[EXECUTION COPY]
CREDIT AGREEMENT
Dated as of August 25, 1997
among
DELTA WOODSIDE INDUSTRIES, INC.,
as Borrower,
CERTAIN SUBSIDIARIES OF THE BORROWER
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
NATIONSBANK, N.A.,
as Agent
TABLE OF CONTENTS
Page
SECTION 1 1
DEFINITIONS 1
1.1 Definitions. 1
1.2 Computation of Time Periods. 23
1.3 Accounting Terms. 23
SECTION 2 24
CREDIT FACILITIES 24
2.1 Revolving Loans. 24
2.2 Letter of Credit Subfacility. 26
SECTION 3 31
OTHER PROVISIONS RELATING TO CREDIT FACILITIES 31
3.1 Default Rate. 31
3.2 Extension and Conversion. 32
3.3 Prepayments. 32
3.4 Termination and Reduction of Revolving Committed Amount. 34
3.5 Fees. 34
3.6 Capital Adequacy. 35
3.7 Limitation on Eurodollar Loans. 36
3.8 Illegality. 36
3.9 Requirements of Law. 36
3.10 Treatment of Affected Revolving Loans. 38
3.12 Compensation. 40
3.13 Pro Rata Treatment. 41
3.14 Sharing of Payments. 42
3.15 Payments, Computations, Etc. 43
3.16 Evidence of Debt. 44
SECTION 4 45
GUARANTY 45
4.1 The Guaranty. 45
4.2 Obligations Unconditional. 46
4.3 Reinstatement. 47
4.4 Certain Additional Waivers. 47
4.5 Remedies. 47
4.6 Rights of Contribution. 48
4.7 Continuing Guarantee. 49
SECTION 5 49
CONDITIONS 49
5.1 Closing Conditions. 49
5.2 Conditions to all Extensions of Credit. 53
SECTION 6 54
REPRESENTATIONS AND WARRANTIES 54
6.1 Financial Condition. 54
6.2 No Material Change. 54
6.3 Organization and Good Standing. 55
6.4 Power; Authorization; Enforceable Obligations. 55
6.5 No Conflicts. 55
6.6 No Default. 56
6.7 Ownership. 56
6.8 Indebtedness. 56
6.9 Litigation. 56
6.10 Taxes. 56
6.11 Compliance with Law. 56
6.12 ERISA. 57
6.13 Subsidiaries. 58
6.14 Governmental Regulations, Etc. 58
6.15 Purpose of Revolving Loans and Letters of Credit. 59
6.16 Environmental Matters. 60
6.17 Intellectual Property. 61
6.18 Solvency. 61
6.19 Investments. 61
6.20 Location of Collateral. 61
6.21 Disclosure. 61
6.22 No Burdensome Restrictions. 61
6.23 Brokers' Fees. 62
6.24 Labor Matters. 62
6.25 Nature of Business. 62
SECTION 7 62
AFFIRMATIVE COVENANTS 62
7.1 Information Covenants. 62
7.2 Preservation of Existence and Franchises. 66
7.3 Books and Records. 66
7.4 Compliance with Law. 66
7.5 Payment of Taxes and Other Indebtedness. 66
7.6 Insurance. 66
7.7 Maintenance of Property. 67
7.8 Performance of Obligations. 67
7.9 Use of Proceeds. 67
7.10 Audits/Inspections. 67
7.11 Financial Covenants. 68
7.12 Additional Credit Parties. 68
7.13 Pledged Assets. 68
7.14 Maintenance of Accounts with Agent. 69
7.15 Factoring Agreements. 69
SECTION 8 69
NEGATIVE COVENANTS 69
8.1 Indebtedness. 69
8.2 Liens. 70
8.3 Nature of Business. 70
8.4 Consolidation, Merger, Dissolution, etc. 71
8.5 Asset Dispositions. 71
8.6 Investments. 72
8.7 Restricted Payments. 72
8.8 Prepayments of Indebtedness, etc. 73
8.9 Transactions with Affiliates. 73
8.10 Fiscal Year. 74
8.11 Limitation on Restricted Actions. 74
8.12 Ownership of Subsidiaries. 74
8.13 Sale Leasebacks. 74
8.14 Capital Expenditures. 75
8.15 No Further Negative Pledges. 75
8.16 Operating Lease Obligations. 75
8.17 Limitation on Foreign Operations. 75
8.18 Factoring Agreements. 75
SECTION 9 76
EVENTS OF DEFAULT76
9.1 Events of Default. 76
9.2 Acceleration; Remedies. 78
SECTION 10 79
AGENCY PROVISIONS 79
10.1 Appointment, Powers and Immunities. 79
10.2 Reliance by Agent. 80
10.3 Defaults. 80
10.4 Rights as a Lender. 81
10.5 Indemnification. 81
10.6 Non-Reliance on Agent and Other Lenders. 81
10.7 Successor Agent. 82
SECTION 11 82
MISCELLANEOUS 82
11.1 Notices. 82
11.2 Right of Set-Off; Adjustments. 83
11.3 Benefit of Agreement. 84
11.4 No Waiver; Remedies Cumulative. 86
11.5 Expenses; Indemnification. 86
11.6 Amendments, Waivers and Consents. 87
11.7 Counterparts. 88
11.8 Headings. 89
11.9 Survival. 89
11.10 Governing Law; Submission to Jurisdiction; Venue. 89
11.11 Severability. 90
11.12 Entirety. 90
11.13 Binding Effect; Termination. 90
11.14 Confidentiality. 90
11.15 Conflict. 91
SCHEDULES
Schedules Omitted
EXHIBITS
Exhibit 1.1A Form of Pledge Agreement
Exhibit 1.1B Form of Security Agreement
Exhibit 2.1(b)(i) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Revolving Note
Exhibit 3.2 Form of Notice of Extension/Conversion
Exhibit 7.1(c) Form of Officer's Compliance Certificate
Exhibit 7.1(d) Form of Borrowing Base Certificate
Exhibit 7.12 Form of Joinder Agreement
Exhibit 11.3(b) Form of Assignment and Acceptance
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of August 25, 1997 (as
amended, modified, restated or supplemented from time to time,
the "Credit Agreement"), is by and among DELTA WOODSIDE
INDUSTRIES, INC., a South Carolina corporation (the "Borrower"),
the Guarantors (as defined herein), the Lenders (as defined
herein) and NATIONSBANK, N.A., as Agent for the Lenders (in such
capacity, the "Agent").
W I T N E S S E T H
WHEREAS, the Borrower has requested that the Lenders provide
a $20 million credit facility for the purposes hereinafter set
forth; and
WHEREAS, the Lenders have agreed to make the requested
credit facility available to the Borrower on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS
1.1 Definitions.
As used in this Credit Agreement, the following terms shall
have the meanings specified below unless the context otherwise
requires:
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date by execution of a
Joinder Agreement.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus 2%.
"Affiliate" means, with respect to any Person, any
other Person (i) directly or indirectly controlling or
controlled by or under direct or indirect common control
with such Person or (ii) directly or indirectly owning or
holding ten percent (10%) or more of the Capital Stock in
such Person. For purposes of this definition, "control"
when used with respect to any Person means the power to
direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to
the foregoing.
"Agency Services Address" means NationsBank, N.A., NC1-
001-15-04, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx
00000, Attn: Agency Services, or such other address as may
be identified by written notice from the Agent to the
Borrower.
"Agent" shall have the meaning assigned to such term in
the heading hereof, together with any successors or assigns.
"Alchem" means Alchem Capital Corporation, a Delaware
corporation wholly-owned by the Borrower.
"Applicable Lending Office" means, for each Lender, the
office of such Lender (or of an Affiliate of such Lender) as
such Lender may from time to time specify to the Agent and
the Borrower by written notice as the office by which its
Eurodollar Loans are made and maintained.
"Application Period", in respect of any Asset
Disposition, shall have the meaning assigned to such term in
Section 8.5.
"Asset Disposition" means the disposition of any or all
of the assets (including without limitation the Capital
Stock of a Subsidiary) of any Consolidated Party whether by
sale, lease, transfer or otherwise, but excluding (i) the
sale of inventory in the ordinary course of business for
fair consideration and (ii) the sale or disposition of
machinery and equipment no longer used or useful in the
conduct of such Consolidated Party's business.
"Asset Disposition Prepayment Event" means, with
respect to any Asset Disposition other than an Excluded
Asset Disposition, the failure of the Borrower to apply (or
cause to be applied) the Net Cash Proceeds of such Asset
Disposition to the purchase, acquisition or construction of
Eligible Assets during the Application Period for such Asset
Disposition.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded
or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person,
the occurrence of any of the following with respect to such
Person: (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order
for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of such Person or for any substantial part
of its Property or ordering the winding up or liquidation of
its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect,
or any case, proceeding or other action for the appointment
of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of such Person or for any
substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or
other case, proceeding or other action shall remain
undismissed, undischarged or unbonded for a period of sixty
(60) consecutive days; or (iii) such Person shall commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent
to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment or taking
possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or make any
general assignment for the benefit of creditors; or (iv)
such Person shall be unable to, or shall admit in writing
its inability to, pay its debts generally as they become
due.
"Base Rate" means, for any day, the rate per annum
equal to the higher of (a) the Federal Funds Rate for such
day plus one-half of one percent (0.5%) and (b) the Prime
Rate for such day. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Rate shall be
effective on the effective date of such change in the Prime
Rate or Federal Funds Rate.
"Base Rate Loan" means any Revolving Loan bearing
interest at a rate determined by reference to the Base Rate.
"Borrower" means the Person identified as such in the
heading hereof, together with any permitted successors and
assigns.
"Borrowing Base" means, as of any day, the sum of (a)
85% of Eligible Receivables (net of any reserves as provided
in the definition of "Eligible Receivables" set forth in
this Section 1.1) and (b) 40% of Eligible Inventory (net of
any reserves as provided in the definition of "Eligible
Inventory" set forth in this Section 1.1), in each case as
set forth in the most recent Borrowing Base Certificate
delivered to the Agent and the Lenders in accordance with
the terms of Section 7.1(d).
"Borrowing Base Parties" means the Borrower and each of
the Guarantors which is a Domestic Subsidiary of the
Borrower.
"Business Day" means a day other than a Saturday,
Sunday or other day on which commercial banks in Charlotte,
North Carolina or New York, New York are authorized or
required by law to close, except that, when used in
connection with a Eurodollar Loan, such day shall also be a
day on which dealings between banks are carried on in U.S.
dollar deposits in London, England.
"Capital Lease" means, as applied to any Person, any
lease of any Property (whether real, personal or mixed) by
that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance
sheet of that Person.
"Capital Stock" means (i) in the case of a corporation,
capital stock, (ii) in the case of an association or
business entity, any and all shares, interests,
participations, rights or other equivalents (however
designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or
limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or
participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time deposits and
certificates of deposit of (i) any Lender, (ii) any domestic
commercial bank of recognized standing having capital and
surplus in excess of $100,000,000 or (iii) any bank whose
short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Xxxxx'x is at least P-1 or
the equivalent thereof (any such bank being an "Approved
Bank"), in each case with maturities of not more than 270
days from the date of acquisition, (c) commercial paper and
variable or fixed rate notes issued by any Approved Bank (or
by the parent company thereof) or any variable rate notes
issued by, or guaranteed by, any domestic corporation rated
A-1 (or the equivalent thereof) or better by S&P or P-1 (or
the equivalent thereof) or better by Moody's and maturing
within six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital
and surplus in excess of $100,000,000 for direct obligations
issued by or fully guaranteed by the United States of
America in which any Credit Party shall have a perfected
first priority security interest (subject to no other Liens)
and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase
obligations and (e) Investments, classified in accordance
with GAAP as current assets, in money market investment
programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable
financial institutions having capital of at least
$100,000,000 and the portfolios of which are limited to
Investments of the character described in the foregoing
subdivisions (a) through (d).
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons
acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its
or their acquisition of, control over, Voting Stock of the
Borrower (or other securities convertible into such Voting
Stock) representing 35% or more of the combined voting power
of all Voting Stock of the Borrower or (ii) during any
period of up to 24 consecutive months, commencing after the
Closing Date, individuals who at the beginning of such 24
month period were directors of the Borrower (together with
any new director whose election by the Borrower's Board of
Directors or whose nomination for election by the Borrower's
shareholders was approved by a vote of at least two-thirds
of the directors then still in office who either were
directors at the beginning of such period or whose election
or nomination for election was previously so approved) cease
for any reason to constitute a majority of the directors of
the Borrower then in office. As used herein, "beneficial
ownership" shall have the meaning provided in Rule 13d-3 of
the Securities and Exchange Commission under the Securities
Exchange Act of 1934.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted
by the rules and regulations issued thereunder, in each case
as in effect from time to time. References to sections of
the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the
collateral which is identified in, and at any time will be
covered by, the Collateral Documents.
"Collateral Documents" means a collective reference to
the Security Agreement, the Pledge Agreement and such other
documents executed and delivered in connection with the
attachment and perfection of the Agent's security interests
and liens arising thereunder, including without limitation
UCC financing statements and patent and trademark filings.
"Commitment" means (i) with respect to each Lender, the
Revolving Commitment of such Lender and (ii) with respect to
the Issuing Lender, the LOC Commitment.
"Consolidated Capital Expenditures" means, for any
period, all capital expenditures of the Consolidated Parties
on a consolidated basis for such period, as determined in
accordance with GAAP.
"Consolidated Cash Taxes" means, for any period, the
aggregate of all income, value added and similar taxes of
the Consolidated Parties on a consolidated basis for such
period, as determined in accordance with GAAP, to the extent
the same are paid in cash during such period.
"Consolidated Current Assets" means, as of any date,
all items which would be classified as current assets on a
consolidated balance sheet of the Borrower and its
Subsidiaries prepared as of such date in accordance with
GAAP.
"Consolidated Current Liabilities" means, as of any
date, all items which would be classified as current
liabilities on a consolidated balance sheet of the Borrower
and its Subsidiaries prepared as of such date in accordance
with GAAP.
"Consolidated EBITDA" means, for any period, the sum of
(i) Consolidated Net Income for such period, plus (ii) an
amount which, in the determination of Consolidated Net
Income for such period, has been deducted for (A)
Consolidated Interest Expense, (B) total federal, state,
local and foreign income, value added and similar taxes and
(C) depreciation and amortization expense, all as determined
in accordance with GAAP.
"Consolidated Interest Expense" means, for any period,
interest expense (including the amortization of debt
discount and premium, the interest component under Capital
Leases and the implied interest component under Synthetic
Leases) of the Consolidated Parties on a consolidated basis
for such period, as determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, net
income (excluding extraordinary items and non-operating
gains and losses (including without limitation currency
gains and losses)) after taxes for such period of the
Consolidated Parties on a consolidated basis, as determined
in accordance with GAAP.
