such
condition exists. As used in this Paragraph 6.14, "interest" means any sum
that must be treated as interest under Applicable Laws in determining whether a
loan is usurious. THE TERM "APPLICABLE LAWS" AS USED IN THIS PARAGRAPH 6.14
SHALL MEAN THE LAWS OF THE STATE OF TEXAS OR THE LAWS OF THE UNITED STATES,
WHICHEVER LAWS ALLOW THE GREATER RATE OF INTEREST, AS SUCH LAWS NOW EXIST OR
MAY BE CHANGED OR AMENDED OR COME INTO EFFECT IN THE FUTURE.
6.11. Notice. Any notice, request, demand or other communication
required or permitted hereunder, or under the Loan Documents, or under any
other instrument securing the payment of the Loan Documents (unless otherwise
expressly provided therein) shall be given in the same manner as set forth in
Section 11.1(a) of the Credit Agreements.
6.12. Successors and Assigns. The terms, provisions, covenants and
conditions hereof shall be binding upon Grantor, and the representatives,
successors and assigns of Grantor including all successors in interest of
Grantor in and to all or any part of the Property, and shall inure to the
benefit of the Collateral Agent and the Lenders, and their respective heirs,
successors, substitutes and assigns and shall constitute covenants running with
the land. All references in this Deed to Grantor, the Collateral Agent or
Lenders shall be deemed to include all such heirs, devisees, representatives,
successors, substitutes and assigns.
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<PAGE> 269
6.13. Severability. A determination that any provision of this Deed
is unenforceable or invalid shall not affect the enforceability or validity of
any other provision and any determination that the application of any provision
of this Deed to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.
6.14. Gender and Number. Within this Deed, words of any gender
shall be held and construed to include any other gender, and words in the
singular and plural number shall be held and construed to include the other
number, unless the context otherwise requires.
6.15. Counterparts. This Deed may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall
constitute one instrument.
6.16. Reporting Requirements. Grantor agrees to comply with any and
all reporting requirements applicable to the transaction secured by this Deed
which are set forth in any law, statute, ordinance, rule, regulation, order or
determination of any governmental authority, and further agrees upon request of
the Collateral Agent to furnish the Collateral Agent with evidence of such
compliance.
6.17. Headings. The paragraph headings contained in this Deed are
for convenience only and shall in no way enlarge or limit the scope or meaning
of the various and several paragraphs hereof.
6.18. Consent of the Collateral Agent. Except where otherwise
provided herein or in any of the other Loan Documents, in any instance
hereunder where the approval, consent or the exercise of judgment of the
Collateral Agent is required, the granting or denial of such approval or
consent and the exercise of such judgment shall be within the sole discretion
of the Collateral Agent, and the Collateral Agent shall not, for any reason or
to any extent, be required to grant such approval or consent or exercise such
judgment in any particular manner, regardless of the reasonableness of either
the request or the Collateral Agent's judgment.
6.19. Modification or Termination. The Loan Documents may only be
modified or terminated by a written instrument or instruments executed by the
party against whom enforcement of the modification or termination is asserted.
Any alleged modification or termination which is not so documented shall not be
effective as to any party.
6.20. ENTIRE AGREEMENT. THIS DEED, TOGETHER WITH THE CREDIT
AGREEMENTS, AND ALL OTHER LOAN DOCUMENTS (ALL AS IN EFFECT ON THE DATE HEREOF
AND AS THE SAME MAY BE AMENDED, SUPPLEMENTED, RESTATED OR OTHERWISE MODIFIED
HEREAFTER FROM TIME TO TIME) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
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<PAGE> 270
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
6.21. GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE REAL PROPERTY
LAWS OF ANY STATE IN WHICH ANY OF THE MORTGAGED PROPERTY MAY BE LOCATED MAY
CONTROL, THIS DEED SHALL BE CONSTRUED, INTERPRETED, AND GOVERNED BY AND IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED
STATES APPLICABLE TO TRANSACTIONS WITHIN SUCH STATE; PROVIDED, HOWEVER, THIS
DEED SHALL BE ENFORCED UNDER AND PURSUANT TO THE LAWS OF THE STATE OF GEORGIA
AND THE LAWS OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS WITHIN
SUCH STATE.
6.22. Multiple Advance Loan. This Deed is given to secure, among
other things, a multiple advance loan and shall secure not only presently
existing indebtedness but also future advances, whether such advances are
obligatory or to be made at the option of the Collateral Agent or any Lender or
otherwise, to the same extent as if such future advances were made on the date
of execution of this Deed. The lien of this Deed shall be valid as to all
indebtedness hereby secured, including future advances, from the time of its
filing for record in the recorder's or registrar's office of the county in
which the Mortgaged Property is located.
6.23. Credit Agreements Control. In the event of any conflict or
inconsistency between any of the terms and provisions of the Credit Agreements
or any other Loan Documents (other than this Deed) and any of the terms and
provisions of this Deed, the terms and provisions of the Credit Agreements and
such other Loan Documents shall control.
IN WITNESS WHEREOF, Grantor has executed this Deed, Assignment of
Leases and Rents and Security Agreement as of the __ day of _________, ______.
------------------------------
a corporation
-----------
By:
---------------------------
Name:
----------------------
Title:
---------------------
Address:
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<PAGE> 271
SIGNED, SEALED AND DELIVERED
in the presence of:
- --------------------------------
Unofficial Witness
- --------------------------------
Notary Public
[Notary Stamp]
[Notary Seal]
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<PAGE> 272
EXHIBIT "A"
[Description of Property]
<PAGE> 273
EXHIBIT "B"
[Description of Permitted Encumbrances]
<PAGE> 274
EXHIBIT J-1
LANDLORD'S AGREEMENT
THIS LANDLORD'S AGREEMENT ("Agreement") is executed as of the ____ day
of _______________, 1997, by and among NATIONSBANK OF TEXAS, N.A., as
Collateral Agent for the benefit of the Lenders defined below ("Collateral
Agent"), ____________________________, a _________________________, together
with its predecessors and successors, ("Lessee") and _________________________
("Landlord").
W I T N E S S E T H :
WHEREAS, Landlord and Lessee, have entered into that certain Lease
Agreement dated ___________________, 1997 (as amended, modified and
supplemented, the "Lease"), covering certain real property situated in
________________ County, _______________, more particularly described in
Exhibit A attached to this Agreement (the "Property"); and
WHEREAS, [Lessee] [PILLOWTEX CORPORATION (THE "BORROWER")] is a party
to that certain Amended and Restated Credit Agreement and that certain Term
Credit Agreement, among [Lessee] [THE BORROWER], certain lenders party thereto
(the "Lenders"), and NationsBank of Texas, N.A., as Administrative Agent (said
Credit Agreements, as amended, modified, supplemented, renewed, extended or
restated, the "Credit Agreements"), pursuant to which Lenders have agreed,
among other things, to make loans ("Advances") to [Lessee] [the Borrower];
WHEREAS, Lessee, in consideration of, among other things, the Advances
made or to be made to Lessee by Lenders pursuant to the Credit Agreements, has
executed an agreement in favor of a trustee (the "Trustee") covering Lessee's
interest in the Lease and the Property (such agreement, as amended, modified,
supplemented, renewed or extended, whether titled as a mortgage, a deed of
trust or other agreement shall be referred to herein as the "Deed of Trust")
and a Security Agreement in favor of Collateral Agent on behalf of Lenders
covering Lessee's interest in certain assets of Lessee (as amended, modified,
supplemented, the "Security Agreement"); and
WHEREAS, Collateral Agent and Lessee desire that Landlord acknowledge
the Lease and the Deed of Trust and Lessee's, Collateral Agent's and Lenders'
rights under the Lease, the Deed of Trust and the Security Agreement;
NOW, THEREFORE, in consideration of the premises, the covenants,
conditions, provisions and agreements set forth in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Collateral Agent, Lessee and Landlord hereby represent,
acknowledge, covenant and agree as follows:
<PAGE> 275
1. Non-Disturbance. Landlord hereby agrees that (a) as long as no
default exists under the Lease which has not been cured or waived and (b) as
long as no event has occurred which, with the lapse of time or the giving of
notice or both, would entitle Landlord to dispossess Lessee, the Lease shall
not be terminated prior to the expiration date of the term thereof, nor shall
Lessee's possession or enjoyment of the Property be interfered with in the
event that Trustee or Collateral Agent or any successor-in-interest thereto
takes possession of any part of the Property or Excluded Property (as herein
defined) pursuant to the Deed of Trust, Security Agreement or otherwise,
provided that such Trustee, Collateral Agent or successor-in-interest agrees to
assume all obligations thereafter accruing under and to be bound by the terms
of the Lease. If any part of the Property is acquired by Trustee, Collateral
Agent or any successor-in-interest thereto by foreclosure or otherwise,
Trustee, Collateral Agent or such successor shall take title to Lessee's
interest in the Property or any part thereof subject to the terms of the Lease
and this Agreement, and Lessee's occupancy of the Property in accordance with
the terms of the Lease shall not be disturbed or otherwise affected except in
accordance with the terms of the Lease and this Agreement, provided that such
Trustee, Collateral Agent or successor-in-interest agrees to assume all
obligations thereafter accruing under and to be bound by the terms of the
Lease.
2. Attornment. If any proceedings are brought for the foreclosure of
Trustee's or Collateral Agent's deed of trust lien, mortgage lien, security
interest or other encumbrance on the Lease or the Property, Landlord agrees
that the substitution as lessee under the Lease of Trustee, Collateral Agent,
any successor-in-interest to Trustee or Collateral Agent, or purchaser at the
foreclosure sale, shall not constitute a default or event of default under the
Lease, and Landlord further agrees to recognize Trustee, Collateral Agent, any
successor-in-interest to Trustee, Collateral Agent or purchaser at the
foreclosure sale, as the lessee under the Lease with all rights and privileges
as are held by Lessee, provided that such Trustee, Collateral Agent or
successor-in-interest agrees to assume all obligations thereafter accruing
under and to be bound by the terms of the Lease. Such attornment shall be
effective and self-operative without the execution of any further instrument
on the part of any of the parties hereto. Landlord agrees, however, to execute
and deliver at any time, and from time to time, upon the request of Trustee,
Collateral Agent or of any other holder(s) of any of the indebtedness or any
such nominee or purchaser, any instrument or certificate which, in its sole
judgment, Trustee, Collateral Agent, such other holder(s), or such nominee or
purchaser, as the case may be, deems to be necessary or appropriate in any such
foreclosure proceeding or conveyance in lieu of foreclosure or otherwise to
evidence such attornment, provided that the rights of Lessee under the Lease
shall not be impaired or Lessee's obligations increased, as a result thereof.
3. Acknowledgment and Agreement by Landlord. Landlord acknowledges and
agrees that:
(a) This Agreement shall constitute written consent of the
Landlord to the encumbrance of the Lease to Collateral Agent and Lenders under
the Deed of Trust and Security Agreement and the subsequent assignment of the
Lease to any successor-in-interest to Trustee, Collateral Agent or purchaser at
the foreclosure sale and shall constitute a waiver of (i) all restrictions to
such encumbrance and assignment in the Lease, including notice requirements,
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<PAGE> 276
and (ii) events of default created by such encumbrance and assignment under the
terms of the Lease.
(b) From and after the date hereof, in the event of any act or
omission by Lessee which would give Landlord the right, either immediately or
after the lapse of time or the giving of notice, to terminate the Lease or to
claim a partial or total eviction, Landlord will not exercise any such right;
(i) Until it has given written notice of such act or
omission to Collateral Agent; and
(ii) Until the longer of (A) thirty days, or (B) the same
period of time as is given to Lessee under the Lease to cure such act
or omission, shall have elapsed following receipt of such notice by
Collateral Agent and following the time when Collateral Agent or
Trustee shall have become entitled under the Deed of Trust or the
Security Agreement to remedy such act or omission;
(c) From and after the date hereof, Landlord will not materially
modify or amend the Lease without the prior written consent of Collateral
Agent, which consent will not be unreasonably withheld, and, in the event of
any material modification or amendment of the Lease without the prior written
consent of Collateral Agent, such modification or amendment shall be voidable
at any time at the option of Collateral Agent, in its sole discretion;
(d) It has notice that the Lease and all sums, if any, due to
Lessee thereunder have been assigned or are to be assigned to Collateral Agent
as security for the obligations secured by the Deed of Trust and the Security
Agreement. In the event that Collateral Agent notifies Landlord of a default
under the Deed of Trust or the Security Agreement and demands that Landlord pay
all sums due Lessee under the Lease (if any) to Collateral Agent, Landlord
shall honor such demand and pay all sums due Lessee under the Lease (if any)
directly to Collateral Agent or as otherwise required pursuant to such notice;
(e) It shall use its reasonable efforts to send a copy of any
notice or statement under the Lease to Collateral Agent at the same time such
notice or statement is sent to Lessee; and
(f) This Agreement satisfies any condition or requirement in the
Lease relating to the granting of a non- disturbance agreement.
4. No Obligation of Collateral Agent. Collateral Agent and Lenders have
no obligation and will not incur any liability hereunder or under the Lease
until such time as Collateral Agent takes possession of the Property or
otherwise acquires Lessee's interest in the Lease, whereupon Collateral Agent
and the Lenders shall be deemed to have assumed all obligations of Lessee
thereafter accruing or arising under the Lease.
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<PAGE> 277
5. Landlord's Agreement. Landlord hereby:
(a) Waives each and every right which Landlord now has, or may
hereafter have, by contract, statute or otherwise, or by virtue of the Lease
now in effect or any other lease related to the Property hereafter executed by
Lessee, to levy or distrain upon for rent, in arrears, in advance, or both, or
for any other claim of Landlord against Lessee or to claim or assert any title
or interest or lien in and to the following described property (hereinafter
called the "Excluded Property"):
All of Lessee's property now or hereafter located on or in the
Property, including but not limited to, all inventory now owned or
hereafter acquired by Lessee, including all goods, merchandise, raw
materials, goods in process, supplies or other personal property held
for sale or lease or furnished or to be furnished under contracts of
service or used or consumed in Lessee's business, all fixtures, all
furnishings, all general intangibles, all equipment (wherever located)
and all substitutions and accessions thereto, now or hereafter
existing, all parts thereof and all accessions and all proceeds and
products thereof
which are already on the Property, or may hereafter be delivered or installed
thereon, and are or may hereafter become subject to the Security Agreement or
the Deed of Trust granting any interest in the Excluded Property, or any of
same, in favor of Trustee or Collateral Agent;
(b) Recognizes and acknowledges that any claim or claims that
Trustee or Collateral Agent or any Lender has or may hereafter have against the
Excluded Property by virtue of the Security Agreement or the Deed of Trust is
senior and superior to any lien or claim of any nature which the Landlord now
has or may hereafter have to the Excluded Property by constitution, statute,
agreement or otherwise;
(c) Agrees that in the event of default by Lessee in the payment
of any indebtedness or other obligation to Collateral Agent or any Lender, or
in the performance of any of the terms and conditions of the Credit Agreement,
the Security Agreement, the Deed of Trust, Trustee or Collateral Agent or its
agent may remove the Excluded Property or any part thereof from the Property,
in accordance with the terms and conditions of the Security Agreement or the
Deed of Trust and Landlord covenants and agrees that Landlord will make no
claim whatsoever to the Excluded Property and will not attempt in any way to
impede such removal of the Excluded Property by Trustee, Collateral Agent or
their agent; and
(d) Agrees that Lenders at any time and from time to time, may,
without affecting the validity of this Agreement, renew, extend or otherwise
modify the terms of payment of any indebtedness of Lessee to Lenders or the
performance of any of the terms and conditions of the Security Agreement, Deed
of Trust, or other agreement with Lessee or Lenders or any other person or
entity now or hereinafter liable for or whose property secure the obligation of
Lessor to Lenders, without the consent of Landlord and without giving notice
thereof to Landlord.
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<PAGE> 278
(e) Represents and warrants that, to the best of its knowledge,
the Property is free and clear of any mortgage, deed of trust, deed to secure
debt or similar encumbrance ("Mortgage") or that, to the best of its knowledge,
if the Property is subject to a Mortgage, the Lease is superior to such
Mortgage and would survive any foreclosure or exercise of a power of sale
contained in the Mortgage.
6. Inconsistent Provisions. This Agreement supersedes any inconsistent
provision of the Lease.
7. Notices. Any notice, demand or request permitted, required or desired
to be given in connection with this Agreement shall be in writing and shall be
deemed effective if hand delivered, or if sent by United States certified or
registered mail, return receipt requested, postage prepaid, or if sent by
private receipted courier guaranteeing same-day or next-day delivery,
addressed to the respective party at its address provided below.
If sent by U.S. certified mail in accordance with this Section 7, such
notices shall be deemed given and received on the earlier of (a) actual receipt
at the above specified address of the named addressee, or (b) on the third
business day after deposit with the United States Postal Service. Notice given
by any other means shall be deemed given and received only upon actual receipt
at the herein specified address of the named addressee.
8. Time. Time is of the essence in all matters pertaining to the
performance of this Agreement.
9. Authority. The parties to this Agreement warrant and represent to one
another that they have the power and authority to enter into and perform their
respective obligations under this Agreement in the names, titles and capacities
herein stated and on behalf of any entities, persons, estates or firms
represented or purported to be represented by such person, and that all formal
requirements necessary or required by any state and/or federal law or private
agreement in order for the parties to enter into and perform their respective
obligations under this Agreement have been fully complied with.
10. Entire Agreement. This Agreement represents the entire agreement
among Collateral Agent, Lessee and Landlord regarding the subject matter dealt
with herein, and it may not be modified, amended or discharged except by
written amendment executed by the party against whom enforcement of such
modification, amendment or discharge is sought.
11. Successors and Assigns. The terms and provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
heirs, administrators, personal representatives, successors and assigns.
12. Governing Law. The terms, provisions and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
_____________ without reference to principles of conflicts of laws.
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<PAGE> 279
13. Attorneys' Fees. Should any litigation, administrative proceeding or
arbitration be commenced by any of the parties hereto or their representatives,
or should any party institute any proceeding in a court which has jurisdiction
over any other party hereto or any or all of its property or assets, or should
any litigation or proceeding be commenced concerning any provision of this
Agreement or the rights and duties of any person or entity in relation thereto,
then the party or parties prevailing in such litigation or proceeding shall be
entitled, in addition to such other relief as may be granted, to a reasonable
sum as and for such prevailing party's attorneys' fees and court costs in such
litigation or proceeding, which shall be determined by the court (or presiding
official) in such litigation or proceeding or in a separate action brought for
that purpose.
14. Indemnity. Notwithstanding anything to the contrary provided herein,
Administrative Agent and Lenders shall (a) indemnify and hold harmless
Landlord for any damage to the Property or any Person caused by or as a result
of any removal of the Excluded Property from the Property by Collateral Agent
or any Lender or any of their representatives and (b) repair any damage caused
by or as a result of removal of the Excluded Property from the Property by
Collateral Agent or any Lender or any of their representatives.
15. Severability. If any provision of this Agreement shall, for any
reason, be held to be violative of any applicable law, and so much of this
Agreement is held to be unenforceable, then the invalidity of such specific
provision shall not be held to invalidate any other provision of this
Agreement, all of which other provisions shall remain in full force and effect.
16. Headings; Construction. The headings contained in this Agreement are
for reference purposes only and shall not modify or affect this Agreement in
any manner whatsoever. Wherever required by this context, any gender shall
include any other gender, the singular shall include the plural, and the plural
shall include the singular.
17. Counterparts. This Agreement may be executed in any number of
counterparts each of which, when so executed, shall be deemed an original and
all of which taken together shall constitute the Agreement.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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<PAGE> 280
EXECUTED as of the date first written above.
COLLATERAL AGENT:
NATIONSBANK OF TEXAS, N.A.
Address:
NationsBank of Texas, N.A.
as Collateral Agent
901 Main Street, 13th Floor
Dallas, Texas 75202 By:
--------------------------------
Attention: Marie T. Lancaster Name:
---------------------------
Title:
--------------------------
LANDLORD:
Address:
----------------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
LESSEE:
Address:
----------------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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<PAGE> 281
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the _____ day of
_________________, 1997, by __________________, ______________________ of
NationsBank of Texas, N.A., a national banking association.
-----------------------------
Notary Public, State of Texas
My Commission Expires:
- ----------------------------------
THE STATE OF )
-------------
)
COUNTY OF )
----------------
This instrument was acknowledged before me on the _____ day of
__________, 1997, by ____________________, ____________________ of
______________________________, a ____________________ corporation, on behalf
of said corporation.
---------------------------------
Notary Public, State of
----------
My Commission Expires:
- -----------------------------
- 8 -
<PAGE> 282
THE STATE OF _____________ )
)
COUNTY OF ________________
This instrument was acknowledged before me on the _____ day of
__________, 1997, by ____________________, ____________________ of
_____________________________, a ______________________, on behalf of said
_________________.
----------------------------------
Notary Public, State of
----------
My Commission Expires:
- ----------------------------
- 9 -
<PAGE> 283
EXHIBIT "A"
Real property description:
Being ___________ square feet in a building located on the
following-described tract of real property in _______________, _____________
County, _______________________ (such real property being commonly referred to
as ________________________________________):
[LEGAL DESCRIPTION OF PROPERTY SUFFICIENT FOR CONVEYANCING PURPOSES]
Owner of Record:
---------------------------------
<PAGE> 284
- --------------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
EXHIBIT J-2
LANDLORD'S WAIVER AND CONSENT
STATE OF ________________ )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF _______________ )
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby acknowledged, the undersigned, ____________________________________ (the
"Landlord") hereby acknowledges, covenants and represents to NATIONSBANK OF
TEXAS, N.A., in its capacity as the Collateral Agent for itself and certain
other lenders (collectively, "Lenders") as follows:
1. Landlord is the owner of certain real property (the
"Premises") described on Exhibit "A" attached hereto and incorporated herein by
reference for all purposes.
2. __________________________________________ (the "Tenant") has
heretofore leased, and is occupying, the Premises under a valid and enforceable
Lease, dated ____________________, 19____ (as amended, supplemented, restated,
extended or otherwise modified from time to time, the "Lease"), between
Landlord and Tenant.
3. As of the date hereof, Tenant is not in default under the
Lease, nor has any event or circumstance occurred which, with the giving of
notice or lapse of time or both, would constitute such a default under the
Lease.
4. Landlord acknowledges that Tenant has granted, or may
hereafter grant, for the benefit of Lenders a security interest (the "Security
Interest") in the following described property now or hereafter owned by Tenant
which is or may hereafter from time to time be situated on or about the
Premises (the "Collateral"):
All present and future accounts, chattel paper, inventory, equipment,
contract rights, documents, instruments, deposit accounts, general
intangibles and other personal property and fixtures now or hereafter
owned, held or acquired by Tenant, together with any and all books of
account, customer lists and other records relating in any way to the
foregoing, and in any case where an account arises from the sale of
goods, the interest of Tenant in such goods, and, including, without
limitation, all of the following: All of Tenant's accounts
<PAGE> 285
receivable, including rights to payment for goods sold or services
rendered, whether or not earned by performance, and all other rights
to receive payments of money from any person; Tenant's inventory,
including raw materials, work in process, and finished goods, owned or
held on consignment, wherever located; all equipment owned by Tenant,
and all of Tenant's right, title and interest under equipment leases,
tools, parts and accessories; processes, plans, specifications, and
manuals; customer lists; computer hardware and all programs, disks,
software and manuals used or usable in connection therewith; Tenant's
rights under any computer service or consulting agreements;
trademarks, trade names and service marks; rights or claims under
contracts, income tax refunds, and all proceeds of the foregoing,
including, without limitation, insurance proceeds payable by reason of
loss or damage to any of the foregoing.
5. Landlord hereby waives, relinquishes and disclaims any and all
rights, if any, to maintain, obtain or enforce a landlord's lien (whether
contractual or statutory) or any other liens, encumbrances or claims which
Landlord has or may hereafter have against the Collateral or any interest
therein, and hereby releases the Collateral from any and all sales, process,
levy, execution, garnishment, attachment, judgment, or distraint and lien,
whether given by operation of law, by the Lease (or any amendments,
supplements, substitutions or renewals thereof), by agreement or otherwise, for
rent due or to become due, and for any and all other claims or demands, present
or future, which either Landlord may have therein.
6. Landlord will not, in any manner, hinder or prevent Lenders or
Lenders' agents from coming onto the Premises to inspect the Collateral, to
remove the Collateral from the Premises or to take possession and exhibit
and/or conduct a sale of the Collateral on the Premises, and Landlord does
hereby specifically consent to any and all such activity(ies). Lenders shall
(a) indemnify and hold harmless Landlord for any damage to the Premises or any
person caused by or as a result of any such activities by Lenders or Lenders'
agents and (b) repair any damage caused by or as a result of any such
activities by Lenders or Lenders' Agents.