"Consolidated Parties" means a collective reference to
the Borrower and its Subsidiaries, and "Consolidated Party"
means any one of them.
"Consolidated Scheduled Funded Debt Payments" means, as
of the end of each fiscal quarter of the Consolidated
Parties, for the Consolidated Parties on a consolidated
basis, the sum of all scheduled payments of principal on
Funded Indebtedness for the applicable period ending on such
date (including the principal component of payments due on
Capital Leases during the applicable period ending on such
date); it being understood that Scheduled Funded Debt
Payments shall not include voluntary prepayments or the
mandatory prepayments required pursuant to Section 3.3.
"Consolidated Tangible Capitalization" means, as of any
date, the sum of (i) Consolidated Tangible Net Worth as of
such date plus (ii) Funded Indebtedness of the Consolidated
Parties on a consolidated basis as of such date.
"Consolidated Tangible Net Worth" means, as of any
date, shareholders' equity or net worth of the Consolidated
Parties on a consolidated basis, as determined in accordance
with GAAP, less all assets of the Consolidated Parties as of
such date which should be classified as intangible assets
under GAAP (including without limitation good will and
investments in Delta Xxxxx and its Subsidiaries).
"Consolidated Total Assets" means, at any time, all
items which, in accordance with GAAP, would be classified as
assets on a consolidated balance sheet of the Consolidated
Parties as of such time.
"Continue", "Continuation", and "Continued" shall refer
to the continuation pursuant to Section 3.2 hereof of a
Eurodollar Loan from one Interest Period to the next
Interest Period.
"Convert", "Conversion", and "Converted" shall refer to
a conversion pursuant to Section 3.2 or Sections 3.7 through
3.12, inclusive, of a Base Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this
Credit Agreement, the Revolving Notes, the LOC Documents,
each Joinder Agreement, the Collateral Documents and all
other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto (in
each case as the same may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to
time), and "Credit Document" means any one of them.
"Credit Parties" means a collective reference to the
Borrower and the Guarantors, and "Credit Party" means any
one of them.
"Credit Party Obligations" means, without duplication,
(i) all of the obligations of the Credit Parties to the
Lenders (including the Issuing Lender) and the Agent,
whenever arising, under this Credit Agreement, the Revolving
Notes, the Collateral Documents or any of the other Credit
Documents (including, but not limited to, any interest
accruing after the occurrence of a Bankruptcy Event with
respect to any Credit Party, regardless of whether such
interest is an allowed claim under the Bankruptcy Code) and
(ii) all liabilities and obligations, whenever arising,
owing from any Consolidated Party to any Lender, or any
Affiliate of a Lender, arising under any Hedging Agreement.
"Current Ratio" means, with respect to the Consolidated
Parties on a consolidated basis as of the last day of any
fiscal quarter of the Consolidated Parties, the ratio of (a)
Consolidated Current Assets as of such date to (b)
Consolidated Current Liabilities as of such date.
"Debt Issuance" means the issuance of any Indebtedness
for borrowed money by any Consolidated Party.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Lender" means, at any time, any Lender that
(a) has failed to make a Revolving Loan or purchase a
Participation Interest required pursuant to the term of this
Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to
the Agent or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement within one
Business Day of when due, unless such amount is subject to a
good faith dispute or (c) has been deemed insolvent or has
become subject to a bankruptcy or insolvency proceeding or
with respect to which (or with respect to any of assets of
which) a receiver, trustee or similar official has been
appointed.
"Delta Xxxxx" means Delta Xxxxx, Inc., a Delaware
corporation indirectly wholly-owned by the Borrower.
"Delta Xxxxx Net Income" means, for any period, net
income (excluding extraordinary items and non-operating
gains and losses (including without limitation currency
gains and losses)) after taxes for such period of Delta
Xxxxx and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"Domestic Subsidiary" means, with respect to any
Person, any Subsidiary of such Person which is incorporated
or organized under the laws of any State of the United
States or the District of Columbia.
"Eligible Assets" means another business or any
substantial part of another business or other long-term
assets, in each case, in, or used or useful in, the same or
a similar line of business as the Consolidated Parties were
engaged in on the Closing Date or any reasonable extensions
or expansions thereof.
"Eligible Assignee" means (i) a Lender; (ii) an
Affiliate of a Lender; and (iii) any other Person approved
by the Agent and, unless an Event of Default has occurred
and is continuing at the time any assignment is effected in
accordance with Section 11.3, the Borrower (such approval
not to be unreasonably withheld or delayed by the Borrower
and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Agent
from the Borrower within two Business Days after notice of
such proposed assignment has been provided by the assigning
Lender to the Borrower); provided, however, that neither the
Borrower nor an Affiliate of the Borrower shall qualify as
an Eligible Assignee.
"Eligible Inventory" means, as of any date of
determination and without duplication, the lower of the
aggregate book value (based on a FIFO or a moving average
cost valuation, consistently applied) or fair market value,
less appropriate reserves determined in accordance with
GAAP, of all raw materials and finished goods inventory
owned by any Borrowing Base Party and subject to a
perfected, first priority Lien in favor of the Agent, for
the benefit of the Lenders, but excluding in any event (i)
inventory subject to any Lien, other than Liens referred to
in clauses (ii), (iv), (vi) and (xii) of the definition of
Permitted Liens, (ii) inventory which fails to meet
standards for sale or use imposed by governmental agencies,
departments or divisions having regulatory authority over
such goods, (iii) inventory which is not useable or saleable
at prices approximating their cost in the ordinary course of
the applicable Borrowing Base Party's business (without
duplication, net of any reserves for obsolescence,
unsalability or decline in value), (iv) inventory located
outside of the United States, (v) inventory located at a
location not owned or leased by the applicable Borrowing
Base Party, (vi) inventory located at a location leased by
the applicable Borrowing Base Party with respect to which
the Agent shall not have received a landlord's waiver
reasonably satisfactory to the Agent, (vii) inventory which
is leased or on consignment and (viii) inventory which fails
to meet such other specifications and requirements as may
from time to time be established by the Agent in its
reasonable discretion.
"Eligible Receivables" means, as of any date of
determination and without duplication, (A) all amounts owing
to any Borrowing Base Party under all Factoring Agreements
at such time (net of any amounts (i) which the Factors are
entitled to offset against amounts owing to any Borrowing
Base Party under such Factoring Agreements and (ii) owing by
account debtors located outside of the United States or
Canada (except to the extent that (a) payment for the goods
shipped is secured by an irrevocable letter of credit in a
form and from an institution reasonably acceptable to the
Agent or (b) the Factor has assumed the credit risk of the
related accounts receivable)) and (B) the aggregate book
value, in U.S. Dollars, of all accounts receivable,
receivables, and obligations for payment created or arising
from the sale of inventory or the rendering of services in
the ordinary course of business (collectively, the
"Receivables"), owned by or owing to any Borrowing Base
Party and subject to a perfected, first priority Lien in
favor of the Agent, for the benefit of the Lenders, net of
allowances and reserves for doubtful or uncollectible
accounts and sales adjustments consistent with such
Borrowing Base Party's internal policies and in any event in
accordance with GAAP, but excluding in any event from this
clause (B) (i) Receivables subject to any Lien, other than
Liens in favor of the Agent, for the benefit of the Lenders,
(ii) Receivables which are more than 60 days past due (net
of reserves for bad debts in connection with any such
Receivables), (iii) Receivables evidenced by notes, chattel
paper or other instruments, unless such notes, chattel paper
or instruments have been delivered to and are in the
possession of the Agent, (iv) Receivables owing by an
account debtor which is not solvent or is subject to any
bankruptcy or insolvency proceeding of any kind (net of any
reserves in connection with any such Receivables), (v)
Receivables owing by an account debtor located outside of
the United States or Canada (unless payment for the goods
shipped is secured by an irrevocable letter of credit in a
form and from an institution reasonably acceptable to the
Agent), provided that, at any time, no more than $5,000,000
in aggregate Receivables owing by account debtors in Canada
may be included as Eligible Receivables, (vi) Receivables
which are contingent or as to which the account debtor has
made a claim for offset, deduction, or counterclaim, or is
disputing, or raising other defenses to, payment, but in
each case only to the extent of such offset, deduction,
counterclaim, dispute or other defense and net of any
reserves in connection with any such Receivables, (vii)
Receivables for which any direct or indirect Subsidiary of
the Borrower or any Affiliate of the Borrower is the account
debtor, (viii) Receivables, to the extent exceeding
$2,500,000 in the aggregate at any one time, representing a
sale to the government of the United States of America or
any subdivision thereof unless the applicable Borrowing Base
Party has complied (to the reasonable satisfaction of the
Agent), with respect to the granting of a security interest
in such Receivable, with the Federal Assignment of Claims
Act or other similar applicable law, in which case all such
Receivables may be included as Eligible Receivables, (ix)
Receivables arising from the sale to an account debtor on a
xxxx-and-hold , guaranteed sale, sale or return, sale on
approval, consignment or any other repurchase or return
basis and (x) Receivables which fail to meet such other
specifications and requirements as may from time to time be
established by the Agent in its reasonable discretion.
"Environmental Laws" means any and all lawful and
applicable Federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses,
agreements or other governmental restrictions relating to
the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating
to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"Equity Issuance" means any issuance by any
Consolidated Party to any Person which is not a Consolidated
Party of (a) shares of its Capital Stock, (b) any shares of
its Capital Stock pursuant to the exercise of options or
warrants or (c) any shares of its Capital Stock pursuant to
the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto,
as interpreted by the rules and regulations thereunder, all
as the same may be in effect from time to time. References
to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which is under common
control with any Consolidated Party within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group
which includes the Borrower and which is treated as a single
employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Plan, the
occurrence of a Reportable Event or the substantial
cessation of operations (within the meaning of Section
4062(e) of ERISA); (ii) the withdrawal by any Consolidated
Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a substantial employer
(as such term is defined in Section 4001(a)(2) of ERISA), or
the termination of a Multiple Employer Plan; (iii) the
distribution of a notice of intent to terminate or the
actual termination of a Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA; (iv) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC
under Section 4042 of ERISA; (v) any event or condition
which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or partial
withdrawal of any Consolidated Party or any ERISA Affiliate
from a Multiemployer Plan; (vii) the conditions for
imposition of a lien under Section 302(f) of ERISA exist
with respect to any Plan; or (vii) the adoption of an
amendment to any Plan requiring the provision of security to
such Plan pursuant to Section 307 of ERISA.
"Eurodollar Loan" means any Revolving Loan that bears
interest at a rate based upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for
any Interest Period therefor, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%)
determined by the Agent to be equal to the quotient obtained
by dividing (a) the Interbank Offered Rate for such
Eurodollar Loan for such Interest Period by (b) 1 minus the
Eurodollar Reserve Requirement for such Eurodollar Loan for
such Interest Period.
"Eurodollar Reserve Requirement" means, at any time,
the maximum rate at which reserves (including, without
limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
by member banks of the Federal Reserve System against
"Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the
foregoing, the Eurodollar Reserve Requirement shall reflect
any other reserves required to be maintained by such member
banks with respect to (i) any category of liabilities which
includes deposits by reference to which the Adjusted
Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include
Eurodollar Loans. The Adjusted Eurodollar Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Requirement.
"Event of Default" means such term as defined in
Section 9.1.
"Excluded Asset Disposition" means (i) any Asset
Disposition by any Consolidated Party to any other
Consolidated Party if (a) the Credit Parties shall cause to
be executed and delivered such documents, instruments and
certificates as the Agent may request so as to cause the
Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such Asset Disposition and (b)
after giving effect to such Asset Disposition, no Default or
Event of Default exists, (ii) any Equity Issuance, (iii)
sales of accounts pursuant to a Factoring Agreement and (iv)
any Asset Disposition not constituting a substantial part of
the assets of any Person if neither the book value of such
assets nor the Net Cash Proceeds of such Asset Disposition
exceeds $100,000.
"Excluded Equity Issuance" means (i) any Asset
Disposition, (ii) any capital contribution to any
Consolidated Party by any other Consolidated Party or (iii)
any Equity Issuance by any Consolidated Party to any of its
employees, officers or directors pursuant to the exercise of
options or warrants or as part of any compensation package.
"Executive Officer" of any Person means any of the
chief executive officer, chief operating officer, president,
vice president, chief financial officer or treasurer of such
Person.
"Existing Credit Facility" means the credit facility in
favor of Delta Woodside evidenced by that certain amended
and restated credit agreement dated as of March 15, 1996, as
amended from time to time thereafter, among Delta Woodside,
the Lenders named therein, NationsBank, N.A., as Agent, and
Bank of America National Trust and Savings Association and
The Bank of New York, as Co-Agents.
"Existing Letter of Credit" means any one of the
letters of credit described by date of issuance, letter of
credit number, undrawn amount, name of beneficiary and date
of expiry on Schedule 1.1A.
"Factor" means such term as defined in the definition
of "Factoring Agreement" set forth in this Section 1.1.
"Factoring Agreement" means each agreement between the
Borrower or any of its Subsidiaries and any Person approved
by the Required Lenders (each such other Person, in such
capacity, a "Factor"), providing for credit, collection and
application services to be performed by a Factor with
respect to accounts receivable of the Borrower or any of
such Subsidiaries, as applicable, and/or for the purchase by
a Factor, subject to the terms thereof, of some or all of
such accounts receivable, and which may grant to a Factor a
security interest in the factored accounts receivable and
related property of the Borrower or any of such
Subsidiaries, as applicable.
"Fees" means all fees payable pursuant to Section 3.5.
"Federal Funds Rate" means, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day; provided
that (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no
such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the
average rate charged to the Agent (in its individual
capacity) on such day on such transactions as determined by
the Agent.
"Foreign Subsidiary" means, with respect to any Person,
any Subsidiary of such Person which is not a Domestic
Subsidiary of such Person.
"Funded Indebtedness" means, with respect to any
Person, without duplication, (a) all Indebtedness of such
Person other than Indebtedness of the types referred to in
clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1,
(b) all Indebtedness of another Person of the type referred
to in clause (a) above secured by (or for which the holder
of such Funded Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, Property
owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all
Guaranty Obligations of such Person with respect to
Indebtedness of the type referred to in clause (a) above of
another Person and (d) Indebtedness of the type referred to
in clause (a) above of any partnership or unincorporated
joint venture in which such Person is legally obligated or
has a reasonable expectation of being liable with respect
thereto.
"GAAP" means generally accepted accounting principles
in the United States applied on a consistent basis and
subject to the terms of Section 1.3.
"Governmental Authority" means any Federal, state,
local or foreign court or governmental agency, authority,
instrumentality or regulatory body.
"Guarantor" means each of the Persons identified as a
"Guarantor" on the signature pages hereto and each
Additional Credit Party which may hereafter execute a
Joinder Agreement, together with their successors and
permitted assigns, and "Guarantor" means any one of them.
"Guaranty Obligations" means, with respect to any
Person, without duplication, any obligations of such Person
(other than endorsements in the ordinary course of business
of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of
any other Person in any manner, whether direct or indirect,
and including without limitation any obligation, whether or
not contingent, (i) to purchase any such Indebtedness or any
Property constituting security therefor, (ii) to advance or
provide funds or other support for the payment or purchase
of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other
Person (including without limitation keep well agreements,
maintenance agreements, comfort letters or similar
agreements or arrangements) for the benefit of any holder of
Indebtedness of such other Person, (iii) to lease or
purchase Property, securities or services primarily for the
purpose of assuring the holder of such Indebtedness, or (iv)
to otherwise assure or hold harmless the holder of such
Indebtedness against loss in respect thereof. The amount of
any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount
equal to the outstanding principal amount (or maximum
principal amount, if larger) of the Indebtedness in respect
of which such Guaranty Obligation is made.
"Hedging Agreements" means any interest rate protection
agreement or foreign currency exchange agreement between any
Consolidated Party and any Lender, or any Affiliate of a
Lender.
"Indebtedness" of any Person means (a) all obligations
of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily
made, (c) all obligations of such Person under conditional
sale or other title retention agreements relating to
Property purchased by such Person (other than customary
reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business),
(d) all obligations of such Person issued or assumed as the
deferred purchase price of Property or services purchased by
such Person (other than (i) trade debt incurred in the
ordinary course of business and due within six months of the
incurrence thereof and (ii) deferred compensation payable to
employees of such Person on a basis generally consistent
with past practices) which would appear as liabilities on a
balance sheet of such Person, (e) all obligations of such
Person under take-or-pay or similar arrangements or
commodities agreements not entered into in the ordinary
course of such Person's business, (f) all Indebtedness of
others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the
proceeds of production from, Property owned or acquired by
such Person, whether or not the obligations secured thereby
have been assumed, (g) all Guaranty Obligations of such
Person, (h) the principal portion of all obligations of such
Person under Capital Leases (but not under Operating
Leases), (i) all obligations of such Person under Hedging
Agreements, (j) the maximum amount of all standby letters of
credit issued or bankers' acceptances facilities created for
the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k)
all preferred Capital Stock issued by such Person and
required by the terms thereof to be redeemed, or for which
mandatory sinking fund payments are due, by a fixed date,
(l) the principal portion of all obligations of such Person
under Synthetic Leases and (m) the Indebtedness of any
partnership or unincorporated joint venture in which such
Person is a general partner or a joint venturer.
"Interbank Offered Rate" means, for any Eurodollar Loan
for any Interest Period therefor, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Telerate Page 3750 (or any successor page) as
the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term
comparable to such Interest Period. If for any reason such
rate is not available, the term "Interbank Offered Rate"
shall mean, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if
necessary, to the nearest 1/100 of 1%).
"Interest Coverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis for the one-
quarter period ending on the last day of any fiscal quarter
of the Consolidated Parties, the ratio of (a) Consolidated
EBITDA for such to (b) Consolidated Interest Expense for
such period.
"Interest Payment Date" means (a) as to Base Rate
Loans, the last day of each fiscal quarter of the Borrower
and the Maturity Date, and (b) as to Eurodollar Loans, the
last day of each applicable Interest Period and the Maturity
Date, and in addition where the applicable Interest Period
for a Eurodollar Loan is greater than three months, then
also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a
period of one, two, three or six months' duration, as the
Borrower may elect, commencing, in each case, on the date of
the borrowing (including continuations and conversions
thereof); provided, however, (a) if any Interest Period
would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business
Day falls in the next succeeding calendar month, then on the
next preceding Business Day), (b) no Interest Period shall
extend beyond the Maturity Date and (c) where an Interest
Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan
or other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment
or other assets in the ordinary course of business) or (c)
any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty
Obligations (including any support for a letter of credit
issued on behalf of such Person) incurred for the benefit of
such Person, but excluding any Restricted Payment to such
Person.
"Issuing Lender" means NationsBank together with its
successors and permitted assigns.
"Issuing Lender Fees" shall have the meaning assigned
to such term in Section 3.5(c)(ii).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.12 hereto, executed
and delivered by an Additional Credit Party in accordance
with the provisions of Section 7.12.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which
may become a Lender by way of assignment in accordance with
the terms hereof, together with their successors and
permitted assigns.
"Letter of Credit" means (i) any letter of credit
issued by the Issuing Lender for the account of the Borrower
in accordance with the terms of Section 2.2 and (ii) each
Existing Letter of Credit..
"Leverage Ratio" means, with respect to the
Consolidated Parties on a consolidated basis as of the last
day of any fiscal quarter, the ratio of (a) Funded
Indebtedness of the Consolidated Parties on a consolidated
basis as of such date to (b) Consolidated Tangible
Capitalization as of such date.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest,
encumbrance, lien (statutory or otherwise), preference,
priority or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other
title retention agreement, any financing or similar
statement or notice filed under the Uniform Commercial Code
as adopted and in effect in the relevant jurisdiction or
other similar recording or notice statute, and any lease in
the nature thereof).
"LOC Commitment" means the commitment of the Issuing
Lender to issue Letters of Credit in an aggregate face
amount at any time outstanding (together with the amounts of
any unreimbursed drawings thereon) of up to the LOC
Committed Amount.
"LOC Committed Amount" shall have the meaning assigned
to such term in Section 2.2.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or
other documents (whether general in application or
applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties
concerned or at risk or (ii) any collateral security for
such obligations.
"LOC Obligations" means, at any time, the sum of (i)
the maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (ii) the
aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore reimbursed
by the Borrower.
"Material Adverse Effect" means a material adverse
effect on (i) the condition (financial or otherwise),
operations, business, assets, liabilities or prospects of
any Consolidated Party, (ii) the ability of any Credit Party
to perform any material obligation under the Credit
Documents to which it is a party or (iii) the material
rights and remedies of the Lenders under the Credit
Documents.
"Material Subsidiary" means (i) each of the Persons
identified as a "Guarantor" on the signature pages hereto
and (ii) any other direct or indirect Domestic Subsidiary of
the Borrower which at any time on or after the Closing Date
has total assets (as determined in accordance with GAAP)
equal to or greater than $1,000,000, provided that the
aggregate total assets (as determined in accordance with
GAAP) at any time of all Subsidiaries of the Borrower
excluded from this definition of "Material Subsidiary" shall
not exceed 10% of Consolidated Total Assets as of the then
most recent fiscal quarter end with respect to which the
Agent shall have received the financial statements required
to be delivered pursuant to Section 7.1(a) or (b).
"Materials of Environmental Concern" means any gasoline
or petroleum (including crude oil or any fraction thereof)
or petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or
under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde
insulation.
"Maturity Date" means October 31, 1998.
"Moody's" means Xxxxx'x Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Multiemployer Plan" means a Plan which is a
multiemployer plan as defined in Sections 3(37) or
4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan which any
Consolidated Party or any ERISA Affiliate and at least one
employer other than the Consolidated Parties or any ERISA
Affiliate are contributing sponsors.
"NationsBank" means NationsBank, N.A. and its
successors.
"Net Cash Proceeds" means, in respect of any Asset
Disposition, Equity Issuance or Debt Issuance, the sum of
(i) cash, (ii) an amount equal to the value of readily
marketable securities and (iii) the principal amount of any
promissory note, received at any time by the Consolidated
Parties in consideration of such transaction, net of (a)
direct costs (including, without limitation, legal,
accounting and investment banking fees, and sales
commissions) and (b) taxes paid or payable as a result
thereof. Net Cash Proceeds shall be deemed to be received
for purposes of this Credit Agreement (A) in the case of
cash, when paid to the recipient, (B) in the case of readily
marketable securities, when delivered to the recipient in
form for transfer and (C) when evidenced by a promissory
note (1) secured by a valid, perfected first priority
security interest in or first mortgage lien on the assets so
sold or disposed of, when payments of principal are received
thereunder and (2) not secured as provided in clause (1),
when payments of principal would have been received
thereunder if such principal were required to be repaid in
substantially equal consecutive annual installments over a
period of three years commencing on the date of delivery of
such note or, if earlier, when payments of principal are
actually received thereunder.
"New Delta Xxxxx Credit Facility" means the credit
facility in favor of Delta Xxxxx evidenced by that certain
credit agreement dated as of the date hereof among Delta
Xxxxx, the Guarantors named therein, the Lenders named
therein, NationsBank, N.A., as Administrative Agent, and BNY
Financial Corporation., as Collateral Agent.
"Notice of Borrowing" means a written notice of
borrowing in substantially the form of Exhibit 2.1(b)(i), as
required by Section 2.1(b)(i).
"Notice of Extension/Conversion" means the written
notice of extension or conversion in substantially the form
of Exhibit 3.2, as required by Section 3.2.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any Property
(whether real, personal or mixed) which is not a Capital
Lease other than any such lease in which that Person is the
lessor.
"Other Taxes" means such term as is defined in Section
3.11.
"Participation Interest" means a purchase by a Lender
of a participation in Letters of Credit or LOC Obligations
as provided in Section 2.2 or in any Revolving Loans as
provided in Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and
any successor thereof.
"Permitted Investments" means Investments which are (i)
cash and Cash Equivalents; (ii) accounts receivable created,
acquired or made by any Consolidated Party in the ordinary
course of business and payable or dischargeable in
accordance with customary trade terms; (iii) Investments
consisting of Capital Stock, obligations, securities or
other property received by any Consolidated Party in
settlement of accounts receivable (created in the ordinary
course of business) from bankrupt obligors; (iv) Investments
existing as of the Closing Date and set forth in Schedule
1.1B; (v) transactions permitted by Section 8.9; (vi)
advances or loans to directors, officers, employees, agents,
customers or suppliers that do not exceed $2,000,000 in the
aggregate at any one time outstanding for all of the
Consolidated Parties; (vii) Investments in Delta Xxxxx and
its Subsidiaries that do not, taken together with Restricted
Payments made pursuant to Section 8.7(d), exceed $500,000 in
the aggregate at any one time outstanding for all of the
Consolidated Parties; or (viii) Investments in any Credit
Party or, subject to the terms of Section 7.12 and 7.13, in
any Subsidiary of a Credit Party.
"Permitted Liens" means:
(i) Liens in favor of the Agent to secure the Credit Party
Obligations;
(ii) Liens (other than Liens created or imposed under ERISA)
for taxes, assessments or governmental charges or levies not
yet due or Liens for taxes being contested in good faith by
appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established
(and as to which the Property subject to any such Lien is
not yet subject to foreclosure, sale or loss on account
thereof);
(iii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, materialmen and suppliers
and other Liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary
course of business, provided that such Liens secure only
amounts not yet due and payable or, if due and payable, are
unfiled and no other action has been taken to enforce the
same or are being contested in good faith by appropriate
proceedings for which adequate reserves determined in
accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to
foreclosure, sale or loss on account thereof);
(iv) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any Consolidated Party in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders,
statutory obligations, bids, leases, government contracts,
performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of
borrowed money);
(v) Liens in connection with attachments or judgments
(including judgment or appeal bonds) provided that the
judgments secured shall, within 60 days after the entry
thereof, have been discharged or execution thereof stayed
pending appeal, or shall have been discharged within 60 days
after the expiration of any such stay;
(vi) easements, rights-of-way, restrictions (including
zoning restrictions), minor defects or irregularities in
title and other similar charges or encumbrances not, in any
material respect, impairing the use of the encumbered
Property for its intended purposes;
(vii) Liens on Property securing purchase money
Indebtedness (including Capital Leases and Synthetic Leases)
to the extent permitted under Section 8.1(c), provided that
any such Lien attaches to such Property concurrently with or
within 90 days after the acquisition thereof;
(viii) any interest of title of a lessor under, and Liens
arising from UCC financing statements (or equivalent
filings, registrations or agreements in foreign
jurisdictions) relating to, leases permitted by this Credit
Agreement;
(ix) Liens in connection with a Factoring Agreement,
but (i) only to the extent of the applicable accounts
receivable subject to such Factoring Agreement and related
property and (ii) only if the proceeds payable thereunder
have been assigned to the Agent for the benefit of the
Lenders in a manner reasonably acceptable to the Agent;
(x) Liens deemed to exist in connection with Investments in
repurchase agreements permitted under Section 8.6;
(xi) normal and customary rights of setoff upon deposits of
cash in favor of banks or other depository institutions; and
(xii) Liens existing as of the Closing Date and set
forth on Schedule 1.1C; provided that no such Lien shall at
any time be extended to or cover any Property other than the
Property subject thereto on the Closing Date.
Notwithstanding anything to the contrary set forth in this
definition or in any other provision of this Credit
Agreement, the term "Permitted Liens" shall not include any
Lien on Property of any Consolidated Party securing any
Indebtedness of Delta Xxxxx or any of its Subsidiaries
(other than pursuant to the pledge agreement executed by
Alchem Capital Corporation in connection with the New Delta
Xxxxx Credit Facility) other than Liens securing any
Guaranty Obligation arising in connection with standby
letters of credit or surety bonds issued to satisfy workers'
compensation requirements.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust or other enterprise (whether or not
incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Consolidated Party or any ERISA
Affiliate is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreement" means the pledge agreement dated as
of the Closing Date in the form of Exhibit 1.1A to be
executed in favor of the Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from
time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by NationsBank as its prime
rate, which rate may not be the lowest rate of interest
charged by NationsBank to its customers.
"Principal Office" means the principal office of
NationsBank, presently located at Charlotte, North Carolina.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Refinancing" shall have the meaning given such term in
Section 6.15.
"Register" shall have the meaning given such term in
Section 11.3(c).
"Regulation G, T, U, or X" means Regulation G, T, U or
X, respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any
successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the
environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing
any Materials of Environmental Concern).
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to
which the notice requirement has been waived by regulation.
"Required Lenders" means, at any time, Lenders which
are then in compliance with their obligations hereunder (as
determined by the Agent) and holding in the aggregate at
least 51% of (i) the Revolving Commitments (and
Participation Interests therein) or (ii) if the Commitments
have been terminated, the outstanding Revolving Loans and
Participation Interests (including the Participation
Interests of the Issuing Lender in Letters of Credit).
"Requirement of Law" means, as to any Person, the
certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its material property is subject.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares
of any class of Capital Stock of any Consolidated Party, now
or hereafter outstanding, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of any Consolidated Party, now or
hereafter outstanding, (iii) any payment made to retire, or
to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
Capital Stock of any Consolidated Party, now or hereafter
outstanding and (iv) any other payment, distribution or
transfer of cash or Property to Delta Xxxxx or any of its
Subsidiaries not constituting an Investment and not
described in clause (i), (ii) or (iii) above.