7. Landlord shall immediately notify Lenders at the address for
Lenders set forth herein of the earlier to occur of (i) the retaking of
possession of the Premises by Landlord (whether by judicial process or
otherwise) or (ii) the giving or delivering of any notice or demand to Tenant
in connection with any default by Tenant or the intention of Landlord to retake
possession of the Premises. After any such retaking of possession of the
Premises (or any part thereof) by Landlord, or if for any other reason,
Landlord ever comes into possession or control of any of the Collateral or of
any of the proceeds of any of the Collateral, Landlord shall store, maintain
and protect any such Collateral or proceeds thereof then under Landlord's
possession or control. In the event Lenders have not reclaimed and/or removed
such Collateral or proceeds thereof within sixty (60) days after Lender
receives notice of the taking of possession or control of the Collateral or
proceeds thereof by Landlord, Lenders shall reimburse Landlord for the
reasonable costs incurred by Landlord in storing, maintaining and protecting
such Collateral. The address for notice to Lenders is as follows:
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NationsBank of Texas, N.A., as Collateral
Agent
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Marie T. Lancaster
8. Landlord acknowledges that Lenders are relying on the
representations and covenants set forth herein and that, but for the execution
by Landlord of this Landlord's Waiver and Consent, Lenders would not make,
renew or extend the loan or loans to the Tenant, or any affiliate of the
Tenant, which are secured by the Security Interest.
9. This Landlord's Waiver and Consent shall bind Landlord, and
its successors and assigns, and shall inure to the benefit of Lenders, and
their respective successors and assigns.
EXECUTED this _____ day of _______________, 1997.
-----------------------------------------
By:
-------------------------------------
Name:
-------------------------------
Title:
------------------------------
STATE OF ___________ )
)
COUNTY OF __________ )
This instrument was acknowledged before me on the _____ day of
___________________________________, 1997, by __________________________, as the
__________________________________________ of _______________________________ on
behalf of said corporation.
-----------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF ____________
My Commission Expires:
- ---------------------------------- -----------------------------------------
(Printed Name of Notary)
3
<PAGE> 287
EXHIBIT "A"
Real property description:
Being ___________ square feet in a building located on the
following-described tract of real property in _______________, _____________
County, _______________________ (such real property being commonly referred to
as ________________________________________):
[LEGAL DESCRIPTION OF PROPERTY SUFFICIENT FOR CONVEYANCING PURPOSES]
Owner of Record:
----------------------------------------
<PAGE> 288
EXHIBIT K
NOTICE OF CONTINUATION/CONVERSION
NationsBank of Texas, N.A., as
the Administrative Agent
901 Main Street, 13th Floor
Dallas, Texas 75202
Attention: Marie T. Lancaster
Re: Pillowtex Corporation
Ladies and Gentlemen:
The undersigned, an Authorized Signatory of Pillowtex Corporation,
pursuant to the Term Credit Agreement, dated as of December 19, 1997, among the
undersigned, the financial institutions party thereto and NationsBank of Texas,
N.A., as the Administrative Agent (said Term Credit Agreement, as it may be
amended, supplemented or otherwise modified from time to time, being the
"Credit Agreement" and capitalized terms not defined herein but defined therein
being used herein as therein defined), hereby gives you notice, irrevocably,
pursuant to Section 2.2 of the Credit Agreement, that the undersigned hereby
requests a [conversion] [continuation] on _____________, ____ of
$________________ in principal amount of presently outstanding [Facility A Term
Loan Advances] [Facility B Term Loan Advances] that are [Base Rate Advances]
[LIBOR Advances having an Interest Period ending on ____________, ______] [to]
[as] [Base Rate] [LIBOR] Advances. [The Interest Period for such amount
requested to be [converted to] [continued as] LIBOR Advances is [1] [2] [3] [6]
months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the [conversion]
[continuation], before and after giving effect thereto:
(A) the representations and warranties of the Borrower contained
in Article 4 of the Credit Agreement and in each of the other Loan
Documents to which it is a party (other than those representations and
warranties that specifically relate to an earlier date) are true and
correct as though made on and as of such date, except as otherwise
expressly provided in Section 4.2 of the Credit Agreement; and
<PAGE> 289
(B) no Default or Event of Default is continuing, or will result
from the [continuation] [conversion].
Very truly yours,
PILLOWTEX CORPORATION
By:
----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT L
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (as the same may from time to time be
amended, modified, supplemented or restated, this "Intercreditor Agreement")
dated as of December 19, 1997, is made by and among Pillowtex Corporation, a
Texas corporation (the "Borrower"), each of the Persons listed as Grantors on
the signature pages hereto (the "Grantors"), NationsBank of Texas, N.A., in its
capacity as Collateral Agent (the "Collateral Agent"), NationsBank of Texas,
N.A., as administrative agent (in such capacity, together with any successor
thereto, the "Revolving Administrative Agent") for itself and certain other
lenders (collectively, the "Revolving Lenders"), under the Revolving Credit
Agreement (as hereinafter defined), the Revolving Lenders, NationsBank of
Texas, N.A., as administrative agent (in such capacity, with any successor
thereto, the "Term Administrative Agent") for itself and certain other lenders
(collectively, the "Term Lenders") under the Term Credit Agreement (as
hereinafter defined), and the Term Lenders.
BACKGROUND.
The Borrower is a party to that certain Amended and Restated Credit
Agreement dated as of December 19, 1997 (as amended, modified, supplemented or
restated from time to time, the "Revolving Credit Agreement") with the
Revolving Lenders and the Revolving Administrative Agent.
The Borrower is a party to that certain Term Credit Agreement dated as
of December 19, 1997 (as amended, modified, supplemented or restated from time
to time, the "Term Credit Agreement") with the Term Lenders and the Term
Administrative Agent.
The parties hereto intend for (a) the rights of payment in respect of
the Advances and the Liens of the Revolving Lenders in the Collateral (as
hereinafter defined) to be pari passu with the rights of payment in respect of
the Advances and the Liens of the Term Lenders in the Collateral, and (b) the
voting rights with respect to the Revolving Credit Agreement and the Term
Credit Agreement be set forth in this Agreement.
It is a requirement of the Revolving Credit Agreement and the Term
Credit Agreement that the Borrower, the Grantors and the Secured Parties (as
hereinafter defined) execute and deliver to the Collateral Agent, for the
benefit of the Secured Parties, this Intercreditor Agreement in order to
further define the rights and obligations of the parties hereto.
<PAGE> 291
AGREEMENT.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Borrower, the Grantors, the
Revolving Administrative Agent, the Term Administrative Agent, the Revolving
Lenders, and the Term Lenders agree with the Collateral Agent as follows:
I. DEFINED TERMS
1.1 Defined Terms. Except as otherwise defined below, as used in
this Intercreditor Agreement defined and capitalized terms shall have the
meanings set forth in the Revolving Credit Agreement and the Term Credit
Agreement.
"Assignment Agreement" means an Assignment Agreement under the
Revolving Credit Agreement or the Term Credit Agreement.
"Collateral" means, collectively, any and all of the property in which
the Collateral Agent, the Revolving Administrative Agent, any Revolving Lender,
the Term Administrative Agent or any Term Lender has a Lien pursuant to any
Loan Document.
"Commitments" means, collectively, the Commitment (as defined in the
Revolving Credit Agreement) and the Commitments (as defined in the Term Credit
Agreement).
"Credit Agreements" means, collectively, the Revolving Credit
Agreement and the Term Credit Agreement.
"Distribution Date" means each date established by the Collateral
Agent as a date for the distribution of amounts on deposit in the Collateral
Account, as defined in Section 4.1.
"Event of Default" means an Event of Default under the Revolving
Credit Agreement or the Term Credit Agreement.
"Loan Document" means a Loan Document under the Revolving Credit
Agreement or the Term Credit Agreement.
"Obligations" means all Obligations (collectively, as defined in each
of the Revolving Credit Agreement and the Term Credit Agreement).
"Proceeds" has the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (a) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrower or any
Grantor from time to time with respect to any of the Collateral, (b) any and
all payments (in any form whatsoever) made or due and payable to
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the Borrower or any Grantor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Tribunal and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral.
"Pro Rata" means for any Person a fraction (a) the numerator of which
is the amount of unpaid principal and face amount of the Revolving Obligations
and the Term Obligations owing to such Person, and (b) the denominator of which
is the aggregate amount of unpaid principal and face amount of the Revolving
Obligations and the Term Obligations owing to the Revolving Lenders and the
Term Lenders.
"Revolving Loan Documents" means Loan Documents as defined in the
Revolving Credit Agreement.
"Required Lenders" means any combination of Revolving Lenders and Term
Lenders whose Voting Specified Percentages aggregate more than 50%; provided,
however, in the event that all of the Commitments have been terminated,
"Required Lender" means, on any date of determination, any combination of
Lenders having more than 50% of the Revolving Advances and Term Advances then
outstanding.
"Revolving Obligations" means Obligations as defined in the Revolving
Credit Agreement.
"Secured Party" means each of, and "Secured Parties" means all of, the
Collateral Agent, the Revolving Administrative Agent, the Revolving Lenders,
the Term Administrative Agent and the Term Lenders.
"Term Loan Documents" means Loan Documents as defined in the Term
Credit Agreement.
"Term Obligations" means Obligations as defined in the Term Credit
Agreement.
"Voting Specified Percentage" means, as to any Revolving Lender or
Term Lender, the percentage indicated beside its name on Schedule 1 hereto as
the Voting Specified Percentage, or as adjusted or specified in any Assignment
Agreement or any amendment to this Intercreditor Agreement [SUCH PERCENTAGE TO
BE EACH LENDER'S AGGREGATE COMMITMENT UNDER THE REVOLVING CREDIT AGREEMENT AND
THE TERM CREDIT AGREEMENT DIVIDED BY ALL COMMITMENTS UNDER THE REVOLVING CREDIT
AGREEMENT AND THE TERM CREDIT AGREEMENT].
1.2 Interpretation. For purposes of distributing proceeds of
Collateral and the definition of "Pro Rata" and "Secured Parties" (but not for
purposes of determining "Required Lenders", "Voting Specified Percentages" or
for purposes of Section 9.1 or 10.3 hereof), (a) "Revolving Lenders" shall
include any Person that is or was a Revolving Lender or an Affiliate of a
Revolving Lender now or at the time it entered into a Hedge Agreement with the
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Borrower or any Grantor and (b) "Term Lenders" shall include any Person that is
or was a Term Lender or an Affiliate of a Term Lender now or at the time it
entered into an Interest Hedge Agreement with the Borrower or any Grantor.
II. AGREEMENT TO HOLD COLLATERAL
In reliance upon, and subject to, the provisions of Article VII, the
Collateral Agent will hold the Liens in the Collateral granted to the
Collateral Agent under the Collateral Documents and granted to the Revolving
Administrative Agent under the Revolving Credit Agreement in respect of the L/C
Cash Collateral Account on behalf of and for the ratable benefit of the
Collateral Agent, the Revolving Administrative Agent, the Revolving Lenders,
the Term Administrative Agent and the Term Lenders on the terms and conditions
set forth in this Intercreditor Agreement.
III. ACCELERATION
3.1 Exercise of Rights and Remedies. Upon the occurrence and
during the continuance of an Event of Default, with the consent of or at the
request of the Required Lenders, the Collateral Agent shall exercise the rights
and remedies provided in this Intercreditor Agreement, the Collateral Documents
and the Revolving Credit Agreement in respect of the L/C Cash Collateral
Account. If the Revolving Administrative Agent, the Term Administrative Agent
and the Collateral Agent are not the same Person, the Revolving Administrative
Agent and the Term Administrative Agent shall give the Collateral Agent notice
of such Event of Default under the Revolving Credit Agreement and the Term
Credit Agreement, respectively.
3.2 Right to Initiate Judicial Proceedings. If an Event of Default
shall occur and be continuing, the Collateral Agent, with the consent of or at
the request of the Required Lenders, (a) shall have the right and power to
institute and maintain such suits and proceedings as it may deem appropriate
and permitted under any Collateral Document and the Revolving Credit Agreement
in respect of the L/C Cash Collateral Account to protect and enforce the rights
vested in it or any Secured Party by this Intercreditor Agreement, each
Collateral Document and the Revolving Credit Agreement in respect of the L/C
Cash Collateral Account and (b) may either after entry, or without entry,
proceed by suit or suits at law or in equity to enforce such rights and to
foreclose upon the Collateral and to sell all or, from time to time, any of the
Collateral under the judgment or decree of a court of competent jurisdiction,
all in accordance with the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account.
3.3 Remedies Not Exclusive.
(a) No remedy conferred upon or reserved to the Collateral Agent
herein or to any Secured Party in the Collateral Documents, the Revolving Loan
Documents or the Term Loan
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<PAGE> 294
Documents is intended to be exclusive of any other remedy or remedies, but
every such remedy shall be cumulative and shall be in addition to every other
remedy conferred herein or in any Collateral Document, the Revolving Loan
Documents or the Term Loan Documents or now or hereafter existing at Law or in
equity; provided, however, any exercise of any rights or remedies by the
Collateral Agent or any other Secured Party shall be subject to the terms of
this Intercreditor Agreement.
(b) If the Collateral Agent shall have proceeded to enforce any
right, remedy or power under this Intercreditor Agreement, any Collateral
Document or under the Revolving Credit Agreement in respect of the L/C Cash
Collateral Account and the proceeding for the enforcement thereof shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then the Borrower, the Grantors, the
Collateral Agent and the other Secured Parties shall, subject to any
determination in such proceeding, severally and respectively be restored to
their former positions and rights hereunder or thereunder with respect to the
Collateral and in all other respects, and thereafter all rights, remedies and
powers of the Collateral Agent and the other Secured Parties shall continue as
though no such proceeding had been taken.
(c) All rights of action and of asserting claims upon or under
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account may be enforced by the
Collateral Agent without the possession of any Collateral Document, any
Revolving Loan Document, any Term Loan Document or other instrument evidencing
any Revolving Obligations or Term Obligations or the production thereof at any
trial or other proceeding relative thereto, and any suit or proceeding
instituted by the Collateral Agent shall be brought in its name as the
Collateral Agent and any recovery or judgment shall be held as part of the
Collateral on behalf of and for the ratable benefit of the Collateral Agent,
the Term Lenders, the Term Administrative Agent, the Revolving Lenders, and the
Revolving Administrative Agent and distributed as provided in Section 4.4.
3.4 Limitation by Law. All rights, remedies and powers provided
herein may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of Law, and all the provisions hereof are
intended to be subject to all applicable mandatory provisions of Law which may
be controlling and to be limited to the extent necessary so that they will not
render this Intercreditor Agreement or any Collateral Document invalid,
unenforceable in whole or in part.
IV. COLLATERAL ACCOUNT; DISTRIBUTIONS
4.1 The Collateral Account. During the continuance of an Event of
Default, with the consent of or at the request of the Required Lenders, all
moneys which are required by this Intercreditor Agreement or any Collateral
Document or the Revolving Credit Agreement in respect of the L/C Cash
Collateral Account to be delivered to the Collateral Agent or any other Secured
Party or which are received by the Collateral Agent or any agent or nominee of
the
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Collateral Agent or any other Secured Party in respect of the Collateral shall
be deposited in an account established at the principal office of the
Collateral Agent (the "Collateral Account") and held by the Collateral Agent
for the benefit of the Secured Parties and applied in accordance with the terms
of this Intercreditor Agreement.
4.2 Control of Collateral Account. Subject to the terms of this
Intercreditor Agreement, all right, title and interest in and to the Collateral
Account shall vest in the Collateral Agent, and the Collateral Account shall be
subject to the exclusive dominion and control of the Collateral Agent.
4.3 Investment of Funds Deposited in Collateral Account. The
Collateral Agent shall use reasonable efforts to invest and reinvest moneys on
deposit in the Collateral Account at any time in:
(a) marketable obligations of the United States having a
maturity of not more than six months from the date of acquisition;
(b) marketable obligations directly and fully guaranteed
by the United States having a maturity of not more than one year from
the date of acquisition;
(c) bankers' acceptances and certificates of deposit and
other interest-bearing obligations issued by the Collateral Agent or
any bank organized under the Laws of the United States or any state
thereof with capital, surplus and undivided profits aggregating at
least $500,000,000, in each case having a maturity of not more than
six months from the date of acquisition;
(d) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (a), (b) and (c) entered into with the Collateral Agent or
any bank meeting the qualifications specified in clause (c) above;
and
(e) commercial paper rated at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Group, a Division of McGraw-Hill,
Inc., a New York corporation, or P-1 or the equivalent thereof by
Moody's Investors Service, Inc. and maturing within three months after
the date of acquisition.
All such investments and the interest and income received thereon and the net
proceeds realized on the sale or redemption thereof shall be held in the
Collateral Account as part of the Collateral. Except for gross negligence or
wilful misconduct, the Collateral Agent shall not be liable for any investment,
for any failure to invest hereunder, or for any performance of any such
investment or any loss or penalty resulting therefrom.
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4.4 Application of Moneys.
(a) The Collateral Agent shall have the right, upon an Event of
Default, to apply moneys held by it in the Collateral Account to the payment of
due and unpaid fees and expenses owing to it pursuant to Section 5.3. If the
Collateral Agent exercises its rights pursuant to the preceding sentence, all
remaining moneys held by the Collateral Agent in the Collateral Account or
received by the Collateral Agent shall, to the extent available for
distribution (it being understood that the Collateral Agent may liquidate
investments prior to maturity in order to make a distribution pursuant to this
Section 4.4), be distributed by the Collateral Agent on each Distribution Date
in the following order of priority:
First: to the Collateral Agent for any unpaid expenses owing
to it pursuant to Section 5.3;
Second: to any Revolving Lender and any Term Lender which has
theretofore advanced or paid any expenses of the Collateral Agent, Pro
Rata an amount equal to the amount thereof so advanced or paid by such
Revolving Lender or such Term Lender and for which such Revolving
Lender or such Term Lender has not been reimbursed prior to such
Distribution Date;
Third: to the Revolving Lenders and the Term Lenders, Pro
Rata an amount equal to the unpaid amount of the Revolving Obligations
and Term Obligations which are due and owing under the relative
Collateral Documents and which constitute the Revolving Obligations
and the Term Obligations as of the Distribution Date;
Fourth: to the Revolving Lenders and the Term Lenders, Pro
Rata amounts equal to all other sums which constitute the Revolving
Obligations and the Term Obligations; and
Fifth: any surplus then remaining shall be paid to the
Borrower and/or the Grantors or their respective successors or assigns
or to whomsoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct.
(b) The term "unpaid" as used in clause Third of Section 4.4(a)
refers:
(i) in the absence of a bankruptcy proceeding with respect
to the Borrower or any Grantor, to all amounts of the Revolving
Obligations and the Term Obligations outstanding as of a Distribution
Date, and
(ii) during the pendency of a bankruptcy proceeding with
respect to the Borrower or any Grantor, to all amounts allowed by the
bankruptcy court in respect of the Revolving Obligations and the Term
Obligations as a basis for distribution (including estimated amounts,
if any, allowed in respect of contingent claims), to the extent that
prior distributions have not been made in respect thereof.
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(c) The Collateral Agent shall make all payments and distributions
under this Section 4.4 on account of the Revolving Obligations to the Revolving
Administrative Agent for redistribution to the Revolving Lenders in accordance
with the provisions of the Revolving Credit Agreement. The Collateral Agent
shall make all payments and distributions under this Section 4.4 on account of
the Term Obligations to the Term Administrative Agent for redistribution to the
Term Lenders in accordance with the provisions of the Term Credit Agreement.
(d) If any Revolving Lender or any Term Lender has advanced or
paid any expenses of the Collateral Agent in excess of its Pro Rata Share
hereunder and is not paid or reimbursed in full for the amount of such advances
or payments, such Revolving Lender or Term Lender shall have a claim against
any Revolving Lender or Term Lender which has not paid its Pro Rata Share of
such expenses of the Collateral Agent.
4.5 The Collateral Agent's Calculations. In making the
determinations and allocations required by Section 4.4, the Collateral Agent
may rely upon information supplied by the Revolving Administrative Agent as to
the amounts payable with respect to the Revolving Obligations and by the Term
Administrative Agent as to amounts payable with respect to the Term
Obligations, and the Collateral Agent shall have no liability to any of the
Revolving Lenders or the Term Lenders for actions taken in reliance on such
information. All distributions made by the Collateral Agent pursuant to Section
4.4 shall be (subject to any decree of any court of competent jurisdiction)
final, and the Collateral Agent shall have no duty to inquire as to the
application by the Revolving Administrative Agent or the Term Administrative
Agent of any amounts distributed to them.
V. AGREEMENTS WITH THE COLLATERAL AGENT
5.1 Delivery of Collateral Documents. The Revolving Administrative
Agent and the Term Administrative Agent have delivered to the Collateral Agent
true and complete copies of all Loan Documents as in effect on the date hereof.
The Revolving Administrative Agent and the Term Administrative Agent, as the
case may be, shall deliver to the Collateral Agent, promptly upon the execution
thereof, a true and complete copy of all amendments, modifications or
supplements to any Loan Document entered into after the date hereof.
5.2 Certain Information. In the event the Revolving Administrative
Agent, the Term Administrative Agent and the Collateral Agent are not the same
Person, the Revolving Administrative Agent and the Term Administrative shall
deliver to the Collateral Agent, between May 1 and May 15 and between November
1 and November 15 in each year, and from time to time upon request of the
Collateral Agent, a list setting forth as of a date not more than 10 days prior
to the date of such delivery, the aggregate unpaid principal and interest on
the Revolving Obligations and the Term Obligations, respectively, and the name
and address of each holder thereof.
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5.3 Compensation and Expenses. The Borrower agrees to pay to the
Collateral Agent, from time to time upon demand, all of the reasonable
our-of-pocket costs and expenses of the Collateral Agent (including, without
limitation, the reasonable fees and disbursements of its counsel and such
special counsel as the Collateral Agent reasonably elects to retain) (a)
arising in connection with the preparation, execution, delivery, modification,
and termination of this Intercreditor Agreement, or the enforcement against the
Borrower or any Guarantor of any of the provisions hereof, (b) incurred or
required to be advanced in connection with the preservation, protection or
defense of the Collateral Agent's rights or any rights of the other Secured
Parties under this Intercreditor Agreement, or (c) incurred by the Collateral
Agent in connection with the resignation of the Collateral Agent pursuant to
Section 7.6. The obligations of the Borrower under this Section 5.3 shall
survive the termination of the other provisions of this Intercreditor
Agreement.
5.4 STAMP AND OTHER SIMILAR TAXES. THE BORROWER AGREES TO
INDEMNIFY AND HOLD HARMLESS THE COLLATERAL AGENT, THE REVOLVING ADMINISTRATIVE
AGENT, THE TERM ADMINISTRATIVE AGENT, EACH REVOLVING LENDER AND EACH TERM
LENDER FROM ANY PRESENT OR FUTURE CLAIM FOR LIABILITY FOR ANY STAMP OR ANY
OTHER SIMILAR TAX AND ANY PENALTIES OR INTEREST WITH RESPECT THERETO, WHICH MAY
BE ASSESSED, LEVIED OR COLLECTED BY ANY JURISDICTION IN CONNECTION WITH THIS
INTERCREDITOR AGREEMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, OTHER THAN
TAXES, PENALTIES AND INTEREST WHICH ARE FINALLY JUDICIALLY DETERMINED BY A
COURT OF COMPETENT JURISDICTION TO HAVE ARISEN AS A RESULT OF GROSS NEGLIGENCE
OR WILFUL MISCONDUCT ON THE PART OF THE COLLATERAL AGENT, THE REVOLVING
ADMINISTRATIVE AGENT, THE TERM ADMINISTRATIVE AGENT, ANY REVOLVING LENDER OR
ANY TERM LENDER. THIS INDEMNIFICATION SHALL BE MADE WITHIN 30 DAYS FROM THE
DATE THE APPLICABLE PARTY MAKES WRITTEN DEMAND THEREFOR. THE OBLIGATIONS OF THE
BORROWER UNDER THIS SECTION 5.4 SHALL SURVIVE THE TERMINATION OF THE OTHER
PROVISIONS OF THIS INTERCREDITOR AGREEMENT.
5.5 Filing Fees, Excise Taxes, Etc. The Borrower agrees to pay or
to reimburse the Collateral Agent for any and all reasonable payments made by
the Collateral Agent in respect of all search, filing, recording and
registration fees, taxes, excise taxes and other similar imposts which may be
payable or determined to be payable in respect to the execution and delivery of
this Intercreditor Agreement and each Collateral Document. The obligations of
the Borrower under this Section 5.5 shall survive the termination of the other
provisions of this Intercreditor Agreement.