"Revolving Commitment" means, with respect to each
Lender, the commitment of such Lender in an aggregate
principal amount at any time outstanding of up to such
Lender's Revolving Commitment Percentage of the Revolving
Committed Amount, (i) to make Revolving Loans in accordance
with the provisions of Section 2.1(a) and (ii) to purchase
Participation Interests in Letters of Credit in accordance
with the provisions of Section 2.2(c).
"Revolving Commitment Percentage" means, for any
Lender, the percentage identified as its Revolving
Commitment Percentage on Schedule 2.1(a), as such percentage
may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Committed Amount" shall have the meaning
assigned to such term in Section 2.1(a).
"Revolving Loans" shall have the meaning assigned to
such term in Section 2.1(a) and shall include within such
meaning a portion of any Revolving Loan bearing interest at
the Base Rate or the Adjusted Eurodollar Rate.
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the
Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1(e), individually or collectively, as
appropriate, as such promissory notes may be amended,
modified, restated, supplemented, extended, renewed or
replaced from time to time.
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., or any successor or assignee of the
business of such division in the business of rating
securities.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which any such
Person is a party, providing for the leasing to any
Consolidated Party of any Property, whether owned by such
Consolidated Party as of the Closing Date or later acquired,
which has been or is to be sold or transferred by such
Consolidated Party to such Person or to any other Person
from whom funds have been, or are to be, advanced by such
Person on the security of such Property.
"Security Agreement" means the security agreement dated
as of the Closing Date in the form of Exhibit 1.1B to be
executed in favor of the Agent by each of the Credit
Parties, as amended, modified, restated or supplemented from
time to time.
"Single Employer Plan" means any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer Plan
or a Multiple Employer Plan.
"Solvent" or "Solvency" means, with respect to any
Person as of a particular date, that on such date (i) such
Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business,
(ii) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature
in their ordinary course, (iii) such Person is not engaged
in a business or a transaction, and is not about to engage
in a business or a transaction, for which such Person's
Property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the
industry in which such Person is engaged or is to engage,
(iv) the fair value of the Property of such Person is
greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person
and (v) the present fair salable value of the assets of such
Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as
they become absolute and matured. In computing the amount
of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in
light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected
to become an actual or matured liability.
"Standby Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(i).
"Subsidiary" means, as to any Person, (a) any
corporation more than 50% of whose Capital Stock of any
class or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time, any
class or classes of such corporation shall have or might
have voting power by reason of the happening of any
contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such
Person directly or indirectly through Subsidiaries has more
than 50% of the Capital Stock at any time; provided,
however, that, notwithstanding the foregoing, Delta Xxxxx
and its direct and indirect Subsidiaries shall not be deemed
to be a direct or indirect Subsidiary of any Credit Party.
"Synthetic Lease" means any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes
but is classified as an Operating Lease.
"Taxes" means such term as is defined in Section 3.11.
"Trade Letter of Credit Fee" shall have the meaning
assigned to such term in Section 3.5(c)(ii).
"Unused Fee" shall have the meaning assigned to such
term in Section 3.5(b).
"Unused Fee Calculation Period" shall have the meaning
assigned to such term in Section 3.5(b).
"Unused Revolving Committed Amount" means, for any
period, the amount by which (a) the then applicable
Revolving Committed Amount exceeds (b) the daily average sum
for such period of (i) the outstanding aggregate principal
amount of all Revolving Loans plus (ii) the outstanding
aggregate principal amount of all LOC Obligations.
"Upfront Fee" shall have the meaning assigned to such
term in Section 3.5(a).
"Voting Stock" means, with respect to any Person,
Capital Stock issued by such Person the holders of which are
ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing
similar functions) of such Person, even though the right so
to vote has been suspended by the happening of such a
contingency.
"Wholly Owned Subsidiary" of any Person means any
Subsidiary 100% of whose Voting Stock is at the time owned
by such Person directly or indirectly through other Wholly
Owned Subsidiaries.
1.2 Computation of Time Periods.
For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Lenders hereunder shall
be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise
expressly provided herein) be made by application of GAAP applied
on a basis consistent with the most recent annual or quarterly
financial statements delivered pursuant to Section 7.1 (or, prior
to the delivery of the first financial statements pursuant to
Section 7.1, consistent with the financial statements as at June
28, 1997); provided, however, if (a) the Borrower shall object to
determining such compliance on such basis at the time of delivery
of such financial statements due to any change in GAAP or the
rules promulgated with respect thereto or (b) the Agent or the
Required Lenders shall so object in writing within 60 days after
delivery of such financial statements, then such calculations
shall be made on a basis consistent with the most recent
financial statements delivered by the Borrower to the Lenders as
to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and
agree that, for purposes of all calculations made in determining
compliance with the financial covenants set forth in Section
7.11, (i)(A) income statement items (whether positive or
negative) attributable to the Property disposed of in any Asset
Disposition as contemplated by Section 8.5, as applicable, shall
be excluded to the extent relating to any period occurring prior
to the date of such transaction and (B) Indebtedness which is
retired in connection with any such Asset Disposition shall be
excluded and deemed to have been retired as of the first day of
the applicable period and (ii) income statement items (whether
positive or negative) attributable to any Property acquired in
any Investment transaction contemplated by Section 8.6 shall be
included to the extent relating to any period applicable in such
calculations occurring after the date of such transaction (and,
notwithstanding the foregoing, during the first four fiscal
quarters following the date of such transaction, shall be
included on an annualized basis).
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations
and warranties set forth herein, each Lender severally
agrees to make available to the Borrower such Lender's
Revolving Commitment Percentage of revolving credit loans
requested by the Borrower in Dollars ("Revolving Loans")
from time to time from the Closing Date until the Maturity
Date, or such earlier date as the Revolving Commitments
shall have been terminated as provided herein for the
purposes hereinafter set forth; provided, however, that the
sum of the aggregate principal amount of outstanding
Revolving Loans shall not exceed TWENTY MILLION DOLLARS
($20,000,000.00) (as such aggregate maximum amount may be
reduced from time to time as provided in Section 3.4, the
"Revolving Committed Amount"); provided, further, (A) with
respect to each individual Lender, the Lender's pro rata
share of outstanding Revolving Loans plus its pro rata share
of outstanding LOC Obligations shall not exceed such
Lender's Revolving Commitment Percentage of the Revolving
Committed Amount., and (B) the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
shall not exceed the lesser of (1) the Revolving Committed
Amount and (2) the Borrowing Base. Revolving Loans may
consist of Base Rate Loans or Eurodollar Loans, or a
combination thereof, as the Borrower may request, and may be
repaid and reborrowed in accordance with the provisions
hereof; provided, however, that no more than 5 Eurodollar
Loans shall be outstanding hereunder at any time. For
purposes hereof, Eurodollar Loans with different Interest
Periods shall be considered as separate Eurodollar Loans,
even if they begin on the same date, although borrowings,
extensions and conversions may, in accordance with the
provisions hereof, be combined at the end of existing
Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period. Revolving Loans hereunder may be
repaid and reborrowed in accordance with the provisions
hereof.
(b) Revolving Loan Borrowings.
(i) Notice of Borrowing. The Borrower shall
request a Revolving Loan borrowing by written notice
(or telephonic notice promptly confirmed in writing) to
the Agent not later than 11:00 A.M. (Charlotte, North
Carolina time) on the Business Day prior to the date of
the requested borrowing in the case of Base Rate Loans,
and on the third Business Day prior to the date of the
requested borrowing in the case of Eurodollar Loans.
Each such request for borrowing shall be irrevocable
and shall specify (A) that a Revolving Loan is
requested, (B) the date of the requested borrowing
(which shall be a Business Day), (C) the aggregate
principal amount to be borrowed, and (D) whether the
borrowing shall be comprised of Base Rate Loans,
Eurodollar Loans or a combination thereof, and if
Eurodollar Loans are requested, the Interest Period(s)
therefor. If the Borrower shall fail to specify in any
such Notice of Borrowing (I) an applicable Interest
Period in the case of a Eurodollar Loan, then such
notice shall be deemed to be a request for an Interest
Period of one month, or (II) the type of Revolving Loan
requested, then such notice shall be deemed to be a
request for a Base Rate Loan hereunder. The Agent
shall give notice to each affected Lender promptly upon
receipt of each Notice of Borrowing pursuant to this
Section 2.1(b)(i), the contents thereof and each such
Lender's share of any borrowing to be made pursuant
thereto.
(ii) Minimum Amounts. Each Eurodollar Loan or
Base Rate Loan that is a Revolving Loan shall be in a
minimum aggregate principal amount of $5,000,000 and
integral multiples of $1,000,000 in excess thereof (or
the remaining amount of the Revolving Committed Amount,
if less).
(iii) Advances. Each Lender will make its
Revolving Commitment Percentage of each Revolving Loan
borrowing available to the Agent for the account of the
Borrower as specified in Section 3.15(a), or in such
other manner as the Agent may specify in writing, by
1:00 P.M. (Charlotte, North Carolina time) on the date
specified in the applicable Notice of Borrowing in
Dollars and in funds immediately available to the
Agent. Such borrowing will then be made available to
the Borrower by the Agent by crediting the account of
the Borrower on the books of such office with the
aggregate of the amounts made available to the Agent by
the Lenders and in like funds as received by the Agent.
(c) Repayment. The principal amount of all Revolving
Loans shall be due and payable in full on the Maturity Date,
unless accelerated sooner pursuant to Section 9.2.
(d) Interest. Subject to the provisions of Section
3.1,
(i) Base Rate Loans. During such periods as
Revolving Loans shall be comprised in whole or in part
of Base Rate Loans, such Base Rate Loans shall bear
interest at a per annum rate equal to the Base Rate.
(ii) Eurodollar Loans. During such periods as
Revolving Loans shall be comprised in whole or in part
of Eurodollar Loans, such Eurodollar Loans shall bear
interest at a per annum rate equal to the Adjusted
Eurodollar Rate.
Interest on Revolving Loans shall be payable in arrears on
each applicable Interest Payment Date (or at such other
times as may be specified herein).
(e) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note
of the Borrower to such Lender in an original principal
amount equal to such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount and in
substantially the form of Exhibit 2.1(e).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions
hereof and of the LOC Documents, if any, and any other terms
and conditions which the Issuing Lender may reasonably
require and in reliance upon the representations and
warranties set forth herein, the Issuing Lender shall from
time to time upon request issue (from the Closing Date to
the Maturity Date and in a form reasonably acceptable to
such Issuing Lender), in Dollars, and the Lenders shall
participate in, letters of credit (the "Letters of Credit")
for the account of the Borrower; provided, however, that the
aggregate amount of LOC Obligations shall not at any time
exceed TEN MILLION DOLLARS ($10,000,000); provided, further,
(i) the sum of the aggregate amount of LOC Obligations
outstanding plus Revolving Loans outstanding shall not
exceed the lesser of (A) the Revolving Committed Amount and
(B) the Borrowing Base and (ii) with respect to each
individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus its pro rata share of
outstanding LOC Obligations shall not exceed such Lender's
Revolving Commitment Percentage of the Revolving Committed
Amount. The issuance and expiry date of each Letter of
Credit shall be a Business Day. Except as otherwise
expressly agreed upon by all the Lenders, no Letter of
Credit shall have an original expiry date more than one year
from the date of issuance, or as extended, shall have an
expiry date extending beyond the Maturity Date. Each Letter
of Credit shall be either (x) a standby letter of credit
issued to support the obligations (including pension or
insurance obligations), contingent or otherwise, of the
Borrower or any of its Subsidiaries, or (y) a commercial
letter of credit in respect of the purchase of goods or
services by the Borrower or any of its Subsidiaries in the
ordinary course of business. Each Letter of Credit shall
comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance
of a Letter of Credit shall be submitted to an Issuing
Lender at least three Business Days prior to the requested
date of issuance. Each Issuing Lender will, at least
quarterly and more frequently upon request, provide to the
Agent for dissemination to the Lenders a detailed report
specifying the Letters of Credit which are then issued and
outstanding and any activity with respect thereto which may
have occurred since the date of the prior report, and
including therein, among other things, the account party,
the beneficiary, the face amount, and the expiry date as
well as any payments or expirations which may have occurred.
Each Issuing Lender will further provide to the Agent,
promptly upon request, copies of the Letters of Credit and
the other LOC Documents.
(c) Participations. Each Lender, upon issuance of
a Letter of Credit (or, in the case of each Existing
Letter of Credit, on the Closing Date), shall be deemed
to have purchased without recourse a risk participation
from the applicable Issuing Lender in such Letter of
Credit and each LOC Document related thereto and the
rights and obligations arising thereunder and any
collateral relating thereto, in each case in an amount
equal to its Revolving Commitment Percentage of the
obligations under such Letter of Credit, and shall
absolutely, unconditionally and irrevocably assume, as
primary obligor and not as surety, and be obligated to
pay to such Issuing Lender therefor and discharge when
due, its Revolving Commitment Percentage of the
obligations arising under such Letter of Credit.
Without limiting the scope and nature of each Lender's
participation in any Letter of Credit, to the extent
that such Issuing Lender has not been reimbursed as
required hereunder or under any such Letter of Credit,
each such Lender shall pay to such Issuing Lender its
Revolving Commitment Percentage of such unreimbursed
drawing in same day funds on the day of notification by
such Issuing Lender of an unreimbursed drawing pursuant
to the provisions of subsection (d) hereof. The
obligation of each Lender to so reimburse each Issuing
Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an
Event of Default or any other occurrence or event. Any
such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower or any other
Credit Party to reimburse an Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided. Each Existing Letter of Credit shall be
deemed for all purposes of this Credit Agreement and
the other Credit Documents to be a Letter of Credit.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the applicable Issuing Lender will
promptly notify the Borrower. Unless the Borrower shall
immediately notify such Issuing Lender of its intent to
otherwise reimburse such Issuing Lender, the Borrower shall
be deemed to have requested a Revolving Loan at the Adjusted
Base Rate in the amount of the drawing as provided in
subsection (e) hereof, the proceeds of which will be used to
satisfy the reimbursement obligations. The Borrower shall
reimburse the applicable Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds
of a Revolving Loan obtained hereunder or otherwise in same
day funds as provided herein or in the LOC Documents. If
the Borrower shall fail to reimburse an Issuing Lender as
provided hereinabove (including, without limitation, as a
result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other
Credit Party), the unreimbursed amount of such drawing shall
bear interest at a per annum rate equal to the Adjusted Base
Rate plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional
under all circumstances irrespective of (but without waiver
of) any rights of set-off, counterclaim or defense to
payment the applicable account party or the Borrower may
claim or have against an Issuing Lender, the Agent, the
Lenders, the beneficiary of the Letter of Credit drawn upon
or any other Person, including without limitation, any
defense based on any failure of the applicable account
party, the Borrower or any other Credit Party to receive
consideration or the legality, validity, regularity or
unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the Lenders of the amount of any
unreimbursed drawing and each Lender shall promptly pay to
the Agent for the account of the Issuing Lender, in Dollars
and in immediately available funds, the amount of such
Lender's Revolving Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day
such notice is received by such Lender from the Issuing
Lender if such notice is received at or before 2:00 p.m.
(Charlotte, North Carolina time), otherwise such payment
shall be made at or before 12:00 Noon (Charlotte, North
Carolina time) on the Business Day next succeeding the day
such notice is received. If such Lender does not pay such
amount to the Issuing Lender in full upon such request, such
Lender shall, on demand, pay to the Agent for the account of
the Issuing Lender interest on the unpaid amount during the
period from the date the Lender received the notice
regarding the unreimbursed drawing until such Lender pays
such amount to the Issuing Lender in full at a rate per
annum equal to, if paid within two Business Days of the date
of drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each Lender's obligation to make
such payment to the Issuing Lender, and the right of the
Issuing Lender to receive the same, shall be absolute and
unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a
Lender to the Issuing Lender, such Lender shall,
automatically and without any further action on the part of
the Issuing Lender or such Lender, acquire a participation
in an amount equal to such payment (excluding the portion of
such payment constituting interest owing to the Issuing
Lender) in the related unreimbursed drawing portion of the
LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the
Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on
which the Borrower shall have requested, or been deemed to
have requested, a Revolving Loan borrowing to reimburse a
drawing under a Letter of Credit, the Agent shall give
notice to the applicable Lenders that a Revolving Loan has
been requested or deemed requested in connection with a
drawing under a Letter of Credit, in which case a Revolving
Loan borrowing comprised solely of Base Rate Loans (each
such borrowing, a "Mandatory Borrowing") shall be
immediately made from all applicable Lenders (without giving
effect to any termination of the Commitments pursuant to
Section 9.2) pro rata based on each Lender's respective
Revolving Commitment Percentage and the proceeds thereof
shall be paid directly to the Issuing Lender for application
to the respective LOC Obligations. Each such Lender hereby
irrevocably agrees to make such Revolving Loans immediately
upon any such request or deemed request on account of each
such Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such
date notwithstanding (i) the amount of Mandatory Borrowing
may not comply with the minimum amount for borrowings of
Revolving Loans otherwise required hereunder, (ii) whether
any conditions specified in Section 5 are then satisfied,
(iii) whether a Default or Event of Default then exists,
(iv) failure of any such request or deemed request for
Revolving Loans to be made by the time otherwise required
hereunder, (v) the date of such Mandatory Borrowing, or (vi)
any reduction in the Revolving Committed Amount or any
termination of the Commitments. In the event that any
Mandatory Borrowing cannot for any reason be made on the
date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or
any other Credit Party), then each such Lender hereby agrees
that it shall forthwith fund (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest
in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation
Interest on the day the Mandatory Borrowing would otherwise
have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable
to the Issuing Lender upon demand, at the rate equal to, if
paid within two Business Days of such date, the Federal
Funds Rate, and thereafter at a rate equal to the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions
to any Letter of Credit shall, for purposes hereof, be
treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published
as of the date of issue by the International Chamber of
Commerce (Publication No. 500 or the most recent
publication, the "UCP"), in which case the UCP may be
incorporated therein and deemed in all respects to be a part
thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lender hereunder to the Lenders
are only those expressly set forth in this Credit Agreement
and that the Issuing Lender shall be entitled to assume that
the conditions precedent set forth in Section 5 have been
satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section
2.2 shall be deemed to prejudice the right of any Lender to
recover from the Issuing Lender any amounts made available
by such Lender to the the Issuing Lender pursuant to this
Section 2.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a
Letter of Credit constituted gross negligence or willful
misconduct on the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations
under this Credit Agreement, the Borrower hereby agrees
to protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, reasonable costs, charges
and reasonable expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or
be subject to as a consequence, direct or indirect, of
(A) the issuance of any Letter of Credit or (B) the
failure of the Issuing Lender to honor a drawing under
a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future
de jure or de facto government or governmental
authority (all such acts or omissions, herein called
"Government Acts").
(ii) As between the Borrower and the Issuing
Lender, the Borrower shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. The Issuing Lender shall not
be responsible for (except in the case of (A), (B) and
(C) below if the Issuing Lender has actual knowledge to
the contrary): (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the
application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective
for any reason; (C) failure of the beneficiary of a
Letter of Credit to comply fully with conditions
required in order to draw upon a Letter of Credit; (D)
errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (G) any consequences arising
from causes reasonably beyond the reasonable control of
the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect,
impair, or prevent the vesting of the Issuing Lender's
rights or powers hereunder.
(iii) In furtherance and extension and
not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any
Letter of Credit or the related certificates, if taken
or omitted in good faith, shall not put the Issuing
Lender under any resulting liability to the Borrower or
any other Credit Party. It is the intention of the
parties that this Credit Agreement shall be construed
and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby
assumed by the Borrower, including, without limitation,
any and all risks of the acts or omissions, whether
rightful or wrongful, of any present or future
Government Acts. The Issuing Lender shall not, in any
way, be liable for any failure by the Issuing Lender or
anyone else to pay any drawing under any Letter of
Credit as a result of any Government Acts or any other
cause beyond the reasonable control of the Issuing
Lender.
(iv) Nothing in this subsection (j) is
intended to limit the reimbursement obligation of the
Borrower contained in this Section 2.2. The
obligations of the Borrower under this subsection (j)
shall survive the termination of this Credit Agreement.
No act or omission of any current or prior beneficiary
of a Letter of Credit shall in any way affect or impair
the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall
have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender
arising primarily out of the gross negligence or
willful misconduct of the Issuing Lender, as determined
by a court of competent jurisdiction. Nothing in this
Agreement shall relieve the Issuing Lender of any
liability to the Borrower in respect of any action
taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing
Lender or a violation of the UCP or Uniform Commercial
Code (as applicable), as determined by a court of
competent jurisdiction.
(k) Designation of Consolidated Parties as Account
Parties. Notwithstanding anything to the contrary set forth
in this Credit Agreement, including without limitation
Section 2.2(a), a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit
is issued for the account of a Consolidated Party other than
the Borrower, provided that notwithstanding such statement,
the Borrower shall be the actual account party for all
purposes of this Credit Agreement for such Letter of Credit
and such statement shall not affect the Borrower's
reimbursement obligations hereunder with respect to such
Letter of Credit.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
3.1 Default Rate.
Upon the occurrence, and during the continuance, of an Event
of Default, the principal of and, to the extent permitted by law,
interest on the Revolving Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear
interest, payable on demand, at a per annum rate 2% greater than
the rate which would otherwise be applicable (or if no rate is
applicable, whether in respect of interest, fees or other
amounts, then the Base Rate plus 2%).
3.2 Extension and Conversion.
Subject to the terms of Section 5.2, the Borrower shall have
the option, on any Business Day, to extend existing Revolving
Loans into a subsequent permissible Interest Period or to convert
Revolving Loans into Revolving Loans of another interest rate
type; provided, however, that (i) except as provided in Section
3.8, Eurodollar Loans may be converted into Base Rate Loans only
on the last day of the Interest Period applicable thereto, (ii)
Eurodollar Loans may be extended, and Base Rate Loans may be
converted into Eurodollar Loans, only if no Default or Event of
Default is in existence on the date of extension or conversion,
(iii) Revolving Loans extended as, or converted into, Eurodollar
Loans shall be subject to the terms of the definition of
"Interest Period" set forth in Section 1.1 and shall be in such
minimum amounts as provided in, with respect to Revolving Loans,
Section 2.1(b)(ii), (iv) no more than 5 Eurodollar Loans shall be
outstanding hereunder at any time (it being understood that, for
purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they
begin on the same date, although borrowings, extensions and
conversions may, in accordance with the provisions hereof, be
combined at the end of existing Interest Periods to constitute a
new Eurodollar Loan with a single Interest Period) and (v) any
request for extension or conversion of a Eurodollar Loan which
shall fail to specify an Interest Period shall be deemed to be a
request for an Interest Period of one month. Each such extension
or conversion shall be effected by the Borrower by giving a
Notice of Extension/Conversion (or telephonic notice promptly
confirmed in writing) to the office of the Agent specified in
specified in Schedule 2.1(a), or at such other office as the
Agent may designate in writing, prior to 11:00 A.M. (Charlotte,
North Carolina time) on the Business Day prior to, in the case of
the conversion of a Eurodollar Loan into a Base Rate Loan, and on
the third Business Day prior to, in the case of the extension of
a Eurodollar Loan as, or conversion of a Base Rate Loan into, a
Eurodollar Loan, the date of the proposed extension or
conversion, specifying the date of the proposed extension or
conversion, the Revolving Loans to be so extended or converted,
the types of Revolving Loans into which such Revolving Loans are
to be converted and, if appropriate, the applicable Interest
Periods with respect thereto. Each request for extension or
conversion shall be irrevocable and shall constitute a
representation and warranty by the Borrower of the matters
specified in subsections (b), (c), (d), (e) and (f) of Section
5.2. In the event the Borrower fails to request extension or
conversion of any Eurodollar Loan in accordance with this
Section, or any such conversion or extension is not permitted or
required by this Section, then such Eurodollar Loan shall be
automatically converted into a Base Rate Loan at the end of the
Interest Period applicable thereto. The Agent shall give each
Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Revolving Loan.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have
the right to prepay Revolving Loans in whole or in part from
time to time, but otherwise without premium or penalty.
Subject to the foregoing terms, amounts prepaid under this
Section 3.3(a) shall be applied as the Borrower may elect;
provided that if the Borrower fails to specify a voluntary
prepayment then such prepayment shall be applied first to
Revolving Loans, first to Base Rate Loans and then to
Eurodollar Loans in direct order of Interest Period
maturities. All prepayments under this Section 3.3(a) shall
be subject to Section 3.12.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any
time, the sum of the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations
outstanding shall exceed the lesser of (A) the
Revolving Committed Amount and (B) the Borrowing Base,
the Borrower immediately shall prepay the Revolving
Loans and (after all Revolving Loans have been repaid)
cash collateralize the LOC Obligations, in an amount
sufficient to eliminate such excess.
(ii) Asset Dispositions. Immediately upon the
occurrence of any Asset Disposition Prepayment Event,
the Borrower shall prepay the Revolving Loans in an
aggregate amount equal to the Net Cash Proceeds of the
related Asset Disposition not applied (or caused to be
applied) by the Consolidated Parties during the related
Application Period to the purchase, acquisition or
construction of Eligible Assets as contemplated by the
terms of Section 8.5 (such prepayment to be applied as
set forth in clause (v) below).
(iii) Debt Issuances. Immediately upon
receipt by any Consolidated Party of proceeds from any
Debt Issuance, the Borrower shall prepay the Revolving
Loans in an aggregate amount equal to 100% of the Net
Cash Proceeds of such Debt Issuance (such prepayment to
be applied as set forth in clause (v) below).
(iv) Issuances of Equity. Immediately upon
receipt by a Consolidated Party of proceeds from any
Equity Issuance other than an Excluded Equity Issuance,
the Borrower shall prepay the Revolving Loans in an
aggregate amount equal to 100% of the Net Cash Proceeds
of such Equity Issuance (such prepayment to be applied
as set forth in clause (v) below).
(v) Application of Mandatory Prepayments.
All amounts required to be paid pursuant to this
Section 3.3(b) shall be applied as follows: (A) with
respect to all amounts prepaid pursuant to Section
3.3(b)(i), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations and (B) with respect to all
amounts prepaid pursuant to Section 3.3(b)(ii), (iii)
or (iv), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in
respect of LOC Obligations (with a corresponding
reduction in the Revolving Committed Amount in an
amount equal to all amounts applied pursuant to this
clause (B)). Within the parameters of the applications
set forth above, prepayments shall be applied first to
Base Rate Loans and then to Eurodollar Loans in direct
order of Interest Period maturities. All prepayments
under this Section 3.3(b) shall be subject to Section
3.12.
3.4 Termination and Reduction of Revolving Committed
Amount.
(a) Voluntary Reductions. The Borrower may from time
to time permanently reduce or terminate the Revolving
Committed Amount in whole or in part (in minimum aggregate
amounts of $5,000,000 or in integral multiples of $1,000,000
in excess thereof (or, if less, the full remaining amount of
the then applicable Revolving Committed Amount)) upon five
Business Days' prior written notice to the Agent; provided,
however, no such termination or reduction shall be made
which would cause the aggregate principal amount of
outstanding Revolving Loans plus LOC Obligations outstanding
to exceed the lesser of (A) the Revolving Committed Amount
and (B) the Borrowing Base, unless, concurrently with such
termination or reduction, the Revolving Loans are repaid to
the extent necessary to eliminate such excess. The Agent
shall promptly notify each affected Lender of receipt by the
Agent of any notice from the Borrower pursuant to this
Section 3.4(a).
(b) Mandatory Reductions.
On any date that the Revolving Loans are
required to be prepaid pursuant to the terms of Section
3.3(b)(ii), (iii) or (iv), the Revolving Committed
Amount automatically shall be permanently reduced by
the amount of such required prepayment and/or
reduction.
(c) Maturity Date. The Revolving Commitments of the
Lenders and the LOC Commitment of the Issuing Lender shall
automatically terminate on the Maturity Date.
(d) General. The Borrower shall pay to the Agent for
the account of the Lenders in accordance with the terms of
Section 3.5(b), on the date of each termination or reduction
of the Revolving Committed Amount, the Unused Fee accrued
through the date of such termination or reduction on the
amount of the Revolving Committed Amount so terminated or
reduced.
3.5 Fees.
(a) Upfront Fees. The Borrower agrees to pay to the
Agent for the benefit of the Lenders in immediately
available funds on or before the Closing Date an upfront fee
(the "Upfront Fee") of $50,000.
(b) Unused Fee. In consideration of the Revolving
Commitments of the Lenders hereunder, the Borrower agrees to
pay to the Agent for the account of each Lender a fee (the
"Unused Fee") on the Unused Revolving Committed Amount
computed at a per annum rate for each day during the
applicable Unused Fee Calculation Period (hereinafter
defined) at the rate of 0.25%. The Unused Fee shall
commence to accrue on the Closing Date and shall be due and
payable in arrears on the last business day of each March,
June, September and December (and any date that the
Revolving Committed Amount is reduced as provided in Section
3.4(a) and the Maturity Date) for the immediately preceding
quarter (or portion thereof) (each such quarter or portion
thereof for which the Unused Fee is payable hereunder being
herein referred to as an "Unused Fee Calculation Period"),
beginning with the first of such dates to occur after the
Closing Date.