5.6 INDEMNIFICATION. THE BORROWER AGREES TO INDEMNIFY, AND
HOLD THE COLLATERAL AGENT, ITS REPRESENTATIVES, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, AND ATTORNEYS (COLLECTIVELY, THE
"INDEMNITEES") HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES,
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OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, REASONABLE
COSTS, REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING, WITHOUT LIMITATION, THE
REASONABLE FEES AND EXPENSES OF COUNSEL) AND REASONABLE DISBURSEMENTS OF ANY
KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST ANY OF THE INDEMNITEES IN ANY WAY RELATING TO OR ARISING OUT
OF ANY OF THIS INTERCREDITOR AGREEMENT OR ANY DOCUMENTS CONTEMPLATED BY OR
REFERRED TO HEREIN OR ANY ACT, EVENT OR TRANSACTION OR ALLEGED ACT, EVENT OR
TRANSACTION RELATING THERETO (INCLUDING IN CONNECTION WITH OR AS A RESULT OF,
IN WHOLE OR IN PART, THE ORDINARY OR MERE NEGLIGENCE OF ANY INDEMNITEE, TO THE
EXTENT THAT ANY OF THE SAME RESULTS, DIRECTLY OR INDIRECTLY, FROM ANY CLAIMS
MADE OR ACTIONS, SUITS OR PROCEEDINGS COMMENCED BY OR ON BEHALF OF ANY PERSON
OR ENTITY, OTHER THAN THE REVOLVING ADMINISTRATIVE AGENT, THE TERM
ADMINISTRATIVE AGENT, THE REVOLVING LENDERS OR THE TERM LENDERS. IN ANY SUIT,
PROCEEDING OR ACTION BROUGHT BY THE COLLATERAL AGENT UNDER OR WITH RESPECT TO
ANY CONTRACT, AGREEMENT, INTEREST OR OBLIGATION CONSTITUTING PART OF THE
COLLATERAL FOR ANY SUM OWING THEREUNDER, OR TO ENFORCE ANY PROVISIONS THEREOF,
THE BORROWER WILL SAVE, INDEMNIFY AND KEEP THE INDEMNITEES HARMLESS FROM AND
AGAINST ALL EXPENSE, LOSS OR DAMAGE SUFFERED BY REASON OF ANY DEFENSE, SETOFF,
COUNTERCLAIM, RECOUPMENT OR REDUCTION OF LIABILITY WHATSOEVER OF THE OBLIGOR
THEREUNDER (INCLUDING IN CONNECTION WITH OR AS A RESULT OF, IN WHOLE OR IN
PART, THE MERE NEGLIGENCE OF ANY INDEMNITEE, ARISING OUT OF A BREACH BY THE
BORROWER OR ANY GRANTOR OF ANY OBLIGATION THEREUNDER OR ARISING OUT OF ANY
OTHER AGREEMENT, INDEBTEDNESS OR LIABILITY AT ANY TIME OWING TO OR IN FAVOR OF
SUCH OBLIGOR OR ITS SUCCESSORS FROM THE BORROWER OR SUCH GRANTOR, AND ALL SUCH
OBLIGATIONS OF THE BORROWER AND THE GRANTORS SHALL BE AND REMAIN ENFORCEABLE
AGAINST AND ONLY AGAINST THE BORROWER OR SUCH GRANTOR AND SHALL NOT BE
ENFORCEABLE AGAINST ANY INDEMNITEE OR ANY SECURED PARTY. THE AGREEMENTS IN THIS
SECTION 5.6 SHALL SURVIVE THE PAYMENT OF THE REVOLVING OBLIGATIONS, THE TERM
OBLIGATIONS AND TERMINATION OF THE OTHER PROVISIONS OF THIS INTERCREDITOR
AGREEMENT. THE INDEMNITEES SHALL NOT BE SO INDEMNIFIED AND HELD HARMLESS FOR
ANY (I) LOSSES OR DAMAGES WHICH THE BORROWER PROVES WERE CAUSED BY INDEMNITEES'
WILFUL MISCONDUCT OR GROSS NEGLIGENCE, (II) ANY CLAIM OR LIABILITY THAT ARISES
AS THE DIRECT RESULT OF THE OPERATION OF THE PROPERTY OF THE BORROWER OR ANY
GRANTOR BY ANY INDEMNITEE AFTER TAKING POSSESSION THEREOF BY FORECLOSURE OR BY
TRANSFER IN LIEU OF FORECLOSURE (PROVIDED THAT SUCH CLAIM OR LIABILITY DOES NOT
RELATE TO ANY CONDITION EXISTING
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ON SUCH PROPERTY PRIOR TO FORECLOSURE OR TRANSFER IN LIEU OF FORECLOSURE), AND
(III) MATTERS CAUSED BY A SECURED PARTY AGAINST AN INDEMNITEE OR ITS
MANAGEMENT.
5.7 Additional Collateral. It is expressly understood that in no
event shall the Revolving Administrative Agent, the Term Administrative Agent,
any Revolving Lender or any Term Lender be entitled to a grant of a Lien in any
Collateral in which the Collateral Agent is not granted a Lien that is pari
passu with such Lien and subject to this Intercreditor Agreement.
VI. POSSESSION AND USE OF COLLATERAL; PARTIAL RELEASES
6.1 Use of Collateral. The rights of the Borrower and the Grantors
in and to the Collateral are set forth in the Revolving Credit Agreement, the
Term Credit Agreement and the Collateral Documents.
6.2 Releases. Releases and dispositions of all or substantially
all of the Collateral (other than sales, releases and dispositions of
Collateral pursuant to the exercise of remedies as provided in this
Intercreditor Agreement or which are expressly permitted by the terms and
provisions of the Revolving Credit Agreement, the Term Credit Agreement and the
Collateral Documents) may be made by the Collateral Agent, only at the
direction of all Revolving Lenders and all Term Lenders. Releases and
dispositions of less than all or substantially all of the Collateral (other
than sales, releases and dispositions of Collateral pursuant to the exercise of
remedies as provided in this Intercreditor Agreement or which are expressly
permitted by the terms and provisions of the Revolving Credit Agreement, the
Term Credit Agreement and the Collateral Documents) may be made by the
Collateral Agent, only at the discretion of the Required Lenders. Sales,
releases or other dispositions of Collateral which are permitted by the terms
and provisions of the Revolving Credit Agreement, the Term Credit Agreement and
the Collateral Documents shall not require any written or oral authorization or
consent of the Collateral Agent, the Revolving Lenders or the Term Lenders.
Sales or other dispositions of Collateral which are pursuant to the exercise of
remedies hereunder or under any Collateral Document shall not require any
written or oral authorization or consent of the Revolving Administrative Agent,
the Term Administrative Agent, any Revolving Lender or any Term Lender.
Nevertheless, the Borrower may request that the Collateral Agent execute and
deliver to the Borrower, any Grantor or any purchaser of Collateral a written
release, disclaimer or quitclaim of the Collateral Agent's, the Revolving
Administrative Agent's, the Term Administrative Agent's, the Revolving Lenders'
or the Term Lenders' interest in any Collateral under the Collateral Documents,
and such purchaser shall be entitled to rely conclusively on such release,
disclaimer or quitclaim. Unless requested by the Borrower, it shall not be
necessary for any Revolving Lender, any Term Lender, the Revolving
Administrative Agent or the Term Administrative Agent to sign such release.
Such request shall be in writing, shall describe the property to be released in
reasonable detail, and, shall state that such release is or will be in
accordance with the Revolving Credit Agreement, the Term Credit Agreement and
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the Collateral Documents. The Collateral Agent shall send a copy of all
releases to the Revolving Administrative Agent and the Term Administrative
Agent.
VII. THE COLLATERAL AGENT
7.1 Appointment. The Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders irrevocably
designate and appoint NationsBank of Texas, N.A. as the Collateral Agent under
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account as attorney-in-fact
with full power and authority in the name of the Revolving Administrative
Agent, the Term Administrative Agent, each Revolving Lender or each Term Lender
or in the Collateral Agent's name to take such action under the provisions of
this Intercreditor Agreement, the Collateral Documents and the Revolving Credit
Agreement in respect of the L/C Cash Collateral Account and to exercise such
powers and perform such duties as are expressly delegated to the Collateral
Agent and/or the Revolving Administrative Agent, the Term Administrative Agent,
the Revolving Lenders and the Term Lenders by the terms hereof and thereof,
together with such other powers as are reasonably incidental thereto. Without
limiting the generality of the foregoing, each of the Revolving Administrative
Agent, the Term Administrative Agent, the Revolving Lenders and the Term
Lenders hereby gives the Collateral Agent the power and rights on behalf of
each of the Revolving Administrative Agent, the Term Administrative Agent, the
Revolving Lenders and the Term Lenders, without notice to or further assent by
each of the Revolving Administrative Agent, the Term Administrative Agent, the
Revolving Lenders and the Term Lenders to do the following:
(a) to ask for, demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due upon, or in
connection with, the Collateral;
(b) to receive, take, endorse, assign and deliver any and
all checks, notes, drafts, acceptances, documents and other negotiable
and non-negotiable instruments taken or received by the Collateral
Agent as, or in connection with, the Collateral;
(c) to commence, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to, or in
connection with, the Collateral;
(d) to sell, transfer, release, assign or otherwise deal in
or with the Collateral or any part thereof as fully and effectively as
if the Collateral Agent were the absolute owner thereof; and
(e) to do, at its option, at any time or from time to time,
all acts and things which the Collateral Agent deems necessary to
protect or preserve the Collateral and to realize upon the Collateral.
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Said attorney, the Collateral Agent, is hereby granted and given full
power and authority to do and perform every act necessary and proper to be done
in the exercise of any of the foregoing powers. Understanding that powers of
attorney are strictly construed, each of the Revolving Administrative Agent,
the Term Administrative Agent, the Revolving Lenders and the Term Lenders
declares that it is its expressed intention that this power of attorney shall
be liberally construed to give the fullest effect to the powers granted herein.
7.2 Exculpatory Provisions.
(a) The Collateral Agent shall not be responsible in any manner
whatsoever for the correctness of any recitals, statements, representations or
warranties in this Intercreditor Agreement, the Revolving Loan Documents or the
Term Loan Documents. The Collateral Agent makes no representations as to the
value or condition of the Collateral or any part thereof, or as to the title of
the Borrower or any Grantor thereto or as to the security, perfection or
priority afforded by this Intercreditor Agreement, any Collateral Document or
the Revolving Credit Agreement in respect of the L/C Cash Collateral Account,
or as to the validity, execution, enforceability, legality or sufficiency of
this Intercreditor Agreement, the Revolving Loan Documents, the Term Loan
Documents, the Revolving Obligations or the Term Obligations, and the
Collateral Agent shall incur no liability or responsibility in respect of any
such matters. The Collateral Agent shall not be responsible for insuring the
Collateral or for the payment of taxes, charges or assessments or discharging
of any Liens upon the Collateral or otherwise as to the maintenance of the
Collateral, except that the Collateral shall be accorded treatment
substantially equal to that which the Collateral Agent accords to collateral
held generally by the Collateral Agent for its sole benefit.
(b) The Collateral Agent shall not be required to ascertain or
inquire as to the performance by the Borrower or any Grantor of any of the
covenants or agreements contained herein or in any Revolving Loan Document or
Term Loan Document. Whenever it is necessary, or in the opinion of the
Collateral Agent advisable, for the Collateral Agent to ascertain the amount of
the Revolving Obligations or the Term Obligations, then held by the Revolving
Lenders or the Term Lenders, as the case may be, the Collateral Agent may rely
on a certificate of the Revolving Administrative Agent, in the case of the
Revolving Obligations, or of the Term Administrative Agent, in the case of the
Term Obligations.
(c) Unless the Collateral Agent receives security or indemnity
satisfactory to it, the Collateral Agent shall be under no obligation or duty
to take any action under this Intercreditor Agreement, any Collateral Document
or the Revolving Credit Agreement in respect of the L/C Cash Collateral Account
if taking such action (i) would subject the Collateral Agent to a tax in any
jurisdiction where it is not then subject to a tax or (ii) would require the
Collateral Agent to qualify to do business in any jurisdiction where it is not
then so qualified.
(d) Notwithstanding any other provision of this Intercreditor
Agreement, the Collateral Agent shall not be liable for any action taken or
omitted to be taken by it in accordance with this Intercreditor Agreement, the
Collateral Documents or the Revolving Credit
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Agreement in respect of the L/C Cash Collateral Account, except to the extent
that taking such action or omitting to take such action is finally determined
by a court of competent jurisdiction to constitute gross negligence or wilful
misconduct by the Collateral Agent.
(e) The Collateral Agent shall have the same rights with respect
to any Revolving Obligations or Term Obligations held by it as any Secured
Party and may exercise such rights as though it were not the Collateral Agent
hereunder, and may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any Grantor as if it were not the
Collateral Agent.
7.3 Delegation of Duties. The Collateral Agent may execute any of
the powers hereof and perform any duty hereunder either directly or by or
through agents or attorneys-in-fact. The Collateral Agent shall be entitled to
advice of counsel concerning all matters pertaining to such powers and duties.
The Collateral Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it in good faith.
7.4 Reliance by the Collateral Agent.
(a) The Collateral Agent may consult with counsel, and any advice
or statements of legal counsel (including, without limitation, counsel to the
Borrower or any Grantor) shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder or under
any Collateral Document in accordance therewith.
(b) The Collateral Agent may conclusively rely, and shall be fully
protected in acting, upon any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties or, in the case of cables, telecopies and telexes,
to have been sent by the proper party or parties, except to the extent that
such reliance or action is finally determined by a court of competent
jurisdiction to constitute gross negligence or wilful misconduct of the
Collateral Agent. The Collateral Agent may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Collateral Agent and conforming
to the requirements of this Intercreditor Agreement, except to the extent that
such reliance is finally determined by a court of competent jurisdiction to
constitute gross negligence or wilful misconduct of the Collateral Agent.
(c) The Collateral Agent shall not be under any obligation to
exercise any of the rights or powers vested in the Collateral Agent by this
Intercreditor Agreement or the Collateral Documents, at the request or
direction of the Required Lenders pursuant to this Intercreditor Agreement, or
otherwise, unless the Collateral Agent shall have been provided security or
indemnity to its satisfaction against the fees, costs, expenses and liabilities
which may be incurred by it, including such reasonable advances as may be
requested by the Collateral Agent.
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7.5 Limitations on Duties of the Collateral Agent.
(a) The Collateral Agent shall be obligated to perform such duties
and only such duties as are specifically set forth in this Intercreditor
Agreement, the Collateral Documents and the Revolving Credit Agreement in
respect of the L/C Cash Collateral Account, and no implied covenants or
obligations shall be read into this Intercreditor Agreement, any Collateral
Document or the Revolving Credit Agreement against the Collateral Agent. The
Collateral Agent may exercise the rights and powers vested in it and the
Revolving Administrative Agent by this Intercreditor Agreement, the Collateral
Documents and the Credit Agreement in respect of the L/C Cash Collateral
Account, and shall not be liable with respect to any action taken by it, or
omitted to be taken by it.
(b) The Collateral Agent shall not be under any obligation to take
any action which is discretionary with the Collateral Agent under the
provisions hereto, any Collateral Document or the Revolving Credit Agreement in
respect of the L/C Cash Collateral Account, except upon the written request of
the Required Lenders and subject to the terms of this Intercreditor Agreement.
7.6 Resignation of the Collateral Agent. Should the Collateral
Agent ever cease to be either the Revolving Administrative Agent or the Term
Administrative Agent, or should the Collateral Agent ever resign as the
Collateral Agent, or should the Collateral Agent ever be removed with cause by
the Required Lenders (other than the Lender then acting as the Collateral
Agent), then the Revolving Administrative Agent or the Term Administrative
Agent appointed by the Required Lenders (other than the Lenders then acting as
the Collateral Agent) shall forthwith become the Collateral Agent, and the
Borrower, each Grantor, the Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders shall execute
such documents as any Revolving Lender or Term Lender may reasonably request to
reflect such change. Any resignation or removal of the Collateral Agent shall
become effective upon the appointment by the Required Lenders (other than the
Lender then acting as the Collateral Agent) of a successor Collateral Agent;
provided, however, that if the Required Lenders fail for any reason to appoint
a successor within 60 days after such removal or resignation, the Collateral
Agent shall thereafter have no obligation to act as the Collateral Agent
hereunder.
7.7 Status of Successor. Every successor Collateral Agent
appointed pursuant to Section 7.6 shall be a commercial bank in good standing
and having power to act as the Collateral Agent hereunder, incorporated under
the laws of the United States of America or any State thereof or the District
of Columbia, and borrowing a combined capital and surplus of at least
$500,000,000.
7.8 Merger of the Collateral Agent. Any corporation into which the
Collateral Agent may be merged, or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Collateral
Agent shall be a party, shall be the Collateral Agent under this Intercreditor
Agreement, the Collateral Documents and the Revolving Credit
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Agreement in respect of the L/C Cash Collateral Account without the execution
or filing of any paper or any further act on the part of the parties hereto,
provided that such corporation meets the requirements of Section 7.7.
7.9 Treatment of Payee or Endorsee by the Collateral Agent;
Representatives of the Revolving Lenders and the Term Lenders. The Collateral
Agent may treat the registered holder or, if none, the payee or endorsee of any
promissory note evidencing the Revolving Obligations or the Term Obligations as
the absolute owner thereof for all purposes and shall not be affected by any
notice to the contrary.
7.10 Non-Reliance on the Collateral Agent. Each Revolving Lender
and Term Lender expressly acknowledges that neither the Collateral Agent nor
any of its officers, directors, employees, agents, attorneys, attorneys-in-fact
or affiliates has made any representations or warranties to them. Each
Revolving Lender and Term Lender represents to the Collateral Agent that such
Revolving Lender or Term Lender independently and without reliance upon the
Collateral Agent, and based on such documents and information as they have
deemed or will deem appropriate, has made and will make its own appraisal of
and investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and each other Grantor, and has
made and will make their own decision to extend credit to the Borrower. Each
Revolving Lender and Term Lender also represents that it will, independently
and without reliance upon the Collateral Agent, and based on such documents and
information as they shall deem appropriate at the time continue to make its own
creditor analysis, appraisals and decisions in taking or not taking action
under this Intercreditor Agreement, any Revolving Loan Document or any Term
Loan Document, and to make such investigation as they deem necessary to inform
themselves as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower and each Grantor. Except for
notices, reports and other documents expressly required to be furnished to the
Revolving Lenders and the Term Lenders by the Collateral Agent hereunder or
other documentation or information about the Borrower in the possession of the
Collateral Agent which is specifically requested, the Collateral Agent shall
not have any duty or responsibility to provide any Revolving Lender or Term
Lender with any credit or other information concerning the business,
operations, property, financial and other condition or creditworthiness of the
Borrower or any Grantor which may come into its possession or the possession of
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates. Each Revolving Lender and Term Lender acknowledges that the
Collateral Agent and its affiliates may exercise all contractual and legal
rights and remedies which may exist from time to time with respect to other
existing and future relationships with the Borrower or any Grantor without any
duty to account therefor to such Revolving Lender or Term Lender.
7.11 INDEMNIFICATION. THE REVOLVING LENDERS AND THE TERM LENDERS
AGREE TO INDEMNIFY THE COLLATERAL AGENT (IN ITS CAPACITY AS SUCH), WITHOUT
LIMITING THE OBLIGATION OF THE BORROWER AND EACH GRANTOR TO DO SO, PRO RATA
ACCORDING TO THE RESPECTIVE PRINCIPAL AMOUNTS OF THE REVOLVING OBLIGATIONS AND
THE TERM
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OBLIGATIONS HELD BY THE REVOLVING LENDERS AND THE TERM LENDERS AT THE DATE OF
ANY CLAIM BY THE COLLATERAL AGENT FOR INDEMNITY UNDER THIS SECTION 7.11, FROM
AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES (INCLUDING, WITHOUT
LIMITATION, THE REASONABLE FEES AND EXPENSES OF COUNSEL) OR DISBURSEMENTS OF
ANY KIND WHATSOEVER WHICH ANY AT ANY TIME BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST THE COLLATERAL AGENT IN ANY WAY RELATING TO OR ARISING OUT OF
THIS INTERCREDITOR AGREEMENT, THE REVOLVING LOAN DOCUMENTS, THE TERM LOAN
DOCUMENTS OR ANY OTHER DOCUMENTS CONTEMPLATED HEREBY OR THEREBY OR REFERRED TO
HEREIN OR THEREIN OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY
ACTION TAKEN OR OMITTED BY THE COLLATERAL AGENT HEREUNDER OR THEREUNDER OR IN
CONNECTION THEREWITH, INCLUDING THE MERE NEGLIGENCE OF THE COLLATERAL AGENT,
BUT EXCLUDING ANY CLAIM OR LIABILITY THAT IS FINALLY DETERMINED BY A COURT OF
COMPETENT JURISDICTION TO HAVE ARISEN AS A RESULT OF THE GROSS NEGLIGENCE OR
WILFUL MISCONDUCT OF THE COLLATERAL AGENT. THE REVOLVING LENDERS AND THE TERM
LENDERS AGREE TO REIMBURSE THE COLLATERAL AGENT (TO THE EXTENT NOT REIMBURSED
BY THE BORROWER AND THE GRANTORS), PRO RATA, PROMPTLY UPON DEMAND FOR ANY
REASONABLE OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES)
INCURRED BY THE COLLATERAL AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION,
DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER
THROUGH LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER THIS INTERCREDITOR AGREEMENT, THE REVOLVING
CREDIT AGREEMENT, THE TERM CREDIT AGREEMENT, THE COLLATERAL DOCUMENTS, OR ANY
OTHER DOCUMENTS CONTEMPLATED HEREBY OR THEREBY. THE AGREEMENTS IN THIS SECTION
7.11 SHALL SURVIVE THE PAYMENT OF THE REVOLVING OBLIGATIONS, THE TERM
OBLIGATIONS AND THE TERMINATION OF THE OTHER PROVISIONS OF THIS INTERCREDITOR
AGREEMENT.
7.11 Benefits of Article. None of the provisions of this Article
VII shall inure to the benefit of any Person other than the Revolving Lenders,
the Revolving Administrative Agent, the Term Lenders, the Term Administrative
Agent and the Collateral Agent; consequently, no such other Person shall be
entitled to rely upon, or to raise as a defense in any manner whatsoever, the
failure of the Collateral Agent or any of the Revolving Lenders, the Revolving
Administrative Agent, the Term Lenders or the Term Administrative Agent to
comply with such provisions.
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VIII. COLLATERAL AGENT PROVISIONS
8.1 Agreement. The Revolving Lenders, the Revolving Administrative
Agent, the Borrower, the Grantors, the Term Lenders and the Term Administrative
Agent agree that all Liens of the Collateral Agent in the Collateral are on
behalf of and for the ratable benefit of the Secured Parties. In the event that
the Revolving Administrative Agent, the Term Administrative Agent, any Term
Lender or any Revolving Lender at any time obtains possession of any of the
Collateral, it shall promptly deliver such Collateral to the Collateral Agent,
unless precluded by Law or judicial order.
8.2 Obligations Hereunder Not Affected. All rights and interests
of the Collateral Agent, the Revolving Administrative Agent, the Term
Administrative Agent, the Revolving Lenders and the Term Lenders hereunder, and
all agreements and obligations of the Borrower and the Grantors under this
Intercreditor Agreement, shall remain in full force and effect irrespective of:
(a) any lack of validity or enforceability of the Revolving
Credit Agreement, this Intercreditor Agreement, the Term Credit
Agreement, the Collateral Documents, or any other Revolving Loan
Documents or Term Loan Documents.
(b) any change in the time, manner or place of payment of,
or in any other term of, all or any of the Revolving Obligations or
the Term Obligations, or any other amendment or waiver of or any
consent to departure from the Revolving Credit Agreement, this
Intercreditor Agreement, the Term Credit Agreement, the Collateral
Documents or any other Revolving Loan Documents or Term Loan
Documents.
(c) any exchange, release or non-perfection of any
Collateral, or any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Revolving
Obligations or the Term Obligations.
(d) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Borrower or any Grantor
in respect of the Revolving Obligations or the Term Obligations. This
Intercreditor Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of
the Revolving Obligations or the Term Obligations is rescinded or must
otherwise be returned by the Collateral Agent upon the insolvency,
bankruptcy or reorganization of any of the Grantors or otherwise, all
as though such payment had not been made.
IX. VOTING
9.1 Amendment and Waivers. Notwithstanding anything in Section
11.11 of the Revolving Credit Agreement or the Term Credit Agreement to the
contrary, the provisions of the Revolving Credit Agreement or the Term Credit
Agreement may not be amended, modified
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or waived except by the written agreement of the Borrower and the Required
Lenders; provided, however, that no such amendment, modification or waiver
shall be made (a) without the consent of all Revolving Lenders and Term
Lenders, if it would (i) increase or release the Specified Percentage, Facility
A Term Loan Specified Percentage, Facility B Term Loan Specified Percentage, or
Total Specified Percentage of any Lender, (ii) increase any of the Commitments,
(iii) extend or postpone the date of maturity of, extend the due date for any
payment of principal or interest on, reduce the amount of any installment of
principal of or interest on, or reduce the rate of interest on, any Advance,
the Reimbursement Obligations, any fee paid under the Credit Agreements, or any
other amount owing under any of the Revolving Loan Documents or the Term Loan
Documents to which the Revolving Lenders or the Term Lenders are entitled, (iv)
release any guaranty of the Revolving Obligations or the Term Obligations (v)
release all or substantially all of the Collateral (except as otherwise
provided in Section 10.3), (vi) waive or extend the date for payment or
prepayment of any principal, interest or fees under either Credit Agreement,
(vii) amend the definition of "Determining Lenders" under either Credit
Agreement, "Specified Percentage", "Facility A Term Loan Specified Percentage",
"Facility B Term Loan Specified Percentage" or "Total Specified Percentage", or
(viii) amend Section 4.4 or this Section 9.1, (b) without the consent of the
Revolving Administrative Agent or the Term Administrative Agent, if it would
alter the rights, duties or obligations of the Revolving Administrative Agent
or the Term Administrative Agent, as the case may be, (c) without the consent
of the Issuing Bank, if it would alter the rights, duties or obligations of the
Issuing Bank, or (d) without the consent of the Swing Line Bank, if it would
alter the rights, duties or obligations of the Swing Line Bank. Notwithstanding
anything in this Intercreditor Agreement or the Term Credit Agreement to the
contrary, no amendment, waiver or consent that changes the allocations of
payments between the Facility A Term Loan Advances and the Facility B Term Loan
Advances may be made without the express written consent of the Lenders holding
more than 50% of all outstanding Facility A Term Advances and the Lenders
holding more than 50% of all outstanding Facility B Term Loan Advances. No
Affiliate of a Revolving Lender or a Term Lender shall have any voting rights
hereunder solely by reason of such Affiliate being a party to a Hedge Agreement
with the Borrower or any Grantor.