(c) Letter of Credit Fees.
(i) Standby Letter of Credit Issuance Fee.
In consideration of the issuance of standby Letters of
Credit hereunder, the Borrower promises to pay to the
Agent for the account of each Lender a fee (the
"Standby Letter of Credit Fee") on such Lender's
Revolving Commitment Percentage of the average daily
maximum amount available to be drawn under each such
standby Letter of Credit computed at a per annum rate
for each day from the date of issuance to the date of
expiration equal to the interest rate spread on
Eurodollar Loans. The Standby Letter of Credit Fee
will be payable quarterly in arrears on the last
Business Day of each March, June, September and
December for the immediately preceding quarter (or a
portion thereof).
(ii) Trade Letter of Credit Drawing Fee. In
consideration of the issuance of trade Letters of
Credit hereunder, the Borrower promises to pay to the
Agent for the account of each Lender a fee (the "Trade
Letter of Credit Fee") equal to the interest rate
spread on Eurodollar Loans on such Lender's Revolving
Commitment Percentage of the amount of each drawing
under any such trade Letter of Credit. The Trade
Letter of Credit Fee will be payable on each date of
drawing under a trade Letter of Credit.
(iii) Issuing Lender Fees. In addition
to the Standby Letter of Credit Fee payable pursuant to
clause (i) above and the Trade Letter of Credit Fee
payable pursuant to clause (ii) above, the Borrower
promises to pay to the Issuing Lender for its own
account without sharing by the other Lenders the letter
of credit fronting and negotiation fees equal to 0.125%
of the LOC Obligations and the customary charges from
time to time of the Issuing Lender with respect to the
issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under,
such Letters of Credit (collectively, the "Issuing
Lender Fees").
3.6 Capital Adequacy.
If any Lender has determined, after the date hereof, that
the adoption or the becoming effective of, or any change in, or
any change by any Governmental Authority, central bank or
comparable agency charged with the interpretation or
administration thereof in the interpretation or administration
of, any applicable law, rule or regulation regarding capital
adequacy, or compliance by such Lender with any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of
return on such Lender's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which
such Lender could have achieved but for such adoption,
effectiveness, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy), then,
upon notice from such Lender to the Borrower, the Borrower shall
be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender for such reduction. Each
determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding
on the parties hereto.
3.7 Limitation on Eurodollar Loans.
If on or prior to the first day of any Interest Period for
any Eurodollar Loan:
(a) the Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Interest
Period; or
(b) the Required Lenders determine (which
determination shall be conclusive) and notify the Agent that
the Eurodollar Rate will not adequately and fairly reflect
the cost to the Lenders of funding Eurodollar Loans for such
Interest Period;
then the Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be
under no obligation to make additional Eurodollar Loans, Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar
Loans and the Borrower shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Eurodollar Loans,
either prepay such Eurodollar Loans or Convert such Eurodollar
Loans into Base Rate Loans in accordance with the terms of this
Credit Agreement.
3.8 Illegality.
Notwithstanding any other provision of this Credit
Agreement, in the event that it becomes unlawful for any Lender
or its Applicable Lending Office to make, maintain, or fund
Eurodollar Loans hereunder, then such Lender shall promptly
notify the Borrower thereof and such Lender's obligation to make
or Continue Eurodollar Loans and to Convert Base Rate Loans into
Eurodollar Loans shall be suspended until such time as such
Lender may again make, maintain, and fund Eurodollar Loans (in
which case the provisions of Section 3.10 shall be applicable).
3.9 Requirements of Law.
(a) If, after the date hereof, the adoption of any
applicable law, rule, or regulation, or any change in any
applicable law, rule, or regulation, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any
Lender (or its Applicable Lending Office) with any request or
directive (whether or not having the force of law) of any such
Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with
respect to any Eurodollar Loans, its Revolving Note, or its
obligation to make Eurodollar Loans, or change the basis of
taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Credit Agreement or
its Revolving Note in respect of any Eurodollar Loans (other
than taxes imposed on the overall net income of such Lender
by the jurisdiction in which such Lender has its principal
office or such Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement
(other than the Eurodollar Reserve Requirement utilized in
the determination of the Adjusted Eurodollar Rate) relating
to any extensions of credit or other assets of, or any
deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its
Applicable Lending Office) or on the United States market
for certificates of deposit or the London interbank market
any other condition affecting this Credit Agreement or its
Revolving Note or any of such extensions of credit or
liabilities or commitments;
and the result of any of the foregoing is to increase the cost to
such Lender (or its Applicable Lending Office) of making,
Converting into, Continuing, or maintaining any Eurodollar Loans
or to reduce any sum received or receivable by such Lender (or
its Applicable Lending Office) under this Credit Agreement or its
Revolving Note with respect to any Eurodollar Loans, then the
Borrower shall pay to such Lender on demand such amount or
amounts as will compensate such Lender for such increased cost or
reduction. If any Lender requests compensation by the Borrower
under this Section 3.9(a), the Borrower may, by notice to such
Lender (with a copy to the Agent), suspend the obligation of such
Lender to make or Continue Eurodollar Loans, or to Convert Base
Rate Loans into Eurodollar Loans, until the event or condition
giving rise to such request ceases to be in effect (in which case
the provisions of Section 3.10 shall be applicable); provided
that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have
determined that the adoption of any applicable law, rule, or
regulation regarding capital adequacy or any change therein or in
the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the
force of law) of any such Governmental Authority, central bank,
or comparable agency, has or would have the effect of reducing
the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such
Lender or such corporation could have achieved but for such
adoption, change, request, or directive (taking into
consideration its policies with respect to capital adequacy),
then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such
Lender for such reduction.
(c) Each Lender shall promptly notify the Borrower and the
Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation
pursuant to this Section 3.9 and will designate a different
Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in
the judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section 3.9 shall
furnish to the Borrower and the Agent a statement setting forth
the additional amount or amounts to be paid to it hereunder which
shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable
averaging and attribution methods.
3.10 Treatment of Affected Revolving Loans.
If the obligation of any Lender to make any Eurodollar Loan
or to Continue, or to Convert Base Rate Loans into, Eurodollar
Loans shall be suspended pursuant to Section 3.8 or 3.9 hereof,
such Lender's Eurodollar Loans shall be automatically Converted
into Base Rate Loans on the last day(s) of the then current
Interest Period(s) for such Eurodollar Loans (or, in the case of
a Conversion required by Section 3.8 hereof, on such earlier date
as such Lender may specify to the Borrower with a copy to the
Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 3.8 or 3.9
hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans
have been so Converted, all payments and prepayments of
principal that would otherwise be applied to such Lender's
Eurodollar Loans shall be applied instead to its Base Rate
Loans; and
(b) all Revolving Loans that would otherwise be made
or Continued by such Lender as Eurodollar Loans shall be
made or Continued instead as Base Rate Loans, and all Base
Rate Loans of such Lender that would otherwise be Converted
into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the
Agent) that the circumstances specified in Section 3.8 or 3.9
hereof that gave rise to the Conversion of such Lender's
Eurodollar Loans pursuant to this Section 3.10 no longer exist
(which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next
succeeding Interest Period(s) for such outstanding Eurodollar
Loans, to the extent necessary so that, after giving effect
thereto, all Revolving Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, interest rate basis, and Interest Periods) in
accordance with their respective Commitments.
3.11 Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any
other Credit Document shall be made free and clear of and
without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes
imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its
Applicable Lending Office) or the Agent (as the case may be)
is organized or any political subdivision thereof (all such
non-excluded taxes, duties, levies, imposts, deductions,
charges, withholdings, and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum
payable under this Credit Agreement or any other Credit
Document to any Lender or the Agent, (i) the sum payable
shall be increased as necessary so that after making all
required deductions (including deductions applicable to
additional sums payable under this Section 3.11) such Lender
or the Agent receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower
shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable
law, and (iv) the Borrower shall furnish to the Agent, at
its address referred to in Section 11.1, the original or a
certified copy of a receipt evidencing payment thereof. Any
Lender or Agent receiving such increased amount shall
immediately pay to the Borrower the amount of any reduction
or refund in the respective Lender or Agent's Tax liability
resulting from a credit or deduction , as the case may be,
of any Tax against the Lender or Agent's Tax liability when
the Lender or Agent realizes such reduction or refund.
(b) In addition, the Borrower agrees to pay any and
all present or future stamp or documentary taxes and any
other excise or property taxes or charges or similar levies
which arise from any payment made under this Credit
Agreement or any other Credit Document or from the execution
or delivery of, or otherwise with respect to, this Credit
Agreement or any other Credit Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and
the Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes
imposed or asserted by any jurisdiction on amounts payable
under this Section 3.11) paid by such Lender or the Agent
(as the case may be) and any liability (including penalties,
interest, and expenses) arising therefrom or with respect
thereto.
(d) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Credit
Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on
which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in
writing by the Borrower or the Agent (but only so long as
such Lender remains lawfully able to do so), shall provide
the Borrower and the Agent with (i) Internal Revenue
Service Form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under
an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant
to this Credit Agreement is effectively connected with the
conduct of a trade or business in the United States, (ii)
Internal Revenue Service Form W-8 or W-9, as appropriate,
or any successor form prescribed by the Internal Revenue
Service, and (iii) any other form or certificate required
by any taxing authority (including any certificate
required by Sections 871(h) and 881(c) of the Internal
Revenue Code), certifying that such Lender is entitled to
an exemption from or a reduced rate of tax on payments
pursuant to this Credit Agreement or any of the other
Credit Documents.
(e) For any period with respect to which a Lender has
failed to provide the Borrower and the Agent with the
appropriate form pursuant to Section 3.11(d) (unless such
failure is due to a change in treaty, law, or regulation
occurring subsequent to the date on which a form originally
was required to be provided), such Lender shall not be
entitled to indemnification under Section 3.11(a) or 3.11(b)
with respect to Taxes imposed by the United States;
provided, however, that should a Lender, which is otherwise
exempt from or subject to a reduced rate of withholding tax,
become subject to Taxes because of its failure to deliver a
form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such
Lender to recover such Taxes.
(f) If the Borrower is required to pay additional
amounts to or for the account of any Lender pursuant to this
Section 3.11, then such Lender will agree to use reasonable
efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the
judgment of such Lender, is not otherwise disadvantageous to
such Lender.
(g) Within thirty (30) days after the date of any
payment of Taxes, the Borrower shall furnish to the Agent
the original or a certified copy of a receipt evidencing
such payment.
(h) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 3.11
shall survive the repayment of the Revolving Loans, LOC
Obligations and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
3.12 Compensation.
Upon the request of any Lender, the Borrower shall pay to
such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss,
reasonable cost, or reasonable expense (including loss of
anticipated profits) incurred by it as a result of:
(a) any payment, prepayment, or Conversion of a
Eurodollar Loan for any reason (including, without
limitation, the acceleration of the Revolving Loans pursuant
to Section 9.2) on a date other than the last day of the
Interest Period for such Revolving Loan; or
(b) any failure by the Borrower for any reason
(including, without limitation, the failure of any condition
precedent specified in Section 5 to be satisfied) to borrow,
Convert, Continue, or prepay a Eurodollar Loan on the date
for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment,
Continuation, or Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may
include an amount equal to the excess, if any, of (a) the amount
of interest which would have accrued on the amount so prepaid, or
not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or
continue to the last day of the applicable Interest Period (or,
in the case of a failure to borrow, convert or continue, the
Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such
Eurodollar Loans provided for herein over (b) the amount of
interest (as reasonably determined by such Lender) which would
have accrued to such Lender on such amount by placing such amount
on deposit for a comparable period with leading banks in the
interbank Eurodollar market. The covenants of the Borrower set
forth in this Section 3.12 shall survive the repayment of the
Revolving Loans, LOC Obligations and other obligations under the
Credit Documents and the termination of the Commitments
hereunder.
3.13 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Revolving Loans. Each Revolving Loan, each
payment or (subject to the terms of Section 3.3) prepayment
of principal of any Revolving Loan or reimbursement
obligations arising from drawings under Letters of Credit,
each payment of interest on the Revolving Loans or
reimbursement obligations arising from drawings under
Letters of Credit, each payment of Unused Fees, each payment
of the Standby Letter of Credit Fee, each payment of the
Trade Letter of Credit Fee, each reduction of the Revolving
Committed Amount and each conversion or extension of any
Revolving Loan, shall be allocated pro rata among the
Lenders in accordance with the respective principal amounts
of their outstanding Revolving Loans and Participation
Interests.
(a) Advances. No Lender shall be responsible for the
failure or delay by any other Lender in its obligation to make
its ratable share of a borrowing hereunder; provided, however,
that the failure of any Lender to fulfill its obligations
hereunder shall not relieve any other Lender of its obligations
hereunder. Unless the Agent shall have been notified by any
Lender prior to the date of any requested borrowing that such
Lender does not intend to make available to the Agent its ratable
share of such borrowing to be made on such date, the Agent may
assume that such Lender has made such amount available to the
Agent on the date of such borrowing, and the Agent in reliance
upon such assumption, may (in its sole discretion but without any
obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in
fact made available to the Agent, the Agent shall be able to
recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Agent's demand therefor, the Agent will promptly notify the
Borrower, and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be
entitled to recover from the Lender or the Borrower, as the case
may be, interest on such corresponding amount in respect of each
day from the date such corresponding amount was made available by
the Agent to the Borrower to the date such corresponding amount
is recovered by the Agent at a per annum rate equal to (i) from
the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender at the
Federal Funds Rate.
3.14 Sharing of Payments.
The Lenders agree among themselves that, in the event that
any Lender shall obtain payment in respect of any Revolving Loan,
LOC Obligations or any other obligation owing to such Lender
under this Credit Agreement (but not including any payment
received by any Lender in its capacity as a Factor under a
Factoring Agreement) through the exercise of a right of setoff,
banker's lien or counterclaim, or pursuant to a secured claim
under Section 506 of Title 11 of the United States Code or other
security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as
provided for in this Credit Agreement, such Lender shall promptly
purchase from the other Lenders a Participation Interest in such
Revolving Loans, LOC Obligations and other obligations in such
amounts, and make such other adjustments from time to time, as
shall be equitable to the end that all Lenders share such payment
in accordance with their respective ratable shares as provided
for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender
through the exercise of a right of setoff, banker's lien,
counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared
the benefit of such payment shall, by repurchase of a
Participation Interest theretofore sold, return its share of that
benefit (together with its share of any accrued interest payable
with respect thereto) to each Lender whose payment shall have
been rescinded or otherwise restored. The Borrower agrees that
any Lender so purchasing such a Participation Interest may, to
the fullest extent permitted by law, exercise all rights of
payment, including setoff, banker's lien or counterclaim, with
respect to such Participation Interest as fully as if such Lender
were a holder of such Revolving Loan, LOC Obligations or other
obligation in the amount of such Participation Interest. Except
as otherwise expressly provided in this Credit Agreement, if any
Lender or the Agent shall fail to remit to the Agent or any other
Lender an amount payable by such Lender or the Agent to the Agent
or such other Lender pursuant to this Credit Agreement on the
date when such amount is due, such payments shall be made
together with interest thereon for each date from the date such
amount is due until the date such amount is paid to the Agent or
such other Lender at a rate per annum equal to the Federal Funds
Rate. If under any applicable bankruptcy, insolvency or other
similar law, any Lender receives a secured claim in lieu of a
setoff to which this Section 3.14 applies, such Lender shall, to
the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the
Lenders under this Section 3.14 to share in the benefits of any
recovery on such secured claim.
3.15 Payments, Computations, Etc.
(a) Except as otherwise specifically provided herein,
all payments hereunder shall be made to the Agent in dollars
in immediately available funds, without offset, deduction,
counterclaim or withholding of any kind, at the Agent's
office specified in Schedule 2.1(a) not later than 2:00 P.M.
(Charlotte, North Carolina time) on the date when due.
Payments received after such time shall be deemed to have
been received on the next succeeding Business Day. The
Agent may (but shall not be obligated to) debit the amount
of any such payment which is not made by such time to any
ordinary deposit account of the Borrower maintained with the
Agent (with notice to the Borrower). The Borrower shall, at
the time it makes any payment under this Credit Agreement,
specify to the Agent the Revolving Loans, LOC Obligations,
Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the
event that it fails so to specify, or if such application
would be inconsistent with the terms hereof, the Agent shall
distribute such payment to the Lenders in such manner as the
Agent may determine to be appropriate in respect of
obligations owing by the Borrower hereunder, subject to the
terms of Section 3.13(a)). The Agent will distribute such
payments to such Lenders, if any such payment is received
prior to 12:00 Noon (Charlotte, North Carolina time) on a
Business Day in like funds as received prior to the end of
such Business Day and otherwise the Agent will distribute
such payment to such Lenders on the next succeeding Business
Day. Whenever any payment hereunder shall be stated to be
due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business
Day (subject to accrual of interest and Fees for the period
of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made
in the next following calendar month, then such payment
shall instead be made on the next preceding Business Day.
Except as expressly provided otherwise herein, all
computations of interest and fees shall be made on the basis
of actual number of days elapsed over a year of 360 days,
except with respect to computation of interest on Base Rate
Loans which (unless the Base Rate is determined by reference
to the Federal Funds Rate) shall be calculated based on a
year of 365 or 366 days, as appropriate. Interest shall
accrue from and include the date of borrowing, but exclude
the date of payment.
(b) Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit
Agreement to the contrary, after the occurrence and during
the continuance of an Event of Default, all amounts
collected or received by the Agent or any Lender on account
of the Credit Party Obligations or any other amounts
outstanding under any of the Credit Documents or in respect
of the Collateral shall be paid over or delivered as
follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agent in connection with enforcing
the rights of the Lenders under the Credit Documents and any
protective advances made by the Agent with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to the Agent;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents or otherwise
with respect to the Credit Party Obligations owing to such
Lender;
FOURTH, to the payment of all of the Credit Party
Obligations consisting of accrued fees and interest;
FIFTH, to the payment of the outstanding principal
amount of the Credit Party Obligations (including the
payment or cash collateralization of the outstanding LOC
Obligations);
SIXTH, to all other Credit Party Obligations and other
obligations which shall have become due and payable under
the Credit Documents or otherwise and not repaid pursuant to
clauses "FIRST" through "FIFTH" above; and
SEVENTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be
applied in the numerical order provided until exhausted
prior to application to the next succeeding category; (ii)
each of the Lenders shall receive an amount equal to its pro
rata share (based on the proportion that the then
outstanding Revolving Loans and LOC Obligations held by such
Lender bears to the aggregate then outstanding Revolving
Loans and LOC Obligations) of amounts available to be
applied pursuant to clauses "THIRD", "FOURTH", "FIFTH" and
"SIXTH" above; and (iii) to the extent that any amounts
available for distribution pursuant to clause "FIFTH" above
are attributable to the issued but undrawn amount of
outstanding Letters of Credit, such amounts shall be held by
the Agent in a cash collateral account and applied (A)
first, to reimburse the Issuing Lender from time to time for
any drawings under such Letters of Credit and (B) then,
following the expiration of all Letters of Credit, to all
other obligations of the types described in clauses "FIFTH"
and "SIXTH" above in the manner provided in this Section
3.15(b).
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts
evidencing each Revolving Loan made by such Lender to the
Borrower from time to time, including the amounts of
principal and interest payable and paid to such Lender from
time to time under this Credit Agreement. Each Lender will
make reasonable efforts to maintain the accuracy of its
account or accounts and to promptly update its account or
accounts from time to time, as necessary.
(b) The Agent shall maintain the Register pursuant to
Section 11.3(c), and a subaccount for each Lender, in which
Register and subaccounts (taken together) shall be recorded
(i) the amount, type and Interest Period of each such
Revolving Loan hereunder, (ii) the amount of any principal
or interest due and payable or to become due and payable to
each Lender hereunder and (iii) the amount of any sum
received by the Agent hereunder from or for the account of
the Borrower and each Lender's share thereof. The Agent
will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this
Section 3.16 (and, if consistent with the entries of the
Agent, subsection (a)) shall be prima facie evidence of the
existence and amounts of the obligations of the Borrower
therein recorded; provided, however, that the failure of any
Lender or the Agent to maintain any such account, such
Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of
the Borrower to repay the Revolving Loans made by such
Lender in accordance with the terms hereof.
3.17 Mandatory Assignment.
In the event any Lender requests payment by the Borrower of
any additional amounts pursuant to Section 3.11, then, provided
that no Default or Event of Default has occurred and is
continuing at such time, the Borrower may, at its own expense
(such expense to include any transfer fee payable to the Agent
under Section 11.3(b)), and in its sole discretion require such
Lender to transfer and assign in whole or in part, without
recourse (in accordance with and subject to the terms and
conditions of Section 11.3(b)), all or part of its interests,
rights and obligations under the Credit Agreement to an Eligible
Assignee which shall assume such assigned obligations, provided
that (i) such assignment shall not conflict with any law, rule or
regulation or order of any court or other Governmental Authority
and (ii) the Borrower or such assignee shall have paid to the
assigning Lender in immediately available funds the principal of
and interest accrued to the date of such payment on the Revolving
Loans made by it under the Credit Agreement and all other amounts
owed to it under the Credit Agreement.
SECTION 4
GUARANTY
4.1 The Guaranty.
Each of the Guarantors hereby jointly and severally
guarantees to each Lender and the Agent as hereinafter provided
the prompt payment of the Credit Party Obligations in full when
due (whether at stated maturity, as a mandatory prepayment, by
acceleration, as a mandatory cash collateralization or otherwise)
strictly in accordance with the terms thereof. The Guarantors
hereby further agree that if any of the Credit Party Obligations
are not paid in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration, as a mandatory cash
collateralization or otherwise), the Guarantors will, jointly and
severally, promptly pay the same, without any demand or notice
whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Credit Party Obligations, the
same will be promptly paid in full when due (whether at extended
maturity, as a mandatory prepayment, by acceleration, as a
mandatory cash collateralization or otherwise) in accordance with
the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, the obligations
of each Guarantor hereunder shall be limited to an aggregate
amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of
the Bankruptcy Code or any comparable provisions of any
applicable state law.
4.2 Obligations Unconditional.
The obligations of the Guarantors under Section 4.1 are
joint and several, absolute and unconditional, irrespective of
the value, genuineness, validity, regularity or enforceability of
any of the Credit Documents or any other agreement or instrument
referred to therein, or any substitution, release, impairment or
exchange of any other guarantee of or security for any of the
Credit Party Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor, it being the intent of this
Section 4.2 that the obligations of the Guarantors hereunder
shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall
have no right of subrogation, indemnity, reimbursement or
contribution against the Borrower or any other Guarantor of the
Credit Party Obligations for amounts paid under this Section 4
until such time as the Lenders have been paid in full, all
Commitments under this Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to
request any return or reimbursement of funds from the Lenders in
connection with monies received under the Credit Documents.
Without limiting the generality of the foregoing, it is agreed
that, to the fullest extent permitted by law, the occurrence of
any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder which shall remain absolute
and unconditional as described above:
(a) at any time or from time to time, without notice
to any Guarantor, the time for any performance of or
compliance with any of the Credit Party Obligations shall be
extended, or such performance or compliance shall be waived;
(b) any of the acts mentioned in any of the provisions
of any of the Credit Documents or any other agreement or
instrument referred to in the Credit Documents shall be done
or omitted;
(c) the maturity of any of the Credit Party
Obligations shall be accelerated, or any of the Credit Party
Obligations shall be modified, supplemented or amended in
any respect, or any right under any of the Credit Documents
or any other agreement or instrument referred to in the
Credit Documents shall be waived or any other guarantee of
any of the Credit Party Obligations or any security therefor
shall be released, impaired or exchanged in whole or in part
or otherwise dealt with;
(d) any Lien granted to, or in favor of, the Agent or
any Lender or Lenders as security for any of the Credit
Party Obligations shall fail to attach or be perfected; or
(e) any of the Credit Party Obligations shall be
determined to be void or voidable (including, without
limitation, for the benefit of any creditor of any
Guarantor) or shall be subordinated to the claims of any
Person (including, without limitation, any creditor of any
Guarantor).
With respect to its obligations hereunder, each Guarantor hereby
expressly waives diligence, presentment, demand of payment,
protest and all notices whatsoever, and any requirement that the
Agent or any Lender exhaust any right, power or remedy or proceed
against any Person under any of the Credit Documents or any other
agreement or instrument referred to in the Credit Documents or
against any other Person under any other guarantee of, or
security for, any of the Credit Party Obligations.
4.3 Reinstatement.
The obligations of the Guarantors under this Section 4 shall
be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of
the Credit Party Obligations is rescinded or must be otherwise
restored by any holder of any of the Credit Party Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Agent and each Lender on demand for all
reasonable costs and expenses (including, without limitation,
fees and expenses of counsel) incurred by the Agent or such
Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law.
4.4 Certain Additional Waivers.
Without limiting the generality of the provisions of this
Section 4, each Guarantor hereby specifically waives the benefits
of N.C. Gen. Stat. 26-7 through 26-9, inclusive, to the extent
applicable. Each Guarantor further agrees that such Guarantor
shall have no right of recourse to security for the Credit Party
Obligations, except through the exercise of rights of subrogation
pursuant to Section 4.2 and through the exercise of rights of
contribution pursuant to Section 4.6.
4.5 Remedies.
The Guarantors agree that, to the fullest extent permitted
by law, as between the Guarantors, on the one hand, and the Agent
and the Lenders, on the other hand, the Credit Party Obligations
may be declared to be forthwith due and payable as provided in
Section 9.2 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.2)
for purposes of Section 4.1 notwithstanding any stay, injunction
or other prohibition preventing such declaration (or preventing
the Credit Party Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of
such declaration (or the Credit Party Obligations being deemed to
have become automatically due and payable), the Credit Party
Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors for
purposes of Section 4.1. The Guarantors acknowledge and agree
that their obligations hereunder are secured in accordance with
the terms of the Security Agreements and the other Collateral
Documents and that the Lenders may exercise their remedies
thereunder in accordance with the terms thereof.
4.6 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor's
Contribution Share (as defined below) of such Excess Payment.
The payment obligations of any Guarantor under this Section 4.6
shall be subordinate and subject in right of payment to the prior
payment in full to the Agent and the Lenders of the Guaranteed
Obligations, and none of the Guarantors shall exercise any right
or remedy under this Section 4.6 against any other Guarantor
until payment and satisfaction in full of all of such Guaranteed
Obligations. For purposes of this Section 4.6, (a) "Guaranteed
Obligations" shall mean any obligations arising under the other
provisions of this Section 4; (b) "Excess Payment" shall mean the
amount paid by any Guarantor in excess of its Pro Rata Share of
any Guaranteed Obligations; (c) "Pro Rata Share" shall mean, for
any Guarantor in respect of any payment of Guaranteed
Obligations, the ratio (expressed as a percentage) as of the date
of such payment of Guaranteed Obligations of (i) the amount by
which the aggregate present fair salable value of all of its
assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of the Borrower and all of the
Guarantors exceeds the amount of all of the debts and liabilities
(including contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the
Guarantors; provided, however, that, for purposes of calculating
the Pro Rata Shares of the Guarantors in respect of any payment
of Guaranteed Obligations, any Guarantor that became a Guarantor
subsequent to the date of any such payment shall be deemed to
have been a Guarantor on the date of such payment and the
financial information for such Guarantor as of the date such
Guarantor became a Guarantor shall be utilized for such Guarantor
in connection with such payment; and (d) "Contribution Share"
shall mean, for any Guarantor in respect of any Excess Payment
made by any other Guarantor, the ratio (expressed as a
percentage) as of the date of such Excess Payment of (i) the
amount by which the aggregate present fair salable value of all
of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of the Borrower and all of the
Guarantors other than the maker of such Excess Payment exceeds
the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Borrower and
the Guarantors hereunder) of the Borrower and all of the
Guarantors other than the maker of such Excess Payment; provided,
however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on
the date of such Excess Payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such
Excess Payment. This Section 4.6 shall not be deemed to affect
any right of subrogation, indemnity, reimbursement or
contribution that any Guarantor may have under applicable law
against the Borrower in respect of any payment of Guaranteed
Obligations. Notwithstanding the foregoing, all rights of
contribution against any Guarantor shall terminate from and after
such time, if ever, that such Guarantor shall be relieved of its
obligations pursuant to Section 8.4.
4.7 Continuing Guarantee.
The guarantee in this Section 4 is a continuing guarantee,
and shall apply to all Credit Party Obligations whenever arising.
SECTION 5
CONDITIONS
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit
Agreement and to make the initial Revolving Loans or the Issuing
Lender to issue the initial Letters of Credit, whichever shall
occur first, shall be subject to satisfaction of the following
conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Agent
of duly executed copies of: (i) this Credit Agreement; (ii)
the Revolving Notes; (iii) the Collateral Documents and (iv)
all other Credit Documents, each in form and substance
acceptable to the Lenders in their sole discretion.
(b) Corporate Documents. Receipt by the Agent of the
following:
(i) Charter Documents. Copies of the
articles or certificates of incorporation or other
charter documents of each Credit Party certified to be
true and complete as of a recent date by the
appropriate Governmental Authority of the state or
other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of each
Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct
as of the Closing Date.