9.2 Acceleration of Advances. Notwithstanding anything in Section
8.2(a) of the Revolving Credit Agreement or the Term Credit Agreement to the
contrary, Revolving Advances and Term Loan Advances and all other amounts owed
under the Revolving Loan Documents and Term Loan Documents may not be declared
due and payable without the prior consent of the Required Lenders.
X. MISCELLANEOUS
10.1 Notices.
(a) All notices and other communications under this Intercreditor
Agreement shall be in writing (except in those cases where giving notice by
telephone is expressly permitted) and shall be deemed to have been given on the
date personally delivered or sent by telecopy (answer
- 19 -
<PAGE> 309
back received), or three days after deposit in the mail, designated as
certified mail, return receipt requested, postage-prepaid, or one day after
being entrusted to a reputable commercial overnight delivery service, addressed
to the party to which such notice is directed at its address determined as
provided in this Section. All notices and other communications under this
Intercreditor Agreement shall be given to the parties hereto at the following
addresses:
(i) If to the Borrower, at:
Pillowtex Corporation
4111 Mint Way
Dallas, Texas 75237
Attention: Chief Financial Officer
Telephone: (214) 333-3225
Telecopier: (214) 330-6016
(ii) If to the Collateral Agent, at:
NationsBank of Texas, N.A.
901 Main Street, 13th Floor
Dallas, Texas 75202-3714
Attention: Marie T. Lancaster
Telephone: (214) 508-2158
Telecopier: (214) 508-2515
(iii) If to the Revolving Administrative Agent, the
Revolving Lenders, the Term Administrative Agent or
the Term Lenders, at their addresses set forth in
the Revolving Credit Agreement or the Term Credit
Agreement, as appropriate, or if applicable, set
forth in the appropriate Assignment Agreement.
(b) The Term Administrative Agent and the Revolving Administrative
Agent, may from time to time, make requests of the Collateral Agent with
respect to notices or documents which the Term Administrative Agent or the
Revolving Administrative Agent seeks to receive and which the Term
Administrative Agent or the Revolving Administrative Agent is not already
entitled to receive and, subject to the confidentiality provisions of the
Revolving Loan Documents and the Term Loan Documents which the Collateral Agent
has received from the Borrower or any of the Grantors, and the Collateral Agent
shall provide such notices or copies of documents to the Revolving
Administrative Agent or the Term Administrative Agent upon request.
10.2 No Waivers. No failure on the part of the Collateral Agent,
the Revolving Administrative Agent, the Term Administrative Agent, any
Revolving Lender or any Term Lender to exercise, no course of dealing with
respect to, and no delay in exercising, any right, power or privilege under
this Intercreditor Agreement operate as a waiver thereof nor shall any
- 20 -
<PAGE> 310
single or partial exercise of any such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
10.3 Amendments, Supplements and Waivers. The provisions of this
Intercreditor Agreement may not be amended, modified or waived except by the
written agreement of the Term Administrative Agent, the Revolving
Administrative Agent, the Borrower, each Grantor, the Collateral Agent and
(except as otherwise required by Section 9.1) Required Lenders. The provisions
of each Collateral Document may not be amended, modified or waived except by
the written agreement of the Borrower or the Grantor who is a party to such
Collateral Document, the Revolving Administrative Agent or the Term
Administrative Agent, as the case may be, the Collateral Agent and the Required
Lenders; provided however, that no such amendment, modification or waiver shall
be contrary to Section 6.2 hereof or shall adversely affect the interest of the
Term Lenders or the Revolving Lenders or release any Lien except (a) as
otherwise permitted by this Intercreditor Agreement, (b) with respect to
property being disposed of as permitted under any Revolving Loan Document or
Term Loan Document, (c) with respect to Collateral consisting of an instrument
evidencing debt, if the underlying debt has been paid in full or (d) if
approved by each of the Revolving Lenders and the Term Lenders, in the case of
a release of Lien in all or substantially all of the Collateral, or by the
Required Lenders, in the case of a release of Lien on less than all or
substantially all of the Collateral.
10.4 Headings. The headings of Sections and subsections have been
included herein for convenience only and should not be considered in
interpreting this Intercreditor Agreement.
10.5 Severability. Any provision of this Intercreditor Agreement
which is prohibited or unenforceable in any jurisdiction shall not invalidate
the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
10.6 Successors and Assigns. This Intercreditor Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and each
other Person who may become an Obligor, Revolving Lender or Term Lender after
the date of this Intercreditor Agreement and their respective successors and
assigns, and nothing herein is intended or shall be construed to give any other
Person any right, remedy or claim under, to or in respect of this Intercreditor
Agreement or any Collateral.
10.7 GOVERNING LAW. THIS INTERCREDITOR AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS.
10.8 Counterparts. This Intercreditor Agreement may be signed in
any number of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
- 21 -
<PAGE> 311
10.9 Termination. Upon (a) the earlier of the Release Dates set
forth in the Credit Agreements and (b) payment in full of all fees and expenses
owing to the Collateral Agent hereunder, this Intercreditor Agreement shall
terminate.
10.10 ENTIRE AGREEMENT. THIS WRITTEN AGREEMENT AND THE OTHER
DOCUMENTS REFERENCED HEREIN OR CONTEMPLATED HEREBY REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES REGARDING THE SUBJECT MATTER HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.
================================================================================
REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
================================================================================
- 22 -
<PAGE> 312
IN WITNESS WHEREOF, the parties hereto have caused this Intercreditor
Agreement to be duly executed by their respective authorized officers as of the
day and year first written above.
BORROWER: PILLOWTEX CORPORATION, a Texas
corporation
By:
-------------------------------
J. Mark Kirkpatrick
Vice President & Treasurer
- 23 -
<PAGE> 313
GRANTORS: [ALL SUBSIDIARIES EXECUTING
COLLATERAL DOCUMENTS]
- 24 -
<PAGE> 314
THE COLLATERAL AGENT: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
REVOLVING ADMINISTRATIVE
AGENT: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
REVOLVING LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
- 25 -
<PAGE> 315
BANK OF AMERICA NT&SA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 26 -
<PAGE> 316
THE BANK OF NOVA SCOTIA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 27 -
<PAGE> 317
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 28 -
<PAGE> 318
COMERICA BANK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 29 -
<PAGE> 319
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 30 -
<PAGE> 320
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 31 -
<PAGE> 321
THE BANK OF TOKYO-MITSUBISHI, LTD
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 32 -
<PAGE> 322
BANK ONE, TEXAS, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 33 -
<PAGE> 323
BANKBOSTON, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 34 -
<PAGE> 324
BHF-BANK AKTIENGESELLSCHAFT
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 35 -
<PAGE> 325
FIRST UNION NATIONAL BANK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 36 -
<PAGE> 326
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 37 -
<PAGE> 327
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 38 -
<PAGE> 328
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 39 -
<PAGE> 329
THE BANK OF NEW YORK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 40 -
<PAGE> 330
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 41 -
<PAGE> 331
CREDITANSTALT BANKVEREIN
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 42 -
<PAGE> 332
FLEET BANK, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 43 -
<PAGE> 333
THE FUJI BANK, LIMITED - HOUSTON
AGENCY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 44 -
<PAGE> 334
NATIONAL BANK OF CANADA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 45 -
<PAGE> 335
NATIONAL CITY BANK OF KENTUCKY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 46 -
<PAGE> 336
TERM ADMINISTRATIVE AGENT: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
FACILITY A TERM LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
- 47 -
<PAGE> 337
BANK OF AMERICA NT&SA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 48 -
<PAGE> 338
THE BANK OF NOVA SCOTIA
ATLANTA AGENCY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 49 -
<PAGE> 339
THE FIRST NATIONAL BANK OF CHICAGO
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 50 -
<PAGE> 340
COMERICA BANK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 51 -
<PAGE> 341
CREDIT LYONNAIS NEW YORK BRANCH
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 52 -
<PAGE> 342
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 53 -
<PAGE> 343
THE BANK OF TOKYO-MITSUBISHI, LTD
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 54 -
<PAGE> 344
BANK ONE, TEXAS, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 55 -
<PAGE> 345
BANKBOSTON, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 56 -
<PAGE> 346
BHF-BANK AKTIENGESELLSCHAFT
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 57 -
<PAGE> 347
FIRST UNION NATIONAL BANK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 58 -
<PAGE> 348
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 59 -
<PAGE> 349
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 60 -
<PAGE> 350
SOCIETE GENERALE, SOUTHWEST AGENCY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 61 -
<PAGE> 351
THE BANK OF NEW YORK
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 62 -
<PAGE> 352
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 63 -
<PAGE> 353
CREDITANSTALT BANKVEREIN
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 64 -
<PAGE> 354
FLEET BANK, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 65 -
<PAGE> 355
THE FUJI BANK, LIMITED - HOUSTON
AGENCY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 66 -
<PAGE> 356
NATIONAL BANK OF CANADA
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 67 -
<PAGE> 357
NATIONAL CITY BANK OF KENTUCKY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 68 -
<PAGE> 358
FACILITY B TERM LENDERS: NATIONSBANK OF TEXAS, N.A.
By:
-------------------------------
Suzanne B. Smith
Vice President
- 69 -
<PAGE> 359
BANKBOSTON, N.A.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 70 -
<PAGE> 360
CREDITANSTALT BANKVEREIN
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 71 -
<PAGE> 361
THOROUGHBRED LIMITED PARTNERSHIP I
By: Appaloosa Management L.P.
its General Partner
By: Appaloosa Partners Inc.
its General Partner
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 72 -
<PAGE> 362
KZH HOLDING CORPORATION III
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 73 -
<PAGE> 363
PRIME INCOME TRUST
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 74 -
<PAGE> 364
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By:
-------------------------
Name:
--------------------
Title:
-------------------
- 75 -
<PAGE> 365
CREDIT AGRICOLE INDOSUEZ
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 76 -
<PAGE> 366
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 77 -
<PAGE> 367
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By:
-------------------------
Name:
--------------------
Title:
-------------------
- 78 -
<PAGE> 368
KZH-CRESCENT CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
- 79 -
<PAGE> 369
SCHEDULE I
VOTING SPECIFIED PERCENTAGES
<TABLE>
<S> <C>
NATIONSBANK OF TEXAS, N.A 19.7500%
BANK OF AMERICA NT&SA 6.6667%
THE BANK OF NOVA SCOTIA 6.6667%
THE FIRST NATIONAL BANK OF CHICAGO 6.6667%
COMERICA BANK 5.0000%
CREDIT LYONNAIS NEW YORK BRANCH 5.000%
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION 5.0000%
THE BANK OF TOKYO-MITSUBISHI, LTD 4.1667%
BANK ONE, TEXAS, N.A 3.3333%
BANKBOSTON, N.A 3.3333%
BHF-BANK AKTIENGESELLSCHAFT 2.5000%
FIRST UNION NATIONAL BANK 3.3333%
GENERAL ELECTRIC CAPITAL CORPORATION 3.3333%
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH 3.3333%
SOCIETE GENERALE, SOUTHWEST AGENCY 3.3333%
THE BANK OF NEW YORK 1.6667%
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE 1.6667%
CREDITANSTALT BANKVEREIN 1.6667%
</TABLE>
- 80 -
<PAGE> 370
<TABLE>
<S> <C>
FLEET BANK, N.A. 1.6667%
THE FUJI BANK, LIMITED - HOUSTON AGENCY 1.6667%
NATIONAL BANK OF CANADA 1.6667%
NATIONAL CITY BANK OF KENTUCKY 1.6667%
THOROUGHBRED LIMITED PARTNERSHIP I 1.3333%
KZH HOLDING CORPORATION III 0.6667%
PRIME INCOME TRUST 1.3333%
DEEPROCK & COMPANY 0.2500%
CREDIT AGRICOLE INDOSUEZ 1.3333%
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. 0.6667%
CRESCENT/MACH I PARTNERS, L.P. 0.6667%
KZH-CRESCENT CORPORATION 0.6667%
</TABLE>
- 81 -
<PAGE> 1
EXHIBIT 10.5
EXECUTION COPY
PILLOWTEX CORPORATION
$185,000,000
9% SENIOR SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
December 15, 1997
NationsBanc Montgomery Securities, Inc.
Bear, Stearns & Co. Inc.
c/o NationsBanc Montgomery Securities, Inc.
100 North Tryon Street
Charlotte, North Carolina 28255
Ladies and Gentlemen:
Pillowtex Corporation, a Texas corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchasers") $185,000,000
principal amount of its 9% Senior Subordinated Notes due 2007 (the "Notes").
The Notes will be fully and unconditionally guaranteed (the "Guarantees" and,
collectively with the Notes, the "Securities") on a senior subordinated basis,
jointly and severally, (i) by each subsidiary of the Company listed on the
signature page hereto (the "Pillowtex Guarantors") and (ii) upon (A)
consummation of the merger (the "Merger") of a wholly owned subsidiary of the
Company with and into Fieldcrest Cannon, Inc., a Delaware corporation
("Fieldcrest"), and (B) the execution of a counterpart to this Agreement in
substantially the form set forth in Exhibit A hereto (the "Purchase Agreement
Supplement") pursuant to Section 5(k) hereof, by Fieldcrest and each subsidiary
of Fieldcrest listed on the signature page to the Purchase Agreement Supplement
(together with Fieldcrest, the "Fieldcrest Guarantors" and, together with the
Pillowtex Guarantors, the "Guarantors"). The Securities are to be issued
pursuant to an indenture, dated as of December 18, 1997 (the "Indenture"), to
be entered into by and among the Company, the Pillowtex Guarantors and Norwest
Bank Minnesota, National Association (the "Trustee"). Upon consummation of the
Merger, the Fieldcrest Guarantors and the Trustee will execute a supplemental
indenture, dated as of the date of consummation of the Merger (the
"Supplemental Indenture"). In addition, upon consummation of the Merger, the
Fieldcrest Guarantors shall execute a supplemental Registration Rights
Agreement (as defined below)(the "Supplemental Registration Rights Agreement").
As used in this Agreement, (i) prior to consummation of the
Merger, references to the "Issuers" shall mean the Company and the Pillowtex
Guarantors and references to the "Guarantors" shall mean the Pillowtex
Guarantors and (ii) upon consummation of the Merger and the due execution and
delivery of the Purchase Agreement Supplement by the Fieldcrest Guarantors in
connection therewith, references to the "Issuers" shall mean the Company, the
Pillowtex Guarantors and the Fieldcrest Guarantors and references to the
"Guarantors" shall mean the Pillowtex Guarantors and the Fieldcrest Guarantors,
in each case as if all such parties had executed this Agreement as of the date
hereof. In addition, as used in this Agreement, (i) prior to consummation of
the Merger, references to the Company's
<PAGE> 2
"subsidiaries" shall mean each of the subsidiaries listed on Schedule A hereto
and (ii) upon consummation of the Merger, references to the Company's
"subsidiaries" shall mean each of the subsidiaries listed on Schedule A hereto
and the Fieldcrest Guarantors.
The sale of the Securities to the Initial Purchasers will be
made without registration of the Securities under the Securities Act of 1933,
as amended (the "Securities Act"), in reliance upon exemptions from the
registration requirements of the Securities Act. You have advised the Issuers
that the Initial Purchasers will offer and sell the Securities purchased by
them hereunder in accordance with Section 3 hereof as soon as you deem
advisable.
In connection with the sale of the Securities, the Issuers
have prepared a preliminary offering memorandum, dated November 26, 1997 (the
"Preliminary Memorandum") and a final offering memorandum, dated December 15,
1997 (the "Final Memorandum"). Each of the Preliminary Memorandum and the
Final Memorandum sets forth certain information concerning the Issuers and the
Securities. The Issuers hereby confirm that they have authorized the use of
the Preliminary Memorandum and the Final Memorandum, and any amendment or
supplement thereto, in connection with the offer and sale of the Securities by
the Initial Purchasers. Unless stated to the contrary, all references herein
to the Final Memorandum are to the Final Memorandum at the time of execution
and delivery of this Agreement (the "Execution Time") and are not meant to
include any amendment or supplement, or any information incorporated by
reference therein, subsequent to the Execution Time.
The Initial Purchasers and their direct and indirect
transferees will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit B (the
"Registration Rights Agreement"), pursuant to which the Issuers will agree to
use their best efforts to commence an offer to exchange the Securities for
Exchange Securities (the "Exchange Securities") that have been registered under
the Securities Act, and that otherwise are identical in all respects to the
Securities, or to cause a shelf registration statement to become effective
under the Securities Act and to remain effective for the period designated in
such Registration Rights Agreement.
1. REPRESENTATIONS AND WARRANTIES. The Company and the Pillowtex
Guarantors jointly and severally represent and warrant to each Initial
Purchaser as set forth below in this Section 1.
(a) The Preliminary Memorandum, at the date thereof, did
not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Final Memorandum, at the date hereof, does not, and at the Closing
Date (as defined below) will not (and any amendment or supplement
thereto, at the date thereof and at the Closing Date, will not),
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however that the Company and the Pillowtex Guarantors make
no representation or warranty as to the information contained in or
omitted from the Preliminary Memorandum or the Final Memorandum, or
any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Issuers by or
on behalf of the Initial Purchasers specifically for inclusion
therein.
(b) Neither the Company nor the Pillowtex Guarantors,
nor, to the Company's knowledge, Fieldcrest nor the Fieldcrest
Guarantors, nor any of their Affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act ("Regulation D")), nor any
person acting on their behalf has, directly or indirectly, made offers
or sales of any security, or solicited offers to buy any
2
<PAGE> 3
security, under circumstances that would require the registration of
the Securities under the Securities Act. Neither the Company nor the
Pillowtex Guarantors, nor, to the Company's knowledge, Fieldcrest nor
the Fieldcrest Guarantors, nor any of their Affiliates, nor any person
acting on their behalf has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of the Securities (provided that the
Issuers make no representations regarding the Initial Purchasers).
The Securities satisfy the eligibility requirements of Rule 144A(d)(3)
under the Securities Act. The Final Memorandum and each amendment or
supplement thereto, as of its date, contains the information specified
in Rule 144A(d)(4) under the Act.
(c) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), without taking
account of any exemption arising out of the number of holders of any
the Company's or any Pillowtex Guarantors' securities.
(d) Assuming (i) that the representations and warranties
and covenants of the Initial Purchasers contained in Section 3 hereof
are true, correct and complete and (ii) that the Initial Purchasers
comply with their covenants in Section 3 hereof, (A) registration
under the Securities Act of the Securities or qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), is not required in connection with the offer
and sale of the Securities to the Initial Purchasers in the manner
contemplated by the Final Memorandum or this Agreement and (B) initial
resales of the Securities by the Initial Purchasers on the terms and
in the manner set forth in the Final Memorandum and Section 3 hereof
are exempt from the registration requirements of the Securities Act.
(e) Since the respective dates as of which information is
given in the Preliminary Memorandum and the Final Memorandum, except
as otherwise stated therein, (i) there has been no material adverse
change in the condition (financial or otherwise), earnings, affairs or
business prospects of the Company and its subsidiaries considered as a
whole, whether or not arising in the ordinary course of business and
(ii) there have been no material transactions entered into by the
Company or any of its subsidiaries (collectively, a "Material Adverse
Change").
(f) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Texas with power and authority to own, lease and operate its
properties and conduct its business as described in the Preliminary
Memorandum and the Final Memorandum; and the Company is duly qualified
as a foreign corporation to transact business and is in good standing
in each jurisdiction in which it owns or leases properties or in which
the conduct of its business requires such qualification, except to the
extent that the failure to be so qualified or be in good standing
would not, singly or in the aggregate, reasonably be expected to have
a material adverse effect on the condition (financial or otherwise),
earnings, affairs or business prospects of the Company and its
subsidiaries considered as a whole (a "Material Adverse Effect"). The
authorized and outstanding capital stock of the Company at September
27, 1997 was as set forth in the "Historical" column under the caption
"Capitalization" in the Preliminary Memorandum and the Final
Memorandum. All of the shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable.
(g) Each of the subsidiaries of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and
conduct its business
3
<PAGE> 4
as described in the Preliminary Memorandum and the Final Memorandum
and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which it owns or
leases properties or in which the conduct of its business requires
such qualification, except to the extent that the failure to be so
qualified or be in good standing would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
All of the issued and outstanding capital stock of each subsidiary has
been duly authorized and validly issued and is fully paid and
nonassessable, and, except as described in the Preliminary Memorandum
and the Final Memorandum, all such capital stock of each subsidiary is
owned by the Company, directly or through subsidiaries, free and clear
of any mortgage, pledge, lien, encumbrance, claim or equity except for
(i) a pledge of such shares pursuant to the Credit Agreement (as
defined below) upon consummation of the Merger as described in the
Final Memorandum and (ii) the pledge of such shares pursuant to the
Company's existing credit agreement with NationsBank of Texas, N.A.,
as agent.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and the Pillowtex Guarantors and constitutes
the valid and binding agreement of the Company and the Pillowtex
Guarantors, enforceable against the Company and the Pillowtex
Guarantors in accordance with its terms, except that (i) enforcement
thereof may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and
(ii) the enforceability of any indemnification or contribution
provisions thereof may be limited under applicable securities laws or
the public policies underlying such laws. When the Merger is
consummated (the "Merger Closing Date"), the Purchase Agreement
Supplement will be duly authorized by the Fieldcrest Guarantors and
will be duly executed and delivered by the Fieldcrest Guarantors and
will constitute the valid and binding agreement of the Fieldcrest
Guarantors, enforceable against the Fieldcrest Guarantors in
accordance with its terms, except that (i) enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws.
(i) The Notes have been duly authorized by the Company,
and, when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with this Agreement, will constitute the
valid and binding obligations of the Company enforceable against the
Company in accordance with the terms, and will be entitled to the
benefits of, the Indenture, except that (i) enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws.
(j) The Guarantees endorsed on the Notes (i) have been
duly authorized by each Pillowtex Guarantor and (ii) as of the Merger
Closing Date, will be duly authorized by each Fieldcrest Guarantor
and, in each case, when the Notes are executed and authenticated in
4
<PAGE> 5
accordance with the provisions of the Indenture and delivered to and
paid for by the Initial Purchasers in accordance with this Agreement,
the Guarantees will constitute the valid and binding obligation of the
Guarantors enforceable against the Guarantors in accordance with their
terms and will be entitled to the benefits of the Indenture except
that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification
or contribution provisions thereof may be limited under applicable
securities laws or the public policies underlying such laws.
(k) The Indenture (i) has been duly authorized by the
Company and the Pillowtex Guarantors and (ii) as of the Merger Closing
Date, will be duly authorized by the Fieldcrest Guarantors. When the
Securities are delivered and paid for pursuant to this Agreement on
the Closing Date, the Indenture will have been duly executed and
delivered by the Company and the Pillowtex Guarantors and (assuming
the due execution and delivery thereof by the Trustee) will be a
legally valid and binding agreement of the Company and the Pillowtex
Guarantors, enforceable against the Company and the Pillowtex
Guarantors in accordance with its terms except that enforcement
thereof may be subject to (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and other similar laws now or
hereafter in effect relating to or affecting creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law). As
of the Merger Closing Date, the Supplemental Indenture will be duly
executed and delivered by the Fieldcrest Guarantors and (assuming the
due execution and delivery thereof by the Trustee) will be legally
valid and binding agreement of the Fieldcrest Guarantors, enforceable
against the Fieldcrest Guarantors in accordance with its terms except
that enforcement thereof may be subject to (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and other similar
laws now or hereafter in effect relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law).
(l) The Exchange Securities have been, and in the case of
the Fieldcrest Guarantors will be as of the Merger Closing Date, duly
authorized, and, when duly executed, authenticated, issued and
delivered, will be validly issued and outstanding, and will constitute
the valid and binding obligations of the Issuers, entitled to the
benefits of the Indenture and enforceable against the Issuers in
accordance with their terms except that (i) enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and (B)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws.
(m) The Registration Rights Agreement (i) has been duly
authorized by the Company and the Pillowtex Guarantors and (ii) as of
the Merger Closing Date, will be authorized by the Fieldcrest
Guarantors, and when duly executed and delivered by the Issuers
(assuming the due execution and delivery by the Initial Purchasers),
will constitute a valid and binding agreement of the Issuers,
enforceable against the Issuers in accordance with its terms except
that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is
5
<PAGE> 6
considered in a proceeding in equity or at law) and (ii) the
enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws. As of the Merger Closing Date, the
Supplemental Registration Rights Agreement will be duly executed and
delivered by the Fieldcrest Guarantors and (assuming the due execution
and delivery thereof by the Initial Purchasers) will be a legally
valid and binding agreement of the Fieldcrest Guarantors, enforceable
against the Fieldcrest Guarantors in accordance with its terms except
that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium, and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification
or contribution provisions thereof may be limited under applicable
securities laws or the public policies underlying such laws.
(n) On the Merger Closing Date, the New Senior Credit
Facilities (as defined in the Final Memorandum) (the "Credit
Agreement") (a) will be duly authorized, executed and delivered by the
Issuers and will constitute the valid and binding agreement of the
Issuers, enforceable against the Issuers in accordance with its terms
except that (i) enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification
or contribution provisions thereof may be limited under applicable
securities laws or the public policies underlying such laws; and (b)
shall be in full force and effect. On the Merger Closing Date, no
event of default or event which, with the giving of notice or passage
of time or both, would constitute an event of default under the Credit
Agreement shall have occurred and all conditions to the extension of
credit thereunder still have been satisfied without waiver.
(o) The Agreement and Plan of Merger, dated September 10,
1997 by and among the Company, Pegasus Merger Sub, Inc., a wholly
owned subsidiary of the Company ("Merger Sub") and Fieldcrest (the
"Merger Agreement") has been duly authorized, executed and delivered
by the Company and Merger Sub and constitutes the valid and binding
agreement of the Company and Merger Sub enforceable against each of
the Company and Merger Sub in accordance with its terms except that
(i) enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws now or hereafter in effect relating to or affecting creditors'
rights generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at
law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under applicable
securities laws or the public policies underlying such laws. The
Merger Agreement is in full force and effect and there exists no
breach by the Company or Merger Sub, or, to the knowledge of the
Company and the Pillowtex Guarantors, any other party of any
representation or covenant thereunder and, to the knowledge of the
Company, all conditions to the consummation of the transactions
contemplated thereby will be satisfied without waiver.
(p) Both before and after giving effect to the Merger,
the execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement, the Credit Agreement and
the Merger Agreement by the Company and the Pillowtex Guarantors (to
the extent each is a party thereto), and the consummation of the
transactions contemplated hereby and thereby and the issuance and sale
of the Securities and Exchange Securities by the Issuers will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a
6
<PAGE> 7
default under, any indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which either the Company
or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries are subject, nor will
such actions result in any violation of the provisions of the charter
or by-laws of the Company or any of its subsidiaries or any statute to
which it may be subject or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets (except
to the extent any such conflict, breach, violation or default singly
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect); and except for such consents, approvals,
authorizations, registrations or qualifications as may be required
under applicable state securities and Blue Sky laws in connection with
the purchase and distribution of the Securities by the Initial
Purchasers or as set forth in the Registration Rights Agreement, no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement, the Indenture, the Registration Rights Agreement, the
Credit Agreement and the Merger Agreement by the Issuers, the
consummation of the transactions contemplated hereby and thereby, and
the issuance and sale of the Securities and Exchange Securities by the
Issuers.
(q) Both before and after giving effect to the Merger,
neither the Company nor any of its subsidiaries is in breach or
violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
subsidiaries are subject, nor is the Company or any of its
subsidiaries in violation of the provisions of its respective charter
or by-laws or any statute or any judgment, order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Company, any of its subsidiaries or any of their properties or
assets (except to the extent any such conflict, breach, violation or
default is cured at or prior to the Closing Date and within the grace
period applicable thereto or would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect).
(r) The Securities, the Indenture and the Registration
Rights Agreement conform in all material respects to the descriptions
thereof contained in the Final Memorandum and the descriptions are
accurate summaries in all material respects.
(s) Both before and after giving effect to the Merger and
except for registration rights granted to Apollo Investment Fund III,
L.P., Apollo Overseas Partner III, L.P. and Apollo (U.K.) Partners
III, L.P. under that certain Preferred Stock Purchase Agreement, dated
September 10, 1997, as amended, and as set forth in the Registration
Rights Agreement, there are no contracts, agreements or understandings
between the Company or any of its subsidiaries and any person granting
such person the right to require the Company or any of its
subsidiaries to file a registration statement under the Securities Act
with respect to any securities owned or to be owned by such person or
to require the Company or any of its subsidiaries to include such
securities in any securities being registered pursuant to any
registration statement filed by the Company or any of its subsidiaries
under the Securities Act.
(t) Both before and after giving effect to the Merger and
except as set forth in the Preliminary Memorandum and the Final
Memorandum, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending
or, to the knowledge of the Company and the Pillowtex Guarantors,
threatened against or affecting the
7
<PAGE> 8
Company or any of its subsidiaries, which would reasonably be expected
to result in a Material Adverse Change or singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect or materially
and adversely affect the offering of the Securities.
(u) Both before and after giving effect to the Merger,
the Company and each of its subsidiaries has good and indefeasible
title in fee simple to all real property and good and indefeasible
title to all personal property owned by it and necessary in the
conduct of the business of the Company or such subsidiary in each case
free and clear of all liens, encumbrances and defects except (i) such
as are referred to in the Final Memorandum or (ii) such as do not
materially adversely affect the value of such property to the Company
or such subsidiary, and do not interfere with the use made and
proposed to be made of such property by the Company or such subsidiary
to an extent that such interference would, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The Company
and its subsidiaries possess adequate certificates, authorizations or
permits issued by the appropriate state, federal or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them, and neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification
of any such certificate, authority or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(v) KPMG Peat Marwick L.L.P. and Ernst & Young L.L.P.,
who have certified certain financial statements of the Company and its
subsidiaries and Fieldcrest and its subsidiaries, respectively, are
independent public accountants within the meaning of the Securities
Act and the rules and regulations thereunder. The consolidated
financial statements included in the Preliminary Memorandum and the
Final Memorandum present fairly in all material respects the
consolidated financial position of the Issuers, on a consolidated
basis, as at the dates indicated and the results of their operations
and the changes in their consolidated financial position for the
periods specified; said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis during the periods involved, except as indicated
therein. Both before and after giving effect to the Merger, the
Company and each of its subsidiaries and Fieldcrest and each of its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(w) Both before and after giving effect to the Merger,
neither the Company nor any of its subsidiaries is now or, after
giving effect to the issuance of the Securities, and the application
of the proceeds thereof, will be (i) insolvent, (ii) left with
unreasonably small capital with which to engage in its anticipated
businesses or (iii) incurring debts beyond its ability to pay such
debts as they become due.
(x) Both before and after giving effect to the Merger,
the Company and its subsidiaries own or otherwise possess the right to
use all patents, trademarks, service marks, trade names and
copyrights, all applications and registrations for each of the
foregoing, and all other proprietary rights and confidential
information used in the conduct of their respective businesses
8
<PAGE> 9
as currently conducted; and, except as disclosed in the Final
Memorandum, neither the Company nor any of its subsidiaries has
received any notice or is otherwise aware, of any infringement of or
conflict with the rights of any third party with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected
to have a Material Adverse Effect.
(y) Both before and after giving effect to the Merger,
the Company and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws
to conduct their respective businesses and (iii) are in compliance
with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect. In the ordinary course of
its business, the Company evaluates changes in Environmental Laws that
may affect the facilities of the Company and its subsidiaries and to
the extent any changes to the Company's facilities are deemed
necessary as a result of such change in Environmental Laws, the
Company attempts to implement such changes. On the basis of such
evaluation, the Company has reasonably concluded that the costs and
liabilities associated with any such change would not, singly or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(z) Both before and after giving effect to the Merger and
except as described in the Final Memorandum, no labor problem or
disturbance with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company, is threatened
which, singly or in the aggregate, would reasonably be expected to
have a Material Adverse Effect.
(aa) Both before and after giving effect to the Merger,
neither the Company nor any of its subsidiaries, nor, to the knowledge
of the Company, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds during the last five years
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; made any unlawful payment to
any foreign or domestic government official or employee from corporate
funds; violated or is in violation of any provision of the Foreign
Corrupt Practices Act of 1977; or made any bribe, payoff, influence
payment, kickback or other unlawful payment.
(ab) Neither the Company nor any of its subsidiaries has
taken, and none of them will take, any action that would cause this
Agreement or the issuance or sale of the Securities and Exchange
Securities to violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System or analogous foreign laws and
regulations.
(ac) The Issuers have complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92- 198, Laws of Florida)
relating to doing business with the Government of Cuba or with persons
or affiliates located in Cuba.
2. PURCHASE AND SALE. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Issuers agree to sell to the Initial
Purchasers, and each Initial Purchaser agrees to purchase the aggregate
principal amount of Securities set
9
<PAGE> 10
forth opposite its name as shown in Schedule B hereto, at a purchase price
equal to 97.60% of such principal amount thereof. The Initial Purchasers shall
reimburse the Company for certain costs incurred in connection with the
offering in the amount of $647,500.
The Issuers shall not be obligated to deliver any of the
Securities to be delivered except upon payment for all the Securities to be
purchased as provided herein.
3. SALE AND RESALE OF THE SECURITIES BY THE INITIAL
PURCHASERS. Each Initial Purchaser represents and warrants to the Issuers that
it will offer the Securities to be purchased hereunder for resale only upon the
terms and conditions set forth in this Agreement and in the Final Memorandum.
The Initial Purchasers hereby represent and warrant to, and agree with, the
Issuers that the Initial Purchasers (i) will not solicit offers for, or offer
or sell, the Notes by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act, and
(ii) will solicit offers for the Notes only from, and will offer, sell or
deliver the Notes, as part of its initial offering, only to the following
persons (each an "Eligible Purchaser") (A) persons in the United States whom
such Initial Purchaser reasonably believes to be qualified institutional buyers
("Qualified Institutional Buyers") as defined in Rule 144A under the Securities
Act, as such rule may be amended from time to time ("Rule 144A") or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented
to such Initial Purchaser that each such account is a Qualified Institutional
Buyer, to whom notice has been given that such sale or delivery is being made
in reliance on Rule 144A, (B) to a limited number of institutional accredited
investors as defined in Rule 501(a) (1), (2), (3) or (7) under Regulation D
("Accredited Investors") that, prior to their purchase of the Securities,
executes and delivers a letter containing certain representations and
agreements in the form attached as Annex A to the Final Memorandum, or (C) in
offshore transactions pursuant to Regulation S under the Securities Act, and in
each case, in transactions under Rule 144A or Regulation D in private sales
exempt from registration under the Securities Act.
4. DELIVERY OF AND PAYMENT FOR THE NOTES. Delivery of
and payment for the Securities shall be made at the office of Jones, Day,
Reavis & Pogue, 599 Lexington Ave., New York, NY 10022, at 9:00 A.M., New York
City time, on December 18, 1997 or at such other date or place as shall be
determined by agreement between the Initial Purchasers and the Company. This
date and time are sometimes referred to as the "Closing Date." On the Closing
Date, the Company and the Pillowtex Guarantors shall deliver or cause to be
delivered the Securities to the Initial Purchasers for the account of the
Initial Purchasers against payment to or upon the order of the Company of the
purchase price by wire transfer in federal (same-day) funds. Time shall be of
the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of the Initial Purchasers
hereunder. Upon delivery, the Securities shall be in definitive fully
registered form and registered in the name of Cede & Co., as nominee of the
Depository Trust Company ("DTC"), or such other name or names and in such
denominations as the Initial Purchasers shall request in writing not less than
one business day prior to the Closing Date. For the purpose of expediting the
checking and packaging of the Securities, the Company and the Pillowtex
Guarantors shall make the Securities available for inspection by the Initial
Purchasers in New York, New York, not later than 2:00 P.M., New York City time,
on the business day prior to the Closing Date.
5. FURTHER AGREEMENTS OF THE ISSUERS. The Issuers
jointly and severally agree with each Initial Purchaser as set forth below in
this Section 5:
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<PAGE> 11
(a) The Issuers will furnish to the Initial
Purchasers, without charge, as many copies of the Final Memorandum and
any supplements and amendments thereto as they may reasonably request.
(b) Prior to making any amendment or supplement
to the Final Memorandum, the Issuers shall furnish a copy thereof to
the Initial Purchasers and counsel to the Initial Purchasers and will
not effect any such amendment or supplement to which the Initial
Purchasers shall reasonably object by notice to the Company after a
reasonable period to review.
(c) If, at any time prior to completion of the
distribution of the Securities by the Initial Purchasers, any event
shall occur or condition exist as a result of which it is necessary,
in the opinion of counsel for the Initial Purchasers or counsel for
the Issuers, to amend or supplement the Final Memorandum in order that
the Final Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein not misleading in light of the
circumstances existing at the time it is delivered to a purchaser, or
if it is necessary to amend or supplement the Final Memorandum to
comply with applicable law, the Issuers will promptly prepare such
amendment or supplement as may be necessary to correct such untrue
statement or omission or so that the Final Memorandum, as so amended
or supplemented, will comply with applicable law and furnish to the
Initial Purchasers such number of copies of such amendment or
supplement as they may reasonably request.
(d) So long as any Securities are outstanding and
are "Restricted Securities" within the meaning of Rule 144(a)(3) under
the Securities Act and during any period in which the Issuers are not
subject to Section 13 or 15(d) of the Exchange Act, the Issuers will
furnish to holders of the Securities and prospective purchasers of
Securities designated by such holders, upon request of such holders or
such prospective purchasers, the information, if any, required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
(e) So long as the Securities and Exchange
Securities are outstanding, the Issuers will furnish to the Initial
Purchasers copies of any annual reports, quarterly reports and current
reports filed with the Securities and Exchange Commission ("SEC") on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the SEC, and such other documents, reports and
information as shall be furnished by the Issuers to the Trustee or to
the holders of the Securities and Exchange Securities pursuant to the
Indenture.
(f) The Issuers will use their best efforts to
qualify the Securities for sale under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers reasonably designate
and to continue such qualifications in effect so long as reasonably
required for the distribution of the Securities. The Issuers will
also arrange for the determination of the eligibility for investment
of the Securities under the laws of such jurisdictions as the Initial
Purchasers reasonably request. Notwithstanding the foregoing, the
Issuers shall not be obligated to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified or to file a general
consent to service of process or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not
otherwise subject.
(g) The Issuers will use their best efforts to
permit the Securities to be designated Private Offerings, Resales and
Trading through the Automated Linkages Market ("PORTAL") securities in
accordance with the rules and regulations adopted by the National
11
<PAGE> 12
Association of Securities Dealers, Inc. relating to trading in the
PORTAL market and to permit the Securities to be eligible for
clearance and settlement through DTC.
(h) The Issuers will not, and will cause their
Affiliates not to, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the
Securities Act) in a transaction that could be integrated with the
sale of the Securities in a manner which would require the
registration of the Securities under the Securities Act.
(i) Except following the effectiveness of any
Registration Statement (as defined in the Registration Rights
Agreement) and except for such offers as may be made as a result of,
or subsequent to, filing such Registration Statement or amendments
thereto prior to the effectiveness thereof, the Issuers will not, and
will cause their affiliates not to, solicit any offer to buy or offer
to sell the Securities by means of any form of general solicitation or
general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
(j) The Company will consummate the transactions
contemplated by the Merger Agreement in accordance with the terms
thereof, and apply the net proceeds from the sale of the Securities,
in each case, as set forth in the Final Memorandum.
(k) On the Merger Closing Date, the Company will
cause the Fieldcrest Guarantors to execute the Purchase Agreement
Supplement, the Supplemental Indenture, the Supplemental Registration
Rights Agreement and the Guarantees.
(l) The Issuers will take such steps as shall be
necessary to ensure that neither the Company nor any of its
subsidiaries shall become (i) an "investment company" within the
meaning of the Investment Company Act, or (ii) a "holding company" or
a "subsidiary company" or an "affiliate" of a holding company within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(m) The Issuers will not, and will cause their
Affiliates not to, take any actions which would require the
registration under the Securities Act of the Securities (other than
pursuant to the Registration Rights Agreement).
(n) Prior to the consummation of the Exchange
Offer or the effectiveness of an applicable shelf registration
statement if, in the reasonable judgment of the Initial Purchasers,
the Initial Purchasers or any of their Affiliates are required to
deliver an offering memorandum in connection with sales of, or
market-making activities with respect to, the Securities, (i) the
Issuers will periodically amend or supplement the Final Memorandum so
that the information contained in the Final Memorandum complies with
the requirements of Rule 144A of the Securities Act, (ii) the Issuers
will amend or supplement the Final Memorandum when necessary to
reflect any material changes in the information provided therein so
that the Final Memorandum will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in light of the circumstances existing as
of the date the Final Memorandum is so delivered, not misleading and
(iii) the Issuers will provide the Initial Purchasers with copies of
each such amended or supplemented Final Memorandum, as the Initial
Purchasers may reasonably request.
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<PAGE> 13
The Issuers hereby expressly acknowledge that the
indemnification and contribution provisions of Section 8 hereof are
specifically applicable and relate to each offering memorandum,
registration statement, prospectus, amendment or supplement referred
to in this Section 5(n).
(o) The Issuers will do all things necessary to
satisfy the closing conditions set forth in Section 7 hereof.
6. EXPENSES. The Issuers jointly and severally, agree
to pay (a) the costs incident to the authorization, issuance, sale and delivery
of the Securities and Exchange Securities and any issue or stamp taxes payable
in that connection; (b) the costs incident to the preparation and printing of
the Preliminary Memorandum, the Final Memorandum and any amendments,
supplements and exhibits thereto; (c) the costs of distributing the Preliminary
Memorandum, the Final Memorandum and any amendment or supplement thereto; (d)
the fees and expenses of qualifying the Securities and Exchange Securities
under the securities laws of the several jurisdictions as provided in Section
5(f) and of preparing, printing and distributing a Blue Sky Memorandum
(including related fees and expenses of counsel to the Initial Purchasers); (e)
the cost of printing the Securities and the Exchange Securities; (f) the fees
and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of any counsel for the Trustee in connection with the Indenture
and the Securities and Exchange Securities; (g) any fees paid to rating
agencies in connection with the rating of the Securities and Exchange
Securities; (h) the costs and expenses of DTC and its nominee, including its
book-entry system; (i) all expenses and listing fees incurred in connection
with the application for quotation of the Securities on the PORTAL market; and
(j) all other costs and expenses incident to the performance of the obligations
of the Issuers under this Agreement.
7. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of
the Issuers contained herein at the Execution Time and the Closing Date, to the
accuracy of the statements of the Issuers made in any certificates pursuant to
the provisions hereof, to the performance by the Issuers of their obligations
hereunder and to the following additional conditions:
(a) The Initial Purchasers shall not have
discovered and disclosed to the Company on or prior to the Closing
Date that the Final Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Latham
& Watkins, counsel for the Initial Purchasers, is material or omits to
state a fact which, in the opinion of such counsel, is material and is
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) The Final Memorandum shall have been printed
and copies distributed to the Initial Purchasers as soon as
practicable but in no event later than on the second Business Day
following the date of this Agreement or at such later date and time as
to which the Initial Purchasers may agree, and no stop order
suspending the qualification or exemption from qualification of the
Securities in any jurisdiction referred to in Section 5(f) shall have
been issued and no proceeding for that purpose shall have been
commenced or shall be pending or threatened.
(c) No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or
issued by any governmental agency which would, as of the Closing Date,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect; no action, suit or proceeding shall have been
commenced and be pending against or affecting or, to the knowledge of
the Company, threatened against, the Company or any of its
13
<PAGE> 14
subsidiaries before any court or arbitrator or any governmental body,
agency or official that, singly or in the aggregate, if adversely
determined, would reasonably be expected to result in a Material
Adverse Effect; and no stop order shall have been issued by the SEC or
any governmental agency of any jurisdiction referred to in Section
5(f) preventing the use of the Final Memorandum, or any amendment or
supplement thereto, or which would reasonably be expected to have a
Material Adverse Effect.
(d) Since the dates as of which information is
given in the Final Memorandum and other than as set forth in the Final
Memorandum, (i) there shall not have been any Material Adverse Change,
or any development that is reasonably likely to result in a Material
Adverse Change, or any material change in the long-term debt of the
Issuers, or material increase in the short-term debt of the Issuers,
from that set forth in the Final Memorandum; (ii) no dividend or
distribution of any kind shall have been declared, paid or made by the
Issuers on any class of their capital stock; (iii) the Issuers shall
not have incurred any liabilities or obligations, direct or
contingent, that are material, individually or in the aggregate, to
the Issuers, taken as a whole, and that are required to be disclosed
on a balance sheet or notes thereto in accordance with generally
accepted accounting principles and are not disclosed on the latest
balance sheet or notes thereto included in the Final Memorandum.
(e) The Initial Purchasers shall have received a
certificate, dated the Closing Date, signed on behalf of the Company
by Jeffrey D. Cordes, Chief Operating Officer, confirming that (i)
such officer, has participated in conferences with other officers and
representatives of the Issuers, representatives of the independent
public accountants of the Issuers and representatives of counsel to
the Issuers at which the contents of the Final Memorandum and related
matters were discussed and (ii) the matters set forth in paragraphs
(b), (c) and (d) of this Section 7 are true and correct as of the
Closing Date.
(f) All corporate proceedings and other legal
matters incident to the authorization, form and validity of this
Agreement, the Purchase Agreement Supplement, the Securities and
Exchange Securities, the Indenture, the Registration Rights Agreement,
the Final Memorandum, the Credit Agreement, the Merger Agreement, the
Supplemental Indenture, the Supplemental Registration Rights Agreement
and all other legal matters relating to this Agreement and the
transactions contemplated hereby and thereby, shall be satisfactory in
all material respects to counsel for the Initial Purchasers, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass
upon such matters.
(g) Jones, Day, Reavis & Pogue, counsel for the
Company and the Pillowtex Guarantors (other than Manetta Home
Fashions, Inc. ("Manetta"), Tennessee Woolen Mills, Inc. ("Woolen
Mills") and Beacon Manufacturing Company ("Beacon")) and in connection
with the matters set forth in (xix) through (xxvii) below with respect
to the Fieldcrest Guarantors (other than Crestfield Cotton Company
("Crestfield") and Bangor Investment Company ("Bangor"), shall have
furnished to the Initial Purchasers its written opinion, addressed to
the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) The Company and each of Pillowtex,
Inc. ("PI") and PTEX Holding Company ("PTEX"), each a Delaware
corporation and wholly owned subsidiary of the Company, are
validly existing as corporations in good standing under the
laws of
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<PAGE> 15
their respective jurisdictions of incorporation. Pillowtex
Management Services Company ("PMSC") is a business trust
existing in good standing under the laws of the State of
Delaware. The Company and each of the Pillowtex Guarantors
(other than Manetta, Woolen Mills and Beacon) are duly
qualified to do business and in good standing in each
jurisdiction set forth in Schedule 1 hereto which the Company
has certified to us (A) are the jurisdictions in which the
Company, PI, PTEX and PMSC own property, maintain business or
have employees and (B) the failure to so qualify to transact
business in other jurisdictions would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect;
(ii) Assuming, (A) the accuracy of the
representations, warranties and covenants of the Company set
forth in this Agreement, and (B) the accuracy of the Initial
Purchasers' representations and warranties set forth in this
Agreement, no registration of the Securities under the
Securities Act or qualification of the Indenture under the
Trust Indenture Act is required in connection with the
issuance, sale and delivery of the Securities by the Company
and the Pillowtex Guarantors to the Initial Purchasers, and
the initial reoffer, resale and delivery of the Securities by
the Initial Purchasers, as contemplated by this Agreement and
the Final Memorandum, it being understood that no opinion is
expressed as to any subsequent resale of Securities or any
resale of Securities by any person other than the Initial
Purchasers;
(iii) The Company, PI and PTEX have the
corporate power and authority, and PMSC has the business trust
power and authority, to consummate the transactions
contemplated by this Agreement; and to issue, sell and deliver
the Securities as contemplated by this Agreement;
(iv) This Agreement has been duly
authorized, executed and delivered by the Company and each of
the Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon);
(v) The Indenture has been duly
authorized, executed and delivered by the Company and each of
the Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon) and assuming due authorization, execution and delivery
thereof by the Trustee, is a valid and binding agreement of
the Company and each of the Pillowtex Guarantors (other than
Manetta, Woolen Mills and Beacon), enforceable against the
Company and each of the Pillowtex Guarantors (other than
Manetta, Woolen Mills and Beacon) in accordance with its
terms, except as the enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to or affecting enforcement of creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law);
(vi) The execution and delivery of the
Securities have been duly authorized by all requisite
corporate or business trust action of the Company and the
Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon), as the case may be; the Notes have been duly executed
and delivered by the Company, and the Guarantees have been
duly executed and delivered by the Pillowtex Guarantors (other
than Manetta, Woolen Mills and Beacon) and, assuming due
authentication of the Notes by the Trustee and upon payment of
the purchase price therefor in accordance with this Agreement,
the
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<PAGE> 16
Notes and the Guarantees are valid and binding obligations of
the Company and the Pillowtex Guarantors (other than Manetta,
Woolen Mills and Beacon), respectively, entitled to the
benefits of the Indenture, enforceable against the Company and
the Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon), respectively, in accordance with their terms, except
as the enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to
or affecting enforcement of creditors' rights generally and
(B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law);
(vii) The execution and delivery of the
Exchange Securities have been duly authorized by all requisite
corporate or business trust action of each of the Company and
each of the Pillowtex Guarantors (other than Manetta, Woolen
Mills and Beacon), as the case may be; and, when duly executed
and delivered by the Company and the Pillowtex Guarantors
(other than Manetta, Woolen Mills and Beacon) and duly
authenticated by the Trustee, the Exchange Securities will be
valid and binding obligations of the Company and the Pillowtex
Guarantors (other than Manetta, Woolen Mills and Beacon)(as
applicable), entitled to the benefits of the Indenture and
enforceable against the Company and the Pillowtex Guarantors
(other than Manetta, Woolen Mills and Beacon) (as applicable)
in accordance with their terms, except as the enforcement
thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or
affecting enforcement of creditors' rights generally and (B)
general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law);
(viii) The Registration Rights Agreement
has been duly authorized, executed and delivered by the
Company and each of the Pillowtex Guarantors (other than
Manetta, Woolen Mills and Beacon) and, assuming due
authorization, execution and delivery thereof by the Initial
Purchasers, the Registration Rights Agreement is a valid and
binding agreement of the Company and each of the Pillowtex
Guarantors (other than Manetta, Woolen Mills and Beacon),
enforceable against the Company and each of the Pillowtex
Guarantors (other than Manetta, Woolen Mills and Beacon) in
accordance with its terms, except as the (i) enforcement
thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws now or hereafter in effect relating to or
affecting enforcement of creditors' rights generally and (B)
general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under
applicable securities laws or the public policies underlying
such laws;
(ix) The execution and delivery of the
Credit Agreement and the Merger Agreement have been duly
authorized by all requisite corporate or business trust
action, as the case may be, of the Company and each of the
Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon) (to the extent each is a party thereto); and the
Merger Agreement has been duly executed and delivered by the
Company and Merger Sub and, assuming the due authorization,
execution and delivery thereof by the other parties thereto,
is a valid and binding agreement of the Company and Merger Sub
enforceable against the Company and Merger Sub in accordance
with its terms, except as the enforcement thereof may be
subject to (A) bankruptcy, insolvency, fraudulent
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<PAGE> 17
conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting
enforcement of creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(x) All outstanding shares of capital
stock of PI and PTEX have been duly authorized and validly
issued, are fully paid and nonassessable; and, to the
knowledge of such counsel, all such shares and the beneficial
interests of PMSC are owned of record by the Company or a
subsidiary of the Company, and except for the pledge of such
shares pursuant to the Credit Agreement upon consummation of
the Merger as described in the Final Memorandum, are free and
clear of any security interests, liens, pledges or
encumbrances except for (A) a pledge of such shares pursuant
to the Credit Agreement upon consummation of the Merger as
described in the Final Memorandum and (B) the pledge of such
shares pursuant to the Company's existing credit agreement
with NationsBank of Texas, N.A., as agent.;
(xi) The execution and delivery by the
Company and the Pillowtex Guarantors of this Agreement, the
Indenture, the Registration Rights Agreement and the Merger
Agreement, to the extent each is a party thereto, and the
performance by the Company and the Pillowtex Guarantors of
their obligations thereunder will not (A) to the knowledge of
such counsel, result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
agreement or instrument set forth on Schedule 2 thereto of the
Company or the Pillowtex Guarantors (other than Manetta,
Beacon and Woolen Mills) or (B) result in any violation of the
provisions of the articles or bylaws or comparable governing
documents of the Company or the Pillowtex Guarantors (other
than Manetta, Woolen Mills and Beacon), or any applicable law,
rule or regulation with respect to the Company or the
Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon) or, to the knowledge of such counsel, order of any
court or governmental agency having jurisdiction over the
Company or the Pillowtex Guarantors (other than Manetta,
Woolen Mills and Beacon), and except for such consents,
approvals or authorizations of, or registrations or
qualifications with, governmental authorities as may be
required under the Securities Act and the rules and
regulations thereunder or applicable states securities or Blue
Sky laws in connection with the purchase and distribution of
the Notes by the Initial Purchasers and as set forth in the
Registration Rights Agreement, no consent, approval,
authorization or order of, or filing or registration with, any
such court or governmental agency or body, is required in
connection with the execution and delivery by the Company and
the Pillowtex Guarantors (other than Manetta, Woolen Mills and
Beacon) of this Agreement, the Indenture, the Registration
Rights Agreement, the Credit Agreement or the Merger
Agreement, and the performance by the Company and the
Pillowtex Guarantors of their obligations thereunder;
(xii) The Indenture, the Securities, the
Registration Rights Agreement and the Merger Agreement conform
and, in the case of the Credit Agreement will conform, in all
material respects to the descriptions thereof contained in the
Final Memorandum;
(xiii) To such counsel's knowledge, no
legal or governmental proceedings are pending to which the
Company or the Pillowtex Guarantors is a party which seek to
restrain, enjoin, prevent the consummation of or otherwise
challenge the
17
<PAGE> 18
issuance or sale of the Securities to the Initial Purchasers
or the consummation of the transactions described in the Final
Memorandum under the caption "The Merger";
(xiv) Neither the Company nor any of the
Pillowtex Guarantors is (i) subject to registration and
regulation as an "investment company" within the meaning of
the Investment Company Act, or (ii) a "holding company" or a
"subsidiary company" or, to the knowledge of such counsel, an
"affiliate" of a holding company within the meaning of the
Public Utility Holding Company Act of 1935, as amended;
(xv) When the Securities are issued and
delivered pursuant to this Agreement, such Securities will not
be of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as securities of Company or the
Pillowtex Guarantors or, to such counsel's knowledge,
Fieldcrest or the Fieldcrest Guarantors, that are listed on a
national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") or quoted on an automated inter-dealer quotation system;
(xvi) Assuming the Initial Purchasers
purchase the Securities in accordance with Rule 144A under the
Securities Act and comply with their representations,
warranties and covenants contained in this Agreement, neither
the issuance or sale of the Securities nor the application by
the Company of the net proceeds thereof as set forth in the
Final Memorandum will violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System;
(xvii) Assuming due authorization by each of
Manetta, Beacon and Woolen Mills, this Agreement, the
Indenture, the Registration Rights Agreement and the
Guarantees have been duly executed and delivered by each of
Manetta, Beacon and Woolen Mills;
(xviii) Assuming (A) the due execution and
delivery by the parties thereto of the Indenture, (B) the
issuance of the Securities by the Company and the Pillowtex
Guarantors, (C) the receipt by the Trustee of the proceeds of
the sale of the Securities to secure the payment and the
performance of the Company's obligations to redeem the Notes
upon a Special Redemption (as defined in the Indenture), (D)
the deposit by the Trustee, pursuant to the Indenture, of the
Special Redemption Amount (as defined in the Indenture) in the
Collateral Account (as defined in the Indenture) and the
immediate investment, pursuant to the Indenture, by the
Trustee of amounts on deposit in the Collateral Account in the
Mutual Fund Account (as defined in the Indenture) maintained
by Nations Fund, (E) the continuing qualification of Nations
Fund as a "securities intermediary" pursuant to and as defined
in Section 8-102 of the Uniform Commercial Code of the State
of New York (the "UCC"), and (F) the delivery by the Trustee
to Nations Fund as "securities intermediary" on whose books
the Mutual Fund Account is registered of instructions to
comply with "entitlement orders" (as defined in Section 8-102
of the UCC) (as attached to such counsel's opinion) originated
by the Trustee without further consent by any of the Company,
the Pilowtex Guarantors, the Initial Purchasers or the
Holders, the Trustee's security interest in the Company's
right, title and interest in the Collateral (as defined in the
Indenture) is and will remain perfected until the Collateral
is released pursuant to the terms of the Indenture;
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<PAGE> 19
(xix) Each of the Fieldcrest Guarantors
(other than Crestfield and Bangor) is duly qualified to do
business and in good standing in each jurisdiction set forth
in Schedule 3 hereto which the Company has certified to us (A)
are the jurisdictions in which the Fieldcrest Guarantors own
property, maintain business or have employees and (B) the
failure to so qualify to transact business in other
jurisdictions would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(xx) Assuming the consummation of the Merger
as described in the Final Memorandum and the due
authorization, execution and delivery of the Indenture and the
Supplemental Indenture by each of the Fieldcrest Guarantors
(other than Crestfield and Bangor), and assuming due
authorization, execution and delivery thereof by the Trustee,
each of the Indenture and the Supplemental Indenture will be
valid and binding agreement of each of the Fieldcrest
Guarantors (other than Crestfield and Bangor), enforceable
against each of the Fieldcrest Guarantors (other than
Crestfield and Bangor) in accordance with its terms, except as
enforcement thereof may be subject to (A) bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to
or affecting enforcement of creditors' rights generally and
(B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law);
(xxi) Assuming the consummation of the
Merger as described in the Final Memorandum and the due
authorization, execution and delivery of the Guarantees by
each of the Fieldcrest Guarantors (other than Crestfield and
Bangor), the Guarantees will be valid and binding obligations
of each of the Fieldcrest Guarantors (other than Crestfield
and Bangor), entitled to the benefits of the Indenture,
enforceable against each of the Fieldcrest Guarantors (other
than Crestfield and Bangor) in accordance with their terms,
except as the enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to or affecting enforcement of creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law);
(xxii) Assuming the consummation of the
Merger as described in the Final Memorandum and the due
authorization, execution and delivery of the Exchange
Securities by each of the Fieldcrest Guarantors (other than
Crestfield and Bangor), the Exchange Securities will be valid
and binding obligations of the Fieldcrest Guarantors (other
than Crestfield and Bangor) entitled to the benefits of the
Indenture and enforceable against the Fieldcrest Guarantors
(other than Crestfield and Bangor) in accordance with their
terms, except as the enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to or affecting enforcement of creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law);
(xxiii) Assuming the consummation of the
Merger as described in the Final Memorandum and the due
authorization, execution and delivery of the Registration
Rights Agreement and the Supplemental Registration Rights
Agreement by each of the Fieldcrest Guarantors (other than
Crestfield and Bangor), and assuming due authorization,
execution and delivery thereof by the Initial Purchasers, the
Registration Rights
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<PAGE> 20
Agreement and the Supplemental Registration Rights Agreement
will be a valid and binding agreement of each of the
Fieldcrest Guarantors (other than Crestfield and Bangor),
enforceable against each of the Fieldcrest Guarantors (other
than Crestfield and Bangor) in accordance with their terms,
except as the (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws now or hereafter in effect
relating to or affecting enforcement of creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity
or at law) and (ii) the enforceability of any indemnification
or contribution provisions thereof may be limited under
applicable securities laws or the public policies underlying
such laws;
(xxiv) Assuming the consummation of the
Merger as described in the Final Memorandum and the due
authorization, execution and delivery of the subsidiary
guarantee in connection with the Credit Agreement (the
"Subsidiary Guarantee") by each of the Fieldcrest Guarantors
(other than Crestfield and Bangor) and, assuming the due
authorization, execution and delivery by the other parties
thereto, each Subsidiary Guarantee will be a valid and binding
agreement of each of the Fieldcrest Guarantors (other than
Crestfield and Bangor), enforceable against each of the
Fieldcrest Guarantors (other than Crestfield and Bangor) in
accordance with its terms, except as the enforcement thereof
may be subject to (A) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors'
rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law);
(xxv) Assuming the consummation of the
Merger as described in the Final Memorandum and in reliance
upon the representations and warranties made to the Company in
the Merger Agreement, all of the outstanding shares of capital
stock of each of the Fieldcrest Guarantors (other than
Crestfield and Bangor) are owned by the Company or a
subsidiary of the Company;
(xxvi) Assuming the consummation of the
Merger as described in the Final Memorandum, and assuming the
due authorization, execution and delivery by each of the
parties thereto of the Purchase Agreement Supplement, the
Supplemental Indenture, the Supplemental Registration Rights
Agreement, the Credit Agreement and the Merger Agreement, the
performance by each of the Fieldcrest Guarantors (other than
Crestfield and Bangor) of their obligations thereunder will
not (A) to the knowledge of such counsel, result in a breach
or violation of any of the terms or provisions of, or
constitute a default under, any agreement or instrument set
forth on Schedule 4 hereto or (B) result in any violation of
the provisions of the charter or bylaws of any of the
Fieldcrest Guarantors (other than Crestfield and Bangor), any
applicable federal, Delaware General Corporate or Texas law or
regulation to which the Fieldcrest Guarantors (other than
Crestfield and Bangor) are bound; and except for such
consents, approvals or authorizations of, or registrations or
qualifications with, governmental authorities as may be
required under the Securities Act and the rules and
regulations thereunder or applicable states securities or Blue
Sky laws in connection with the purchase and distribution of
the Notes by the Initial Purchasers and as set forth in the
Registration Rights Agreement, no consent, approval,
authorization or order of, or filing or registration with, any
governmental agency or authority of the State of Texas,
Delaware or of the United States of America other than such
filings that are required to effect the Merger that have not
been made or obtained, is
20
<PAGE> 21
required in connection with the execution and delivery by each
of the Fieldcrest Guarantors (other than Crestfield and
Bangor) of the Purchase Agreement Supplement, the Supplemental
Indenture, the Supplemental Registration Rights Agreement, the
Credit Agreement or the Merger Agreement, and the performance
of the obligations thereunder of the Fieldcrest Guarantors
(other than Crestfield and Bangor); and
(xxvii) To such counsel's knowledge, no
legal or governmental proceedings are pending to which any of
the Fieldcrest Guarantors is a party which seek to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Securities to the Initial Purchasers
or the consummation of the transactions described in the Final
Memorandum under the caption "The Merger".
In addition, such counsel shall also state that such counsel
has participated in conferences with officers and representatives of
the Issuers, representatives of KPMG Peat Marwick LLP and Ernst &
Young LLP, the independent public accountants for the Issuers who
examined certain of the consolidated financial statements of the
Company and Fieldcrest included in the Final Memorandum, and the
Initial Purchasers at which the information contained in the
Preliminary Memorandum and Final Memorandum and related matters were
discussed. Such counsel is not passing upon and does not assume any
responsibility for and has not verified the accuracy, completeness or
fairness of the information contained in the Final Memorandum, and has
not made any independent check or verification thereof. On the basis
of the foregoing (relying as to materiality upon facts provided by
officers and other representatives of the Issuers), no facts have come
to the attention of such counsel that lead such counsel to believe
that the Final Memorandum, as of its date or the Closing Date,
contained an untrue statement of a material fact or omitted to state
any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no belief or opinion
with respect to the financial statements and the notes thereto, and
other financial and statistical data included therein and the
information referred to under the caption "Independent Public
Accountants" as having been included in the Final Memorandum on the
authority of KPMG Peat Marwick LLP and Ernst & young LLP, as experts).
In rendering such opinion, such counsel may state that such
opinion is limited to the laws of the state of New York, the laws of
the state of Texas, the General Corporation Law of the State of
Delaware and the federal law of the United States of America. In
rendering such opinion, such counsel shall be entitled to rely, as to
certain matters of fact, on information contained in certificates of
officers of the Company and the Pillowtex Guarantors.
(h) Parker, Poe, Adams & Bernstein L.L.P.,
special North Carolina counsel for Manetta and Beacon, shall have
furnished to the Initial Purchasers its written opinion, addressed to
the Initial Purchasers and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, to the
effect that:
(i) Each of Manetta and Beacon is
validly existing as a corporation and is in good standing
under the laws of its jurisdiction of incorporation. Each of
Manetta and Beacon is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction
with respect to which it has certified to us that it owns
property, maintains business or has employees (except where
failure to so qualify would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect);
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<PAGE> 22
(ii) Each of Manetta and Beacon has the
corporate power and authority to execute and deliver, and to
consummate the transactions contemplated by this Agreement;
and each of Manetta and Beacon has the corporate power and
authority to issue, sell and deliver the Securities as
contemplated by this Agreement;
(iii) To such counsel's knowledge, neither
Manetta nor Beacon is in violation of its corporate charter or
by-laws by virtue of the execution, delivery or performance of
the Purchase Agreement, the Indenture, the Guarantees, the
Registration Rights Agreement or the Credit Agreement;
(iv) The execution and delivery of this
Agreement have been duly authorized by all requisite corporate
action of each of Manetta and Beacon;
(v) The execution and delivery of the
Indenture have been duly authorized by all requisite corporate
action of each of Manetta and Beacon;
(vi) The execution and delivery of the
Guarantees have been duly authorized by all requisite
corporate action of each of Manetta and Beacon;
(vii) The execution and delivery of the
Registration Rights Agreement have been duly authorized by all
requisite corporate action of each of Manetta and Beacon; and
(viii) All of the capital stock of each of
Manetta and Beacon is owned of record by the Company or a
subsidiary of the Company. All shares of capital stock of
each of Manetta and Beacon have been duly authorized and
validly issued, are fully paid and nonassessable.
In rendering such opinion, such counsel may state that such
opinion is limited to the laws of the state of North Carolina and the
federal law of the United States of America. In rendering such
opinion, such counsel shall be entitled to rely, as to certain matters
of fact, on information contained in certificates of officers of the
Issuers, provided that such counsel shall state that they believe that
they and the Initial Purchasers are justified in relying upon such
certificates and on certificates and reports of public officials.
(i) Waller Lansden Dortch & Davis, special
Tennessee counsel for Woolen Mills, shall have furnished to the
Initial Purchasers its written opinion, addressed to the Initial
Purchasers and dated the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that:
(i) Woolen Mills is validly existing as
a corporation and is in good standing under the laws of its
jurisdiction of incorporation. Woolen Mills is duly qualified
to do business and in good standing as a foreign corporation
in each jurisdiction with respect to which it has certified to
us that it owns property, maintains business or has employees
(except where failure to so qualify would not, singly or in
the aggregate, reasonably be expected to have a Material
Adverse Effect);
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<PAGE> 23
(ii) Woolen Mills has the corporate power
and authority to execute and deliver, and to consummate the
transactions contemplated by this Agreement and the Guarantee;
(iii) To such counsel's knowledge, Woolen
Mills is not in violation of its corporate charter or by-laws
by virtue of the execution, delivery or performance of the
Indenture, the Purchase Agreement, the Registration Rights
Agreement or the Credit Agreement;
(iv) The execution and delivery of this
Agreement have been duly authorized by all requisite corporate
action of Woolen Mills;
(v) The execution and delivery of the
Indenture have been duly authorized by all requisite corporate
action of Woolen Mills;
(vi) The execution and delivery of the
Guarantee have been duly authorized by all requisite corporate
action of Woolen Mills;
(vii) The execution and delivery of the
Registration Rights Agreement have been duly authorized by all
requisite corporate action of Woolen Mills;
(viii) The execution and delivery of the
Credit Agreement has been duly authorized by all requisite
corporate action of Woolen Mills; and
(ix) All of the capital stock of Woolen
Mills is owned of record by the Company or a subsidiary of the
Company. All shares of capital stock of Woolen Mills have
been duly authorized and validly issued, are fully paid and
nonassessable and except as disclosed in the Final Memorandum,
to such counsel's knowledge, all such shares are owned by the
Company or a subsidiary of the Company free and clear of any
security interests, liens, pledges or encumbrances.
In rendering such opinion, such counsel may state that such
opinion is limited to the laws of the state of Tennessee and the
federal law of the United States of America. In rendering such
opinion, such counsel shall be entitled to rely, as to certain matters
of fact, on information contained in certificates of officers of the
Issuers, provided that such counsel shall state that they believe that
they and the Initial Purchasers are justified in relying upon such
certificates and on certificates and reports of public officials.
(j) Morris Nichols Arsht & Tunnell, counsel for
the Fieldcrest Guarantors (other than Crestfield and Bangor), shall
have furnished to the Initial Purchasers its written opinion,
addressed to the Initial Purchasers and dated the Closing Date, in
form and substance reasonably satisfactory to the Initial Purchasers,
to the effect that:
(i) The Fieldcrest Guarantors (other
than Crestfield and Bangor) have the corporate power and
authority to consummate the transactions contemplated by this
Agreement; and to execute and deliver the Guarantees as
contemplated by this Agreement and the Purchase Agreement
Supplement;
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<PAGE> 24
(ii) This Agreement and the Purchase
Agreement Supplement have been duly authorized by all
requisite corporate action of each of the Fieldcrest
Guarantors (other than Crestfield and Bangor) and, upon
consummation of the Merger, this Agreement and the Purchase
Agreement Supplement will be duly executed and delivered by
each of the Fieldcrest Guarantors (other than Crestfield and
Bangor);
(iii) The Indenture has been duly
authorized by all requisite corporate action of each of the
Fieldcrest Guarantors (other than Crestfield and Bangor), and,
upon the consummation of the Merger, the Indenture and the
Supplemental Indenture will be duly executed and delivered by
the Fieldcrest Guarantors (other than Crestfield and Bangor);
(iv) The execution and delivery of the
Securities have been duly authorized by all requisite
corporate action of the Fieldcrest Guarantors (other than
Crestfield and Bangor); upon consummation of the Merger, the
Guarantees will be duly executed and delivered by the
Fieldcrest Guarantors (other than Crestfield and Bangor);
(v) Assuming consummation of the Merger,
the execution and delivery of the Exchange Securities have
been duly authorized by all requisite corporate action of each
of the Fieldcrest Guarantors (other than Crestfield and
Bangor);
(vi) Assuming consummation of the Merger,
the Registration Rights Agreement and the Supplemental
Registration Rights Agreement have been duly authorized by all
requisite corporate action of each of the Fieldcrest
Guarantors (other than Crestfield and Bangor);
(vii) Assuming consummation of the Merger,
the execution and delivery of the Credit Agreement and the
Merger Agreement have been duly authorized by all requisite
corporate action of the Fieldcrest Guarantors (other
Crestfield and Bangor); and
(viii) All outstanding shares of capital
stock of the Fieldcrest Guarantors (other than Crestfield and
Bangor) have been duly authorized and validly issued, are
fully paid and nonassessable; and, to the knowledge of such
counsel, all such shares are owned of record by the Fieldcrest
Guarantors free and clear of any security interests, liens,
pledges or encumbrances of record.
In rendering such opinion, such counsel may state that such
opinion is limited to the General Corporation Law of the State of
Delaware and the federal law of the United States of America. In
rendering such opinion, such counsel shall be entitled to rely, as to
certain matters of fact, on information contained in certificates of
officers of the Issuers, provided that such counsel shall state that
they believe that they and the Initial Purchasers are justified in
relying upon such certificates and on certificates and reports of
public officials.
(k) Waller Lansden Dortch & Davis, special
Tennessee counsel for Crestfield, shall have furnished to the Initial
Purchasers its written opinion, addressed to the Initial Purchasers
and dated the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, to the effect that:
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<PAGE> 25
(i) Crestfield is validly existing as a
corporation and is in good standing under the laws of its
jurisdiction of incorporation. Crestfield is duly qualified
to do business and in good standing as a foreign corporation
in each jurisdiction with respect to which it has certified to
us that it owns property, maintains business or has employees
(except where failure to so qualify would not, singly or in
the aggregate, reasonably be expected to have a Material
Adverse Effect);
(ii) Crestfield has the corporate power
and authority to execute and deliver, and to consummate the
transactions contemplated by this Agreement and the Guarantee;
(iii) To such counsel's knowledge,
Crestfield is not in violation of its corporate charter or
by-laws by virtue of the execution, delivery or performance of
the Supplemental Indenture, the Purchase Agreement Supplement,
the Supplemental Registration Rights Agreement or the Credit
Agreement;
(iv) Assuming the consummation of the
Merger, the execution and delivery of this Agreement and the
Purchase Agreement Supplement have been duly authorized by all
requisite corporate action of Crestfield;
(v) Assuming the consummation of the
Merger, the execution and delivery of the Indenture and the
Supplemental Indenture have been duly authorized by all
requisite corporate action of Crestfield;
(vi) Assuming the consummation of the
Merger, the execution and delivery of the Guarantee have been
duly authorized by all requisite corporate action of
Crestfield;
(vii) Assuming the consummation of the
Merger, the execution and delivery of the Registration Rights
Agreement and the Supplemental Registration Rights Agreement
have been duly authorized by all requisite corporate action of
Crestfield;
(viii) Assuming the consummation of the
Merger, the execution and delivery of the Credit Agreement has
been duly authorized by all requisite corporate action of
Crestfield; and
(ix) Assuming the consummation of the
Merger, all of the capital stock of Crestfield is owned of
record by the Company or a subsidiary of the Company. All
shares of capital stock of Crestfield have been duly
authorized and validly issued, are fully paid and
nonassessable and except as disclosed in the Final Memorandum,
to such counsel's knowledge, all such shares are owned by the
Company or a subsidiary of the Company free and clear of any
security interests, liens, pledges or encumbrances.
In rendering such opinion, such counsel may state that such
opinion is limited to the laws of the state of Tennessee and the
federal law of the United States of America. In rendering such
opinion, such counsel shall be entitled to rely, as to certain matters
of fact, on information contained in certificates of officers of the
Issuers, provided that such counsel shall state that they believe that
they and the Initial Purchasers are justified in relying upon such
certificates and on certificates and reports of public officials.
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<PAGE> 26
(l) Drummond Woodsum & MacMahon, special Maine
counsel for Bangor, shall have furnished to the Initial Purchasers its
written opinion, addressed to the Initial Purchasers and dated the
Closing Date, in form and substance reasonably satisfactory to the
Initial Purchasers, to the effect that:
(i) Bangor is validly existing as a
corporation and is in good standing under the laws of its
jurisdiction of incorporation. Bangor is duly qualified to do
business and in good standing as a foreign corporation in each
jurisdiction with respect to which it has certified to us that
it owns property, maintains business or has employees (except
where failure to so qualify would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse
Effect);
(ii) Bangor has the corporate power and
authority to execute and deliver this Agreement and the
Purchase Agreement Supplement; and Bangor has the corporate
power and authority to issue, sell and deliver the Securities
as contemplated by this Agreement and the Purchase Agreement
Supplement;
(iii) To such counsel's knowledge, the
execution and delivery of the Purchase Agreement Supplement,
the Supplemental Indenture, the Supplemental Registration
Rights Agreement and the Credit Agreement will not violate
Bangor's corporate charter or bylaws;
(iv) Assuming the consummation of the
Merger, the execution and delivery of this Agreement and the
Purchase Agreement Supplement have been duly authorized by all
requisite corporate action of Bangor;
(v) Assuming the consummation of the
Merger, the execution and delivery of the Indenture and the
Supplemental Indenture have been duly authorized by all
requisite corporate action of Bangor;
(vi) Assuming the consummation of the
Merger, the execution and delivery of the Guarantee have been
duly authorized by all requisite corporate action of Bangor;
(vii) Assuming the consummation of the
Merger, the execution and delivery of the Registration Rights
Agreement and the Supplemental Registration Rights Agreement
have been duly authorized by all requisite corporate action of
Bangor;
(viii) Assuming the consummation of the
Merger, the execution and delivery of the Credit Agreement has
been duly authorized by all requisite corporate action of
Bangor; and
(ix) Assuming the consummation of the
Merger, all of the capital stock of Bangor is owned of record
by the Company or a subsidiary of the Company. All shares of
capital stock of Bangor have been duly authorized and validly
issued, are fully paid and nonassessable and except as
disclosed in the Final Memorandum, to such counsel's
knowledge, all such shares are owned by the Company or a
subsidiary of the Company free and clear of any security
interests, liens, pledges or encumbrances.
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<PAGE> 27
In rendering such opinion, such counsel may state that such
opinion is limited to the laws of the state of Maine and the federal
law of the United States of America. In rendering such opinion, such
counsel shall be entitled to rely, as to certain matters of fact, on
information contained in certificates of officers of the Issuers,
provided that such counsel shall state that they believe that they and
the Initial Purchasers are justified in relying upon such certificates
and on certificates and reports of public officials.
(m) You shall have received on the Closing Date
an opinion of Latham & Watkins, counsel for the Initial Purchasers,
dated the Closing Date and addressed to you, in form and substance
reasonably satisfactory to you.
(n) The Company, the Pillowtex Guarantors and the
Trustee shall have entered into the Indenture and the Initial
Purchasers shall have received counterparts, conformed as executed,
thereof.
(o) The Company, the Pillowtex Guarantors and the
Initial Purchasers shall have entered into the Registration Rights
Agreement and the Initial Purchaser shall have received counterparts,
conformed as executed, thereof.
(p) At the Execution Time and at the Closing
Date, KPMG Peat Marwick L.L.P. and Ernst & Young L.L.P. shall have
furnished to the Initial Purchasers a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in
form and substance satisfactory to the Initial Purchasers, confirming
that they are independent accountants within the meaning of the
Securities Act and the Exchange Act and the applicable rules and
regulations thereunder and Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants (the
"AICPA") and otherwise satisfactory in form and substance to the
Initial Purchasers and their counsel.
(q) (i) Neither the Company nor its subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Final Memorandum losses or interferences
with their businesses, taken as a whole, from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Final Memorandum or
(ii) since such date there shall not have been any change in the
capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective
change, in or affecting the general affairs, management, financial
position, shareholders' equity or results of operations of the Company
or its subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Final Memorandum, the effect of which, in any such
case described in clause (i) or (ii), is, in the reasonable judgment
of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the
delivery of the Securities being delivered on the Closing Date on the
terms and in the manner contemplated herein and in the Final
Memorandum.
(r) Subsequent to the execution and delivery of
this Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or The
NASDAQ Stock Market's National Market or in the over-the-counter
market shall have been suspended or materially limited, or minimum
prices shall have been established on such exchange by the SEC, or by
such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have
been declared by Federal or
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<PAGE> 28
state authorities, (iii) the United States shall have become engaged
in hostilities, there shall have been an escalation in hostilities
involving the United States or there shall have been a declaration of
a national emergency or war by the United States or (iv) there shall
have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be
such) as to make it, in the reasonable judgment of the Initial
Purchaser, impracticable or inadvisable to proceed with the offering
or delivery of the Securities being delivered on the Closing Date on
the terms and in the manner contemplated herein and in the Final
Memorandum.
(s) Latham & Watkins shall have been furnished
with such documents, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 7 and in order to
evidence the accuracy, completeness or satisfaction in all material
respects of any of the representations, warranties or conditions
herein contained.
(t) Prior to the Closing Date, the Issuers shall
have furnished to the Initial Purchaser such further information,
certificates and documents as the Initial Purchaser may reasonably
request.
(u) The Company shall have been advised by PORTAL
that the Securities have been designated PORTAL eligible securities in
accordance with the rules and regulations of the National Association
of Securities Dealers, Inc.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.
8. POST CLOSING COVENANTS.
(a) On the Merger Closing Date, the Issuers shall
enter into the Credit Agreement (the form and substance of which shall
be reasonably acceptable to the Initial Purchasers) and the Initial
Purchasers shall receive counterparts, conformed as executed, thereof
and of all other documents and agreements entered into in connection
therewith. There shall exist at and as of the Merger Closing Date no
conditions that would constitute a default (or an event that with
notice or the lapse of time, or both, would constitute a default)
under the Credit Agreement. On the Merger Closing Date, the Credit
Agreement shall be in full force and effect and shall not have been
modified.
(b) On the Merger Closing Date, the Company shall
cause each of the Fieldcrest Guarantors to authorize, execute and
deliver the Purchase Agreement Supplement, the Supplemental Indenture,
the Supplemental Registration Rights Agreement and a Guarantee with
respect to the Notes.
(c) On the Merger Closing Date, the Company shall
issue and sell the Pillowtex Preferred Stock (as defined in the Final
Memorandum) in the manner contemplated by the Final Memorandum and the
Company shall provide the Initial Purchasers with final and complete
copies of the Certificate of Designations, Securities Purchase
Agreement and all other related documents.
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<PAGE> 29
(d) On or prior to the Merger Closing Date, a
two-thirds majority of the stockholders of Fieldcrest shall have
approved the Merger in accordance with applicable laws and a majority
of the shareholders of the Company shall have approved the Share
Issuance (as such term is defined in the Joint Proxy
Statement/Prospectus dated November 26, 1997, of the Company and
Fieldcrest). On the Closing Date, a wholly owned subsidiary of the
Company shall merge with and into Fieldcrest in the manner
contemplated by the Merger Agreement and as described in the Final
Memorandum.
9. INDEMNIFICATION AND CONTRIBUTION. (a) The Issuers
jointly and severally agree to indemnify and hold harmless each Initial
Purchaser, the directors, officers, employees and agents of each Initial
Purchaser and each person who controls any Initial Purchaser within the meaning
of either the Securities Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Securities Act, the Exchange Act or other Federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the Preliminary Memorandum, the Final
Memorandum or any information provided by the Issuers to any holder or
prospective purchaser of Notes pursuant to Section 5(e), or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agree to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action: provided, however,
that the Issuers will not be liable in any such case to any Initial Purchaser
to the extent that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue statement or omission
or alleged omission made in the Preliminary Memorandum or the Final Memorandum,
or in any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Issuers by or on behalf of
such Initial Purchaser specifically for inclusion therein; provided further
that with respect to any such untrue statement or omission made in the
Preliminary Memorandum, the indemnity agreement contained in this Section 9(a)
shall not inure to the benefit of an Initial Purchaser from whom the person
asserting any such losses, claims, damages, liabilities, judgments, actions or
expenses purchased Securities, or any controlling person of such Initial
Purchaser if a copy of the Final Memorandum was sent or given by or on behalf
of such Initial Purchaser to such person at or prior to the written
confirmation of the sale of Securities to such person and the Final Memorandum
cured the defect giving rise to such losses, claims, damages, liabilities,
judgments, actions or expenses, unless, such failure to deliver the Final
Memorandum was a result of noncompliance by the Issuers with Section 5(c)
hereof.
(b) Each Initial Purchaser severally and not jointly
agrees to indemnify and hold harmless the Issuers, their directors, officers,
employees and agents and each person who controls the Issuers within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Issuers to each Initial Purchaser, but only
with reference to written information relating to such Initial Purchaser
furnished to the Issuers by or on behalf of such Initial Purchaser specifically
for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto). This indemnity agreement will be in addition
to any liability which any Initial Purchaser may otherwise have. The Issuers
acknowledge that the statements set forth in the last paragraph of the cover
page, the last paragraph on page (iii) and under the heading "Plan of
Distribution" in the Preliminary Memorandum and the Final Memorandum constitute
the only information furnished in writing by or on behalf of the Initial
Purchasers for inclusion in the Preliminary Memorandum or the Final Memorandum
(or any amendment or supplement thereto).
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<PAGE> 30
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party in
writing of the commencement thereof, but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however that such counsel shall be
reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i)
the use of counsel chosen by the indemnifying party to represent the
indemnified party would, in the opinion of legal counsel to the indemnified
party, present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been informed in writing by legal counsel that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, (iii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise
or consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Issuers and the Initial Purchasers
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the Issuers
and the Initial Purchasers may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Issuers and by the Initial
Purchasers from the offering of the Securities; provided, however, that in no
case shall the Initial Purchasers be responsible for any amount in excess of
the purchase discount or commission applicable to the Securities purchased by
the Initial Purchasers hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Issuers and
the Initial Purchasers shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Issuers and of the Initial Purchasers in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuers shall be deemed to be equal
to the total net proceeds from the offering (before deducting expenses), and
benefits received by the Initial Purchasers shall be deemed to be equal to the
total purchase discounts and commissions received by the Initial Purchasers
from the Issuers in connection with the purchase of the Securities hereunder.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to
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<PAGE> 31
information provided by the Issuers or the Initial Purchasers. The Issuers and
the Initial Purchasers agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section
8, each person who controls an Initial Purchaser within the meaning of either
the Securities Act or the Exchange Act and each director, officer, employee and
agent of an Initial Purchaser shall have the same rights to contribution as
such Initial Purchaser, and each person who controls the Issuers within the
meaning of either the Securities Act or the Exchange Act and each partner,
officer and director of the Issuers shall have the same rights to contribution
as the Issuers, subject in each case to the applicable terms and conditions of
this paragraph (d).
10. TERMINATION. The obligations of the Initial
Purchasers hereunder may be terminated by the Initial Purchasers by notice
given to and received by the Company prior to delivery of and payment for the
Securities if, prior to that time, any of the events described in Sections 7
(r) or 7(s) shall have occurred or if the Initial Purchaser shall decline to
purchase the Securities for any reason permitted under this Agreement.
11. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If
(a) the Issuers shall fail to tender the Securities for delivery to the Initial
Purchasers otherwise than for any reason permitted under this Agreement or (b)
the Initial Purchasers shall decline to purchase the Securities for any reason
permitted under this Agreement, the Issuers shall reimburse the Initial
Purchasers for the reasonable fees and expenses of their counsel and for such
other out-of-pocket expenses as shall have been incurred by them in connection
with this Agreement and the proposed purchase of the Securities, and upon
demand the Issuers shall pay the full amount thereof to the Initial Purchasers.
12. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be
delivered or sent by mail, telex or facsimile transmission to
NationsBanc Montgomery Securities, Inc., 100 North Tryon Street, 20th
Floor, Charlotte, North Carolina 28255, Attention: Gary Wolfe (Fax:
(704) 386-6453), with a copy to Latham & Watkins, 885 Third Avenue,
New York, New York 10022, Attention: Kirk A. Davenport (Fax: (212)
751-4864);
(b) if to the Company, shall be delivered or sent
by mail, telex or facsimile transmission to the address of the Company
set forth in the Final Memorandum, Attention: Jeffrey D. Cordes (Fax:
(214) 330- 6016).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Issuers shall be entitled to act and rely upon
any request, consent, notice or agreement given or made on behalf of the
Initial Purchasers.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers, the Issuers and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (a) the representations, warranties, indemnities and agreements of
the Issuers contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control an Initial Purchaser
31
<PAGE> 32
within the meaning of Section 15 of the Securities Act and (b) the indemnity
agreement of the Initial Purchasers contained in Section 9(b) of this Agreement
shall be deemed to be for the benefit of directors of the Issuers, officers
employees and agents of the Issuers and any person controlling any of the
Issuers within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 12, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision
contained herein.
14. SURVIVAL. The respective indemnities,
representations, warranties and agreements of the Issuers and the Initial
Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Securities and shall remain in full force and effect,
regardless of any investigation made by or on behalf of any of them or any
person controlling any of them.
15. DEFINITION OF "BUSINESS DAY." For purposes of this
Agreement, "business day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York,
New York are authorized or obligated by law, executive order or regulation to
close.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
[Signature page follows]
32
<PAGE> 33
If the foregoing correctly sets forth the agreement between
the Company and the Initial Purchasers, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
Pillowtex Corporation
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
Pillowtex, Inc.
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
Beacon Manufacturing Company
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
Manetta Home Fashions, Inc.
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
Tennessee Woolen Mills, Inc.
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 34
PTEX Holding Company
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
Pillowtex Management Services Company
By: /s/ Jeffrey D. Cordes
-------------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 35
The foregoing Agreement is hereby confirmed and accepted as of
the date first above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By: /s/ Gary Wolfe
----------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 36
EXHIBIT A
PURCHASE AGREEMENT SUPPLEMENT
THIS PURCHASE AGREEMENT SUPPLEMENT is a supplement to that
certain Purchase Agreement, dated December 15, 1997 (the "Purchase Agreement"),
among Pillowtex Corporation, a Texas corporation, the Pillowtex Guarantors
listed on the signature page thereto, and NationsBanc Montgomery Securities,
Inc. and Bear Stearns & Co. Inc.
As a result of the consummation of the Merger, the Fieldcrest
Guarantors have become direct subsidiaries of the Company and hereby agree to
be bound by the terms and provisions applicable to the Fieldcrest Guarantors
under the Purchase Agreement, including but not limited to the representations
in Section 1 thereof and the agreements in Section 5 thereof, as if the
Fieldcrest Guarantors had executed the Purchase Agreement on the date thereof.
Other than as set forth on Schedule A hereto, the Fieldcrest
Guarantors are not a party to any contract or agreement that would be required
to be filed with the Commission as an exhibit to a registration statement on
Form S- 1 pursuant to entries (2), (4) and (10) of the Exhibit Table of Item
601 of Regulation S-K under the Securities Act.
This Purchase Agreement Supplement does not cancel or
extinguish any right or obligation of the parties to the Purchase Agreement.
The parties hereto agree that the Purchase Agreement shall be supplemented only
with respect to the matters referred to herein and the provisions of the
Purchase Agreement are otherwise in full force and effect.
Terms used but not defined herein shall have the meanings
given to them in the Purchase Agreement. This Purchase Agreement Supplement
may be executed in one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall each be deemed to be an original
and all such counterparts shall together constitute one and the same
instrument.
THIS PURCHASE AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
<PAGE> 37
If the foregoing correctly sets forth the agreement between
the Fieldcrest Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
FIELDCREST CANNON, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FIELDCREST CANNON FINANCING, INC.
FIELDCREST CANNON LICENSING, INC.
FIELDCREST CANNON INTERNATIONAL, INC.
FIELDCREST CANNON SURE FIT, INC.
FIELDCREST CANNON TRANSPORTATION, INC.
ST. MARYS INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
BANGOR INVESTMENT COMPANY
MOORE'S FALLS CORPORATION
DOWNEAST SECURITIES CORPORATION
FCC CANADA INC.
By:
-------------------------------
Name: Jeffrey D. Cordes
Title: President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By:
-----------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 38
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
<PAGE> 1
EXHIBIT 10.6
PURCHASE AGREEMENT SUPPLEMENT
THIS PURCHASE AGREEMENT SUPPLEMENT is a supplement to that certain
Purchase Agreement, dated December 15, 1997 (the "Purchase Agreement"), among
Pillowtex Corporation, a Texas corporation, the Pillowtex Guarantors listed on
the signature page thereto, and NationsBanc Montgomery Securities, Inc. and
Bear Stearns & Co. Inc.
As a result of the consummation of the Merger, the Fieldcrest
Guarantors have become direct subsidiaries of the Company and hereby agree to
be bound by the terms and provisions applicable to the Fieldcrest Guarantors
under the Purchase Agreement, including but not limited to the representations
in Section 1 thereof and the agreements in Section 5 thereof, as if the
Fieldcrest Guarantors had executed the Purchase Agreement on the date thereof.
Other than as set forth on Schedule A hereto, the Fieldcrest
Guarantors are not a party to any contract or agreement that would be required
to be filed with the Commission as an exhibit to a registration statement on
Form S-1 pursuant to entries (2), (4) and (10) of the Exhibit Table of Item 601
of Regulation S-K under the Securities Act.
This Purchase Agreement Supplement does not cancel or extinguish any
right or obligation of the parties to the Purchase Agreement. The parties
hereto agree that the Purchase Agreement shall be supplemented only with
respect to the matters referred to herein and the provisions of the Purchase
Agreement are otherwise in full force and effect.
Terms used but not defined herein shall have the meanings given to
them in the Purchase Agreement. This Purchase Agreement Supplement may be
executed in one or more counterparts and, if executed in more than one
counterpart, the executed counterparts shall each be deemed to be an original
and all such counterparts shall together constitute one and the same
instrument.
THIS PURCHASE AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW
RULES THEREOF.
<PAGE> 2
If the foregoing correctly sets forth the agreement between the
Fieldcrest Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
FIELDCREST CANNON, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FIELDCREST CANNON FINANCING, INC.
FIELDCREST CANNON LICENSING, INC.
FIELDCREST CANNON INTERNATIONAL, INC.
FIELDCREST CANNON SURE FIT, INC.
FIELDCREST CANNON TRANSPORTATION, INC.
ST. MARYS INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
BANGOR INVESTMENT COMPANY
MOORE'S FALLS CORPORATION
DOWNEAST SECURITIES CORPORATION
FCC CANADA INC.
By: /s/ Jeffrey D. Cordes
---------------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 3
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By: /s/ Gary Wolfe
-------------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 1
EXHIBIT 10.7
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of December 18, 1997
by and among
Pillowtex Corporation,
each domestic subsidiary of
Pillowtex Corporation
and
NationsBanc Montgomery Securities, Inc., and
Bear, Stearns & Co. Inc.
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made
and entered into as of December 18, 1997 by and among Pillowtex Corporation, a
Texas corporation (the "Company"), and each of the domestic subsidiaries of the
Company set forth on the signature pages hereto (each a "Guarantor" and,
collectively, the "Guarantors"), and NationsBanc Montgomery Securities, Inc.
and Bear Stearns & Co. Inc. (each a "Purchaser" and, collectively, the
"Purchasers"), each of whom has agreed to purchase the Company's 9% Series A
Senior Subordinated Notes due 2007 (the "Series A Notes") pursuant to the
Purchase Agreement (as defined below).
The Registration Rights Agreement Supplement (the
"Supplement"), which is attached hereto as Exhibit A, will be entered into
immediately after the consummation of the merger (the "Merger") of a wholly
owned subsidiary of the Company within and into Fieldcrest Cannon, Inc., a
Delaware corporation ("Fieldcrest")(the "Merger Closing Date"), by and among
the Purchasers and Fieldcrest and its domestic subsidiaries set forth on the
signature pages to the Supplement (each a "Fieldcrest Guarantor" and,
collectively with Fieldcrest, the "Fieldcrest Guarantors").
This Agreement is made pursuant to the Purchase Agreement,
dated December 15, 1997 (the "Purchase Agreement"), by and among the Company,
the Guarantors and the Purchasers. In order to induce the Purchasers to
purchase the Series A Notes, the Company and the Guarantors (collectively, the
"Issuers") have agreed to provide the registration rights set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
obligations of the Purchasers set forth in Section 7 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the
Exchange Act.
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Act of the Exchange Offer Registration
Statement relating to the Series B Notes to be issued in the Exchange Offer,
(ii) the maintenance of such Registration Statement continuously effective and
the keeping of the Exchange Offer open for a period not less than the minimum
period required pursuant to Section 3(b) hereof, and (iii) the delivery by the
Issuers to the Registrar under the Indenture of Series B Notes in the same
aggregate principal amount as the aggregate principal amount of Series A Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes,
each Interest Payment Date.
Effectiveness Target Date: As defined in Section 5.
<PAGE> 3
Exchange Act: The Securities Exchange Act of 1934, as
amended.
Exchange Offer: The registration by the Issuers under the Act
of the Series B Notes pursuant to a Registration Statement pursuant to which
the Issuers offer the Holders of all outstanding Transfer Restricted Securities
the opportunity to exchange all such outstanding Transfer Restricted Securities
held by such Holders for Series B Notes in an aggregate principal amount equal
to the aggregate principal amount of the Transfer Restricted Securities
tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration
Statement relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Purchasers
propose to sell the Series A Notes (i) to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, (ii) to certain
institutional "accredited investors," as such term is defined in Rule
501(a)(1), (2), (3) and (7) of Regulation D under the Act ("Accredited
Institutions") and (iii) in offshore transactions pursuant to Regulation S
under the Act.
Holders: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated as of December 18, 1997,
among the Issuers and Norwest Bank, N.A., as trustee (the "Trustee"), pursuant
to which the Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the
Notes.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Purchaser: As defined in the preamble hereto.
Record Holder: With respect to any Damages Payment Date
relating to the Notes, each Person who is a Holder of Notes on the record date
with respect to the Interest Payment Date on which such Damages Payment Date
shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the
Issuers relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, which is filed pursuant to the
provisions of this
-2-
<PAGE> 4
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
Series B Notes: The Company's 9% Series B Senior Subordinated
Notes due 2007 to be issued pursuant to the Indenture in the Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest
to occur of (a) the date on which such Note is exchanged in the Exchange Offer
and entitled to be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with a Shelf Registration Statement or (c) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act or by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities
entitled to the benefits of this Agreement are the Transfer Restricted
Securities.
(b) Holders of Transfer Restricted Securities. A Person
is deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible
under applicable law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with), the Issuers shall (i) cause to be
filed with the Commission as soon as practicable after the Closing Date, but in
no event later than 60 days after the Closing Date, a Registration Statement
under the Act relating to the Series B Notes and the Exchange Offer, (ii) use
their best efforts to cause such Registration Statement to become effective at
the earliest possible time, but in no event later than 105 days after the
Closing Date, (iii) in connection with the foregoing, file (A) all pre-
effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings in connection
with the registration and qualification of the Series B Notes to be made under
the Blue Sky laws of such jurisdictions as are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B Notes to be offered
-3-
<PAGE> 5
in exchange for the Transfer Restricted Securities and to permit resales of
Notes held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company shall cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer;
provided, however, that in no event shall such period be less than 20 business
days. The Company shall cause the Exchange Offer to comply with all applicable
federal and state securities laws. No securities other than the Notes shall be
included in the Exchange Offer Registration Statement. The Company shall use
its best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter.
(c) The Company shall indicate in a "Plan of
Distribution" section contained in the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Series A Notes
that are Transfer Restricted Securities and that were acquired for its own
account as a result of market-making activities or other trading activities
(other than Transfer Restricted Securities acquired directly from the Company),
may exchange such Series A Notes pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of the
Act and must, therefore, deliver a prospectus meeting the requirements of the
Act in connection with any resales of the Series B Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such resales
by Broker-Dealers that the Commission may require in order to permit such
resales pursuant thereto, but such "Plan of Distribution" shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such Broker-
Dealer except to the extent required by the Commission as a result of a change
in policy after the date of this Agreement.
The Issuers shall use their best efforts to keep the Exchange
Offer Registration Statement continuously effective, supplemented and amended
as required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of one year from the date on which
the Exchange Offer Registration Statement is declared effective.
The Issuers shall provide sufficient copies of the latest
version of such Prospectus to Broker-Dealers promptly upon request at any time
during such one-year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not
required to file an Exchange Offer Registration Statement or to consummate the
Exchange Offer because the Exchange Offer is not permitted by applicable law or
Commission policy (after the procedures set forth in Section 6(a) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 business days of the Consummation of the
Exchange Offer (A) that such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) that such
Holder may not resell the Series B Notes acquired by it in the Exchange Offer
to the public without delivering a prospectus and that the Prospectus contained
in the Exchange Offer Registration Statement is not appropriate or available
-4-
<PAGE> 6
for such resales by such Holder, or (C) that such Holder is a Broker-Dealer and
holds Series A Notes acquired directly from the Company or one of its
affiliates, then the Issuers shall
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf
Registration Statement") on or prior to the earliest to occur of (1)
the 45th day after the date on which the Company determines that it is
not required to file the Exchange Offer Registration Statement or (2)
the 45th day after the date on which the Company receives notice from
a Holder of Transfer Restricted Securities as contemplated by clause
(ii) above (such earliest date being the "Shelf Filing Deadline"),
which Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof; and
(y) use their best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission on
or before the 105th day after the Shelf Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least one year following the Closing Date or such shorter period
ending when all of the Notes have been sold thereunder.
(b) Provision by Holders of Certain Information in
Connection with the Shelf Registration Statement. No Holder of Transfer
Restricted Securities may include any of its Transfer Restricted Securities in
any Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Company in writing, within 20 business days after
receipt of a request therefor, such information as the Company may reasonably
request for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to Liquidated Damages pursuant to
Section 5 hereof unless and until such Holder shall have used its best efforts
to provide all such reasonably requested information. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly
to the Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (a) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified
for such filing in this Agreement, (b) any of such Registration Statements has
not been declared effective by the Commission on or prior to the date specified
for such effectiveness in this Agreement (the "Effectiveness Target Date"), (c)
the Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a post-
effective amendment to such Registration Statement that cures such failure
-5-
<PAGE> 7
and that is itself immediately declared effective (each such event referred to
in clauses (a) through (d), a "Registration Default"), the Issuers hereby
jointly and severally agree to pay liquidated damages to each Holder of
Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.30 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Company by wire transfer of immediately available funds or by
federal funds check on each Damages Payment Date, as provided in the Indenture.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of liquidated damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Issuers set forth in the preceding
paragraph that are outstanding with respect to any Transfer Restricted Security
at the time such security ceases to be a Transfer Restricted Security shall
survive until such time as all such obligations with respect to such Security
shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection
with the Exchange Offer, the Issuers shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If in the reasonable opinion of counsel to the
Company there is a question as to whether the Exchange Offer is
permitted by applicable law, the Issuers hereby agree to seek a no-
action letter or other favorable decision from the Commission allowing
the Issuers to Consummate an Exchange Offer for such Series A Notes.
The Issuers hereby agree to pursue the issuance of such a decision to
the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission
policy. The Issuers hereby agree, however, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the
Commission staff an analysis prepared by counsel to the Company
setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of
Transfer Restricted Securities shall furnish, upon the request of the
Company, prior to the Consummation thereof, a written representation
to the Company (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Issuers, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of
the Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Issuers' preparations for the Exchange
Offer. Each Holder hereby acknowledges and agrees that any Broker-
Dealer and any such Holder using
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<PAGE> 8
the Exchange Offer to participate in a distribution of the securities
to be acquired in the Exchange Offer (1) could not under Commission
policy as in effect on the date of this Agreement rely on the position
of the Commission enunciated in Morgan Stanley and Co., Inc.
(available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including any no- action letter obtained pursuant to clause (i)
above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as
applicable, of Regulation S-K if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired by
such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Issuers shall provide a supplemental
letter to the Commission (A) stating that the Issuers are registering
the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13,
1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if
applicable, any no-action letter obtained pursuant to clause (i) above
and (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any
Person to distribute the Series B Notes to be received in the Exchange
Offer and that, to the best of the Company's information and belief,
each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the
Shelf Registration Statement, the Issuers shall comply with all the provisions
of Section 6(c) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution thereof,
and pursuant thereto the Issuers will as expeditiously as possible prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof.
(c) General Provisions. In connection with any
Registration Statement and any Prospectus required by this Agreement to permit
the sale or resale of Transfer Restricted Securities (including, without
limitation, any Registration Statement and the related Prospectus required to
permit resales of Notes by Broker-Dealers), the Issuers shall:
(i) use their best efforts to keep such Registration
Statement continuously effective and provide all requisite financial
statements (including, if required by the Act or any regulation
thereunder, financial statements of the Guarantors) for the period
specified in Section 3 or 4 of this Agreement, as applicable; upon the
occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a
material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Issuers shall file promptly an
appropriate amendment to such Registration Statement, in the case of
clause (A), correcting any such misstatement or omission, and, in the
case of either clause (A) or (B), use its best efforts to cause such
amendment to be declared effective and such Registration Statement and
the related Prospectus to become usable for their intended purpose(s)
as soon as practicable thereafter;
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<PAGE> 9
(ii) prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement
as may be necessary to keep the Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as
applicable, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Registration Statement have been
sold; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Act, and to comply fully with the applicable
provisions of Rules 424 and 430A under the Act in a timely manner; and
comply with the provisions of the Act with respect to the disposition
of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling
Holders promptly and, if requested by such Persons, to confirm such
advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with
respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement under
the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or
sale in any jurisdiction, or the initiation of any proceeding for any
of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact
made in the Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by
reference therein untrue, or that requires the making of any additions
to or changes in the Registration Statement or the Prospectus in order
to make the statements therein not misleading. If at any time the
Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or
other regulatory authority shall issue an order suspending the
qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the
Issuers shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and
each of the underwriter(s), if any, before filing with the Commission,
copies of any Shelf Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Shelf
Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Shelf
Registration Statement), which documents will be subject to the review
of such Holders and underwriter(s), if any, for a period of at least
three business days, and the Issuers will not file any such Shelf
Registration Statement or Prospectus or any amendment or supplement to
any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which a selling Holder of
Transfer Restricted Securities covered by such Registration Statement
or the underwriter(s), if any, shall reasonably object within three
business days after the receipt thereof;
(v) promptly prior to the filing of any document
that is to be incorporated by reference into a Shelf Registration
Statement or Prospectus, provide copies of such document to the
selling Holders and to the underwriter(s), if any, make the Issuers'
representatives available for discussion of such document and other
customary due diligence matters, and include such
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<PAGE> 10
information in such document prior to the filing thereof as such
selling Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for
inspection by the selling Holders, any underwriter participating in
any disposition pursuant to such Shelf Registration Statement, and any
attorney or accountant retained by such selling Holders or any of the
underwriter(s), all financial and other records, pertinent corporate
documents and properties of the Issuers and cause the Issuers'
officers, directors and employees to supply all information reasonably
requested by any such Holder, underwriter, attorney or accountant in
connection with such Registration Statement subsequent to the filing
thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the
"Plan of Distribution" of the Transfer Restricted Securities,
information with respect to the principal amount of Transfer
Restricted Securities being sold to such underwriter(s), the purchase
price being paid therefor and any other terms of the offering of the
Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Issuers are notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment;
(viii) cause the Transfer Restricted Securities
covered by the Registration Statement to be rated with the appropriate
rating agencies, if so requested by the Holders of a majority in
aggregate principal amount of Notes covered thereby or the
underwriter(s), if any;
(ix) furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the Shelf
Registration Statement, as first filed with the Commission, and of
each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including exhibits incorporated
therein by reference);
(x) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment
or supplement thereto as such Persons reasonably may request; the
Issuers hereby consent to the use of the Prospectus and any amendment
or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale
of the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) enter into such agreements (including an
underwriting agreement), and make such representations and warranties,
and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of the Transfer Restricted
Securities pursuant to any Registration Statement contemplated by this
Agreement, all to such extent as may be reasonably requested by any
Purchaser or by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any
Registration Statement contemplated by this Agreement; and whether or
not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to each Purchaser, each selling Holder
and each underwriter, if any, in such substance and scope as
they may reasonably request and as are customarily made
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<PAGE> 11
by issuers to underwriters in primary underwritten offerings,
upon the date of the Consummation of the Exchange Offer and,
if applicable, the effectiveness of the Shelf Registration
Statement:
(1) a certificate, dated the date of
Consummation of the Exchange Offer or the date of
effectiveness of the Shelf Registration Statement, as
the case may be, signed by (y) the President or any
Vice President and (z) a principal financial or
accounting officer of the Company confirming, as of
the date thereof, the matters set forth in paragraphs
(b), (c) and (d) of Section 7 of the Purchase
Agreement and such other matters as such parties may
reasonably request;
(2) an opinion, dated the date of
effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Issuers, covering
the matters set forth in paragraph (g), (h), (i),
(j), (k) and (l) of Section 7 of the Purchase
Agreement and such other matter as such parties may
reasonably request, and in any event including a
statement to the effect that such counsel has
participated in conferences with officers and other
representatives of the Issuers, representatives of
the independent public accountants for the Issuers,
the Purchasers' representatives and the Purchasers'
counsel in connection with the preparation of such
Shelf Registration Statement and the related
Prospectus and have considered the matters required
to be stated therein and the statements contained
therein, and although such counsel has not
independently verified the accuracy, completeness or
fairness of such statements, on the basis of the
foregoing (relying as to materiality to a large
extent upon facts provided to such counsel by
officers and other representatives of the Issuers and
without independent check or verification), no facts
came to such counsel's attention that caused such
counsel to believe that the Shelf Registration
Statement, at the time such Shelf Registration
Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a
material fact or omitted to state a material fact
required to be stated therein or necessary to make
the statements therein not misleading, or that the
Prospectus contained in such Shelf Registration
Statement as of its date, contained an untrue
statement of a material fact or omitted to state a
material fact necessary in order to make the
statements therein, in light of the circumstances
under which they were made, not misleading. Without
limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility
for, and has not independently verified, the
accuracy, completeness or fairness of exhibits, the
financial statements, notes and schedules and other
financial and statistical data included in any Shelf
Registration Statement contemplated by this Agreement
or the related Prospectus; and
(3) a customary comfort letter, dated as of
the date of effectiveness of the Shelf Registration
Statement, from the Issuers' independent accountants,
in the customary form and covering matters of the
type customarily covered in comfort letters by
underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the
comfort letters delivered pursuant to Section 7(q) of
the Purchase Agreement, without exception;
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<PAGE> 12
(B) set forth in full or incorporate by reference in
the underwriting agreement, if any, the indemnification
provisions and procedures of Section 8 hereof with respect to
all parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as
may be reasonably requested by such parties to evidence
compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Issuers pursuant to this clause
(xi), if any.
If at any time the Issuers become aware that the
representations and warranties of the Issuers contemplated in clause
(A)(1) above cease to be true and correct, the Issuers shall so advise
the Purchasers and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice
in writing;
(xii) prior to any public offering of Transfer
Restricted Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection
with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions
as the selling Holders or underwriter(s) may reasonably request and do
any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Transfer
Restricted Securities covered by the Shelf Registration Statement;
provided, however, that neither the Company nor any of the Guarantors
shall be required to register or qualify as a foreign corporation
where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other
than as to matters and transactions relating to the Registration
Statement, in any jurisdiction where it is not now so subject;
(xiii) shall issue, upon the request of any Holder
of Series A Notes covered by the Shelf Registration Statement, Series
B Notes, having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such Series
B Notes to be registered in the name of such Holder or in the name of
the purchaser(s) of such Notes, as the case may be; in return, the
Series A Notes held by such Holder shall be surrendered to the Company
for cancellation;
(xiv) cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Transfer Restricted Securities
to be sold and not bearing any restrictive legends; and enable such
Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any,
may request at least two business days prior to any sale of Transfer
Restricted Securities made by such underwriter(s);
(xv) use its best efforts to cause the Transfer
Restricted Securities covered by the Shelf Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the seller or sellers
thereof or the underwriter(s), if any, to consummate the disposition
of such Transfer Restricted Securities, subject to the proviso
contained in clause (viii) above;
(xvi) if any fact or event contemplated by clause
(c)(iii)(D) above shall exist or have occurred, prepare a supplement
or post-effective amendment to the Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus
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<PAGE> 13
will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading;
(xvii) provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of the
Registration Statement and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which
are in a form eligible for deposit with the Depository Trust Company;
(xviii) cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD, and use its reasonable best efforts
to cause such Shelf Registration Statement to become effective and
approved by such governmental agencies or authorities as may be
necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;
(xix) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
generally available to its security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) for the twelve-month period (A) commencing
at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts
Underwritten Offering or (B) if not sold to underwriters in such an
offering, beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Shelf Registration
Statement;
(xx) cause the Indenture to be qualified under the
TIA not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith,
cooperate with the Trustee and the Holders of Notes to effect such
changes to the Indenture as may be required for such Indenture to be
so qualified in accordance with the terms of the TIA; and execute and
use their best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner;
(xxi) provide promptly to each Holder upon
request each document filed with the Commission pursuant to the
requirements of Section 13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Company of the existence of
any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the applicable Registration Statement until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(c)(xvi)
hereof, or until it is advised in writing (the "Advice") by the Company that
the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference in the
Prospectus. If so directed by the Company, each Holder will deliver to the
Company (at the Issuers' expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such Transfer
Restricted Securities that was current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by
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<PAGE> 14
such Registration Statement shall have received the copies of the supplemented
or amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have
received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of
or compliance with this Agreement will be borne by the Company or the
respective Guarantor, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and filing fees
and expenses (including filings made by any Purchaser or Holder with the NASD
(and, if applicable, the fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Series B Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company and,
subject to Section 7(b) below, the Holders of Transfer Restricted Securities;
(v) all application and filing fees in connection with listing Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Issuers (including the expenses of any
special audit and comfort letters required by or incident to such performance).
The Issuers will bear their internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and
the fees and expenses of any Person, including special experts, retained by any
Issuer.
(b) In connection with any Shelf Registration Statement
required by this Agreement, the Issuers will reimburse the Purchasers and the
Holders of Transfer Restricted Securities being registered pursuant to the
Shelf Registration Statement for the reasonable fees and disbursements of not
more than one counsel, who shall be Latham & Watkins or such other counsel as
may be chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Shelf Registration Statement is
being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers jointly and severally, agree to indemnify
and hold harmless (i) each Holder and (ii) each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
any Holder (any of the persons referred to in this clause (ii) being
hereinafter referred to as a "controlling person") and (iii) the respective
officers, directors, partners, employees, representatives and agents of any
Holder or any controlling person (any person referred to in clause (i), (ii) or
(iii) may hereinafter be referred to as an "Indemnified Holder"), to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as soon as reasonably practicable, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus (or any amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with
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<PAGE> 15
information relating to any of the Holders furnished in writing to the Company
by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental
or regulatory investigation or proceeding) shall be brought or asserted against
any of the Indemnified Holders with respect to which indemnity may be sought
against the Issuers, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Issuers in
writing (provided, that the failure to give such notice (i) will not relieve
the Issuers from liability under paragraph (a) above unless and to the extent
it did not otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) above). Such Indemnified Holder shall have the right
to employ its own counsel in any such action and the fees and expenses of such
counsel shall be paid, as soon as reasonably practicable after they are
incurred, by the Issuers (regardless of whether it is ultimately determined
that an Indemnified Holder is not entitled to indemnification hereunder). The
Issuers shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for such
Indemnified Holders, which firm shall be designated by the Holders. The
Issuers shall be liable for any settlement of any such action or proceeding
effected with the Issuers' prior written consent, which consent shall not be
withheld unreasonably, and the Issuers agree to indemnify and hold harmless any
Indemnified Holder from and against any loss, claim, damage, liability or
expense by reason of any settlement of any action effected with the written
consent of the Issuers. The Issuers shall not, without the prior written
consent of each Indemnified Holder, settle or compromise or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is
a party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all liability
arising out of such action, claim, litigation or proceeding.
(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Issuers, and
their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the
Issuers, and the respective officers, directors, partners, employees,
representatives and agents of each such person, to the same extent as the
foregoing indemnity from the Issuers to each of the Indemnified Holders, but
only with respect to claims and actions based on information relating to such
Holder furnished in writing by such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against any of the Issuers or their directors or officers or any such
controlling person and in respect of which indemnity may be sought against a
Holder of Transfer Restricted Securities, such Holder shall have the rights and
duties given the Issuers and the Issuers or their directors or officers or such
controlling person shall have the rights and duties given to each Holder by the
preceding paragraph. In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
(c) If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or Section 8(b)
hereof (other than by reason of exceptions provided in those Sections) in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses
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<PAGE> 16
in such proportion as is appropriate to reflect the relative benefits received
by the Issuers on the one hand and the Holders on the other hand from the sale
by the Company of the Series A Notes or if such allocation is not permitted by
applicable law, the relative fault of the Issuers on the one hand and of the
Indemnified Holder on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative fault of the
Issuers on the one hand and of the Indemnified Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Issuers or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Issuers and each Holder of Transfer Restricted Securities
agree that it would not be just and equitable if contribution pursuant to this
Section 8(c) were determined by pro rata allocation (even if the Holders were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or expenses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, none of the Holders (and its related Indemnified Holders) shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the total discount received by such Holder with respect to the Series A
Notes exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Series A Notes held by each of the Holders hereunder and not joint.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such underwriting arrangements.
-15-
<PAGE> 17
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the
Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker or investment bankers and manager or managers
that will administer the offering will be selected by the Holders of a majority
in aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages
(including the liquidated damages contemplated hereby) would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not, on
or after the date of this Agreement, enter into any agreement with respect to
its securities that is inconsistent with the rights granted to the Holders in
this Agreement or otherwise conflicts with the provisions hereof. Other than
the agreements with Apollo Investment Fund II, L.P., Apollo Overseas Partners
III, L.P. and Apollo (U.K.) Partners III, L.P., neither the Company nor the
Guarantors have previously entered into any agreement granting any registration
rights with respect to its securities to any Person. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Issuers' securities under any
agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. The Issuers will
not take any action, or permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to or departures from the provisions hereof may not be given unless the Issuers
have obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities. Notwithstanding the
foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of Holders whose securities are being
tendered pursuant to the Exchange Offer and that does not affect directly or
indirectly the rights of other Holders whose securities are not being tendered
pursuant to such Exchange Offer may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities being
tendered or registered.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the
records of the Registrar under the Indenture, with a copy to the
Registrar under the Indenture; and
-16-
<PAGE> 18
(ii) if to the Issuers:
Pillowtex Corporation
4111 Mint Way
Dallas, TX 75237
Telecopier No.: (214) 330-6016
Attention: Jeffrey D. Cordes
All such notices and communications shall be deemed to have
been duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
(g) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Entire Agreement. This Agreement together with the
Supplemental Registration Rights Agreement, the Purchase Agreement, the
Purchase Agreement Supplement, the Indenture and the Supplemental Indenture is
intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the registration rights granted by
the Issuers with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
-17-
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
Pillowtex Corporation
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
Pillowtex Inc.
BY: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
Beacon Manufacturing Company
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
Manetta Home Fashions, Inc.
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
Pillowtex Management Services Company, Inc.
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
Tennessee Woolen Mills, Inc.
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 20
PETX Holding Company
By: /s/ Jeffrey D. Cordes
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
-19-
<PAGE> 21
The foregoing Registration Rights Agreement is hereby confirmed, accepted
and agreed as of the date first above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By: /s/ Gary Wolfe
---------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 22
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT SUPPLEMENT
THIS REGISTRATION RIGHTS AGREEMENT SUPPLEMENT is a supplement to that
certain Registration Rights Agreement, dated December 18, 1997 (the
"Registration Rights Agreement"), among Pillowtex Corporation, a Texas
corporation, the Guarantors listed on the signature page thereto, and
NationsBanc Montgomery Securities, Inc. and Bear Stearns & Co. Inc.
As a result of the consummation of the Merger, the Fieldcrest
Guarantors have become direct subsidiaries of the Company and hereby agree to
be bound by the terms and provisions applicable to the Guarantors under the
Registration Rights Agreement, as if the Fieldcrest Guarantors had executed the
Registration Rights Agreement on the date thereof.
This Registration Rights Agreement Supplement does not cancel or
extinguish any right or obligation of the parties to the Registration Rights
Agreement. The parties hereto agree that the Registration Rights Agreement
shall be supplemented only with respect to the matters referred to herein and
the provisions of the Registration Rights Agreement are otherwise in full force
and effect.
Terms used but not defined herein shall have the meanings given to
them in the Registration Rights Agreement. This Registration Rights Agreement
Supplement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same
instrument.
THIS REGISTRATION RIGHTS AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
<PAGE> 23
If the foregoing correctly sets forth the agreement between the
Fieldcrest Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
FIELDCREST CANNON, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FIELDCREST CANNON FINANCING, INC.
FIELDCREST CANNON LICENSING, INC.
FIELDCREST CANNON INTERNATIONAL, INC.
FIELDCREST CANNON SURE FIT, INC.
FIELDCREST CANNON TRANSPORTATION, INC.
ST. MARYS INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
BANGOR INVESTMENT COMPANY
MOORE'S FALLS CORPORATION
DOWNEAST SECURITIES CORPORATION
FCC CANADA INC.
By:
---------------------------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 24
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By:
---------------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 1
EXHIBIT 10.8
REGISTRATION RIGHTS AGREEMENT SUPPLEMENT
THIS REGISTRATION RIGHTS AGREEMENT SUPPLEMENT is a supplement
to that certain Registration Rights Agreement, dated December 18, 1997 (the
"Registration Rights Agreement"), among Pillowtex Corporation, a Texas
corporation, the Guarantors listed on the signature page thereto, and
NationsBanc Montgomery Securities, Inc. and Bear Stearns & Co. Inc.
As a result of the consummation of the Merger, the Fieldcrest
Guarantors have become direct subsidiaries of the Company and hereby agree to be
bound by the terms and provisions applicable to the Guarantors under the
Registration Rights Agreement, as if the Fieldcrest Guarantors had executed the
Registration Rights Agreement on the date thereof.
This Registration Rights Agreement Supplement does not cancel
or extinguish any right or obligation of the parties to the Registration Rights
Agreement. The parties hereto agree that the Registration Rights Agreement shall
be supplemented only with respect to the matters referred to herein and the
provisions of the Registration Rights Agreement are otherwise in full force and
effect.
Terms used but not defined herein shall have the meanings
given to them in the Registration Rights Agreement. This Registration Rights
Agreement Supplement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original and all such counterparts shall together constitute one
and the same instrument.
THIS REGISTRATION RIGHTS AGREEMENT SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT
REGARD TO THE CONFLICT OF LAW RULES THEREOF.
<PAGE> 2
If the foregoing correctly sets forth the agreement between
the Fieldcrest Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
FIELDCREST CANNON, INC.
CRESTFIELD COTTON COMPANY
ENCEE, INC.
FIELDCREST CANNON FINANCING, INC.
FIELDCREST CANNON LICENSING, INC.
FIELDCREST CANNON INTERNATIONAL, INC.
FIELDCREST CANNON SURE FIT, INC.
FIELDCREST CANNON TRANSPORTATION, INC.
ST. MARYS INC.
AMOSKEAG COMPANY
AMOSKEAG MANAGEMENT CORPORATION
BANGOR INVESTMENT COMPANY
MOORE'S FALLS CORPORATION
DOWNEAST SECURITIES CORPORATION
FCC CANADA INC.
By: /s/ Jeffrey D. Cordes
-----------------------------
Name: Jeffrey D. Cordes
Title: President
<PAGE> 3
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
NATIONSBANC MONTGOMERY SECURITIES, INC.
BEAR, STEARNS & CO. INC.
By: NATIONSBANC MONTGOMERY SECURITIES, INC.
By: /s/ Gary Wolfe
---------------------------------------
Name: Gary Wolfe
Title: Director
<PAGE> 1
EXHIBIT 99.1
[PILLOWTEX CORPORATION LOGO]
FOR IMMEDIATE RELEASE
CONTACTS:
Investor Contact: Media Contact:
Mark Kirkpatrick Sabrina Walheim
Treasurer Abernahty/MacGregor Group
(214) 333-3225 Ext. 618 (212) 371-5999
PILLOWTEX COMPLETES ACQUISITION OF FIELDCREST CANNON
Dallas, Texas, December 19, 1997 -- Pillowtex Corporation (NYSE:PTX) announced
today that it had completed acquisition of Fieldcrest Cannon, Inc. (NYSE:FLD).
Fieldcrest Cannon stockholders voted their approval of the transaction at a
Special Meeting of Stockholders held this morning in New York City. In
addition, at a Pillowtex Special Meeting today, Pillowtex shareholders approved
the issuance of the Pillowtex common stock to be issued in the transaction.
The average closing price of Pillowtex common stock for the 20 consecutive
trading days immediately preceding the 5th day prior to the close of the
merger was $27.175. Based upon that figure and as outlined in the merger
agreement, Pillowtex paid $249.6 million in cash and issued approximately 2.49
million shares of its Common Stock to Fieldcrest Cannon common stockholders.
Pillowtex also paid $69.2 million in cash and issued approximately 690,000
shares of Common Stock to Fieldcrest Cannon preferred stockholders. The
acquisition will be accounted for as a purchase and is anticipated to be
accretive to Pillowtex's earnings per share in 1998.
Pillowtex financed the cash portion of the transaction using a combination of
bank financing and the sale of senior subordinated notes and convertible
preferred stock.
This combination creates one of the industry's largest home textile
manufacturers with annual sales in excess of $1.5 billion. The strength of the
combined operations includes extensive distribution networks, a broad array of
products available at all price points, and a portfolio of many of the best
recognized names and products in the industry including Fieldcrest Cannon's
Royal Velvet(R), Cannon(R), Touch of Class(R), and Charisma(R) brands.
Pillowtex Corporation, with annual sales in excess of $500 million, markets and
manufactures top-of-the-bed home textile furnishings. The Company operates a
network of manufacturing, purchasing and distribution facilities in the U.S.
and Canada, with approximately 4,000 employees.
###