(iii) Resolutions. Copies of resolutions
of the Board of Directors of each Credit Party
approving and adopting the Credit Documents to which it
is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as
of the Closing Date.
(iv) Good Standing. Copies of (A)
certificates of good standing, existence or its
equivalent with respect to each Credit Party certified
as of a recent date by the appropriate Governmental
Authorities of the state or other jurisdiction of
incorporation and each other jurisdiction in which the
failure to so qualify and be in good standing could
have a Material Adverse Effect and (B) to the extent
available, a certificate indicating payment of all
corporate franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate
of each Credit Party certified by a secretary or
assistant secretary to be true and correct as of the
Closing Date.
(c) Opinions of Counsel. The Agent shall have
received, in each case dated as of the Closing Date:
(i) a legal opinion of Wyche, Burgess,
Xxxxxxx & Xxxxxx, P.A., general counsel for the Credit
Parties, substantially in the form of Schedule
5.1(c)(i);
(ii) a legal opinion of special local counsel
for each Credit Party not incorporated in the State of
South Carolina or Delaware, substantially in the form
of Schedule 5.1(c)(ii); and
(iii) a legal opinion of special local
counsel for the Credit Parties for each State other
than South Carolina in which any material portion of
the Collateral (as determined by the Agent) is located,
substantially in the form of Schedule 5.1(c)(iii).
(d) Personal Property Collateral. The Agent shall
have received:
(i) searches of Uniform Commercial Code
filings in the jurisdiction of the chief executive
office of each Credit Party and each jurisdiction where
any Collateral is located or where a filing would need
to be made in order to perfect the Agent's security
interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence
that no Liens exist other than Permitted Liens;
(ii) duly executed UCC financing statements
for each Credit Party for each appropriate jurisdiction
as is necessary, in the Agent's sole discretion, to
perfect the Agent's security interest in the
Collateral;
(iii) searches of ownership of
intellectual property in the appropriate governmental
offices and such patent/trademark/copyright filings as
requested by the Agent in order to perfect the Agent's
security interest in the Collateral; (iv) all stock
certificates evidencing the Capital Stock pledged to
the Agent pursuant to the Pledge Agreement, together
with duly executed in blank undated stock powers
attached thereto;
(v) such patent/trademark/copyright filings
as requested by the Agent in order to perfect the
Agent's security interest in the Collateral;
(vi) all instruments and chattel paper in the
possession of any of the Credit Parties, together with
allonges or assignments as may be necessary or
appropriate to perfect the Agent's security interest in
the Collateral; and
(vii) an original, executed copy of an
assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form
and substance satisfactory to the Agent, for each
Factoring Agreement existing as of the Closing Date;
and
(viii) all duly executed consents as are
necessary, in the Agent's sole discretion, to perfect
the Agent's security interest in the Collateral.
(e) Priority of Liens. The Agent shall have received
satisfactory evidence that (i) the Agent, on behalf of the
Lenders, holds a perfected, first priority Lien on all
Collateral and (ii) none of the Collateral is subject to any
other Liens other than Permitted Liens.
(f) Availability. The Agent shall be satisfied that,
after giving effect to the initial Revolving Loans made and
Letters of Credit issued hereunder on the Closing Date,
there shall be at least $7,500,000 of availability existing
under the Revolving Committed Amount.
(g) Opening Borrowing Base Report. Receipt by the
Agent of a Borrowing Base Certificate as of the Closing Date
substantially in the form of Exhibit 7.1(d) and certified by
the chief financial officer of the Borrower to be true and
correct as of the Closing Date.
(h) Evidence of Insurance. Receipt by the Agent of
copies of insurance policies or certificates of insurance of
the Consolidated Parties evidencing liability and casualty
insurance meeting the requirements set forth in the Credit
Documents, including, but not limited to, naming the Agent
as sole loss payee on behalf of the Lenders.
(i) Closing of New Delta Xxxxx Credit Facility. The
closing of the New Delta Xxxxx Credit Facility shall have
occurred and all conditions precedent to the initial
extensions of credit thereunder shall have been satisfied.
(j) Material Adverse Change. No material adverse
change shall have occurred since June 28, 1997 in the
condition (financial or otherwise), business, management or
prospects of any Consolidated Party.
(k) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against
a Consolidated Party that is reasonably likely to have a
Material Adverse Effect.
(l) Officer's Certificates. The Agent shall have
received a certificate or certificates executed by an
Executive Officer of the Borrower as of the Closing Date
stating that (A) each Consolidating Party is in compliance
with all existing financial obligations, (B) all
governmental, shareholder and third party consents and
approvals, if any, with respect to the Credit Documents and
the transactions contemplated thereby have been obtained,
(C) no action, suit, investigation or proceeding is pending
or threatened in any court or before any arbitrator or
governmental instrumentality that purports to affect any
Consolidating Party or any transaction contemplated by the
Credit Documents, if such action, suit, investigation or
proceeding could have a Material Adverse Effect and (D)
immediately after giving effect to this Credit Agreement,
the other Credit Documents and all the transactions
contemplated therein to occur on such date, (1) each of the
Credit Parties is Solvent, (2) no Default or Event of
Default exists, (3) all representations and warranties
contained herein and in the other Credit Documents are true
and correct in all material respects, and (4) the Credit
Parties are in compliance with each of the financial
covenants set forth in Section 7.11.
(m) Fees and Expenses. Payment by the Credit Parties
of all reasonable fees and expenses owed by them to the
Lenders and the Agent on or before the Closing Date.
(n) Payoff Letter. Receipt by the Agent of a payoff
letter in respect of the Existing Credit Facility in form
and substance satisfactory to the Agent.
(o) Other. Receipt by the Lenders of such other
documents, instruments, agreements or information with
respect to the Consolidated Parties as reasonably requested
by any Lender.
5.2 Conditions to all Extensions of Credit.
The obligations of each Lender to make, convert or extend
any Revolving Loan and of the Issuing Lender to issue or extend
any Letter of Credit (including the initial Revolving Loans and
the initial Letter of Credit) are subject to satisfaction of the
following conditions in addition to satisfaction on the Closing
Date of the conditions set forth in Section 5.1:
(a) The Borrower shall have delivered (i) in the case
of any Revolving Loan an appropriate Notice of Borrowing or
Notice of Extension/Conversion or (ii) in the case of any
Letter of Credit, the Issuing Lender shall have received an
appropriate request for issuance in accordance with the
provisions of Section 2.2(b);
(b) The representations and warranties set forth in
Section 6 shall, subject to the limitations set forth
therein, be true and correct in all material respects as of
such date (except for those which expressly relate to an
earlier date);
(c) There shall not have been commenced against any
Credit Party an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or any case, proceeding or other action for the
appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person
or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and such
involuntary case or other case, proceeding or other action
shall remain undismissed, undischarged or unbonded;
(d) No Default or Event of Default shall exist and be
continuing either prior to or after giving effect thereto;
(e) No development or event which has had or could
have a Material Adverse Effect shall have occurred since
June 28, 1997; and
(f) Immediately after giving effect to the making of
such Revolving Loan (and the application of the proceeds
thereof) or to the issuance of such Letter of Credit, as the
case may be, (i) the sum of the aggregate principal amount
of outstanding Revolving Loans plus LOC Obligations
outstanding shall not exceed the lesser of (A) the Revolving
Committed Amount and (B) the Borrowing Base, and (ii) the
LOC Obligations shall not exceed the LOC Committed Amount.
The delivery of each Notice of Borrowing, each Notice of
Extension/Conversion and each request for a Letter of Credit
pursuant to Section 2.2(b) shall constitute a representation and
warranty by the Borrower of the correctness of the matters
specified in subsections (b), (c), (d), (e) and (f) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agent and each
Lender that:
6.1 Financial Condition.
(a) The consolidated and consolidating balance sheet
of the Consolidated Parties as of June 28, 1997 and the
consolidated and consolidating statements of earnings and
statements of cash flows for the years ended June 24, 1995
and June 29, 1996 have heretofore been furnished to each
Lender. Such financial statements (including the notes
thereto) (i) have been reviewed by KPMG Peat Marwick, (ii)
have been prepared in accordance with GAAP consistently
applied throughout the periods covered thereby and (iii)
present fairly (on the basis disclosed in the footnotes to
such financial statements) the consolidated and
consolidating financial condition, results of operations and
cash flows of the Consolidated Parties as of such date and
for such periods. During the period from June 28, 1997 to
and including the Closing Date, there has been no sale,
transfer or other disposition by any Consolidated Party of
any material part of the business or property of the
Consolidated Parties, taken as a whole, and no purchase or
other acquisition by any of them of any business or property
(including any capital stock of any other person) material
in relation to the consolidated financial condition of the
Consolidated Parties, taken as a whole, in each case, which
is not reflected in the foregoing financial statements or in
the notes thereto and has not otherwise been disclosed in
writing to the Lenders on or prior to the Closing Date.
(b) The financial statements delivered to the Lenders
pursuant to Section 7.1(a) and (b), (i) have been prepared
in accordance with GAAP (except as may otherwise be
permitted under Section 7.1(a) and (b)) and (ii) present
fairly (on the basis disclosed in the footnotes to such
financial statements) the consolidated and consolidating
financial condition, results of operations and cash flows of
the Consolidated Parties as of such date and for such
periods.
6.2 No Material Change.
Since June 28, 1997, (a) there has been no development or
event relating to or affecting a Consolidated Party which has had
or could have a Material Adverse Effect and (b) except as
otherwise permitted under this Credit Agreement, no dividends or
other distributions have been declared, paid or made upon the
Capital Stock in a Consolidated Party nor has any of the Capital
Stock in a Consolidated Party been redeemed, retired, purchased
or otherwise acquired for value.
6.3 Organization and Good Standing.
Each of the Consolidated Parties (a) is duly organized,
validly existing and is in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has the
corporate or other necessary power and authority, and the legal
right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is
currently engaged and (c) is duly qualified as a foreign entity
and in good standing under the laws of each jurisdiction where
its ownership, lease or operation of property or the conduct of
its business requires such qualification, other than in such
jurisdictions where the failure to be so qualified and in good
standing would not have a Material Adverse Effect.
6.4 Power; Authorization; Enforceable Obligations.
Each of the Credit Parties has the corporate or other
necessary power and authority, and the legal right, to make,
deliver and perform the Credit Documents to which it is a party,
and in the case of the Borrower, to obtain extensions of credit
hereunder, and has taken all necessary corporate action to
authorize the borrowings and other extensions of credit on the
terms and conditions of this Credit Agreement and to authorize
the execution, delivery and performance of the Credit Documents
to which it is a party. As of the Closing Date, no consent or
authorization of, filing with, notice to or other similar act by
or in respect of, any Governmental Authority or any other Person
is required to be obtained or made by or on behalf of any Credit
Party in connection with the borrowings or other extensions of
credit hereunder or with the execution, delivery, performance,
validity or enforceability of the Credit Documents to which such
Credit Party is a party, except for (i) consents, authorizations,
notices and filings described in Schedule 6.4, all of which have
been obtained or made or have the status described in such
Schedule 6.4 and (ii) filings to perfect the Liens created by the
Collateral Documents. This Credit Agreement has been, and each
other Credit Document to which any Credit Party is a party will
be, duly executed and delivered on behalf of the Credit Parties.
This Credit Agreement constitutes, and each other Credit Document
to which any Credit Party is a party when executed and delivered
will constitute, a legal, valid and binding obligation of such
Credit Party enforceable against such party in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents,
nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions
thereof by such Credit Party will (a) violate or conflict with
any provision of its articles or certificate of incorporation or
bylaws or other organizational or governing documents of such
Person, (b) violate, contravene or materially conflict with any
Requirement of Law or any other law, regulation (including,
without limitation, Regulation U or Regulation X), order, writ,
judgment, injunction, decree or permit applicable to it, (c)
violate, contravene or conflict with contractual provisions of,
or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement
or instrument to which it is a party or by which it may be bound,
the violation of which could have a Material Adverse Effect, or
(d) result in or require the creation of any Lien (other than
those contemplated in or created in connection with the Credit
Documents) upon or with respect to its properties.
6.6 No Default.
Except as disclosed in Schedule 6.6, (i) no Consolidated
Party is in default in any respect under any contract, lease,
loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of
its properties is bound which default could reasonably be
expected to have a Material Adverse Effect and (ii) no Default or
Event of Default has occurred or exists.
6.7 Ownership.
Each Consolidated Party is the owner of, and has good and
marketable title to, all of its respective assets and none of
such assets is subject to any Lien other than Permitted Liens.
6.8 Indebtedness.
Except as otherwise permitted under Section 8.1, the
Consolidated Parties have no Indebtedness.
6.9 Litigation.
Except as disclosed in Schedule 6.9, there are no actions,
suits or legal, equitable, arbitration or administrative
proceedings, pending or, to the knowledge of any Credit Party,
threatened against any Consolidated Party which might have a
Material Adverse Effect.
6.10 Taxes.
Each Consolidated Party has filed, or caused to be filed,
all tax returns (federal, state, local and foreign) required to
be filed and paid (a) all amounts of taxes shown thereon to be
due (including interest and penalties) and (b) all other taxes,
fees, assessments and other governmental charges (including
mortgage recording taxes, documentary stamp taxes and intangibles
taxes) owing by it, except for such taxes (i) which are not yet
delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware as
of the Closing Date of any proposed tax assessments against it or
any other Consolidated Party.
6.11 Compliance with Law.
Each Consolidated Party is in compliance with all
Requirements of Law and all other laws, rules, regulations,
orders and decrees (including without limitation Environmental
Laws) applicable to it, or to its properties, unless such failure
to comply could not have a Material Adverse Effect. No
Requirement of Law could cause a Material Adverse Effect.
6.12 ERISA.
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
ERISA Event has occurred, and, to the best knowledge of the
Credit Parties, no event or condition has occurred or exists
as a result of which any ERISA Event could reasonably be
expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor
of the PBGC or a Plan has arisen or is reasonably likely to
arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA),
whether or not vested, under each Single Employer Plan, as
of the last annual valuation date prior to the date on which
this representation is made or deemed made (determined, in
each case, in accordance with Financial Accounting Standards
Board Statement 87, utilizing the actuarial assumptions used
in such Plan's most recent actuarial valuation report), did
not exceed as of such valuation date the fair market value
of the assets of such Plan.
(c) Neither any Consolidated Party nor any ERISA
Affiliate has incurred, or, to the best knowledge of the
Credit Parties, could be reasonably expected to incur, any
withdrawal liability under ERISA to any Multiemployer Plan
or Multiple Employer Plan. Neither any Consolidated Party
nor any ERISA Affiliate would become subject to any
withdrawal liability under ERISA if any Consolidated Party
or any ERISA Affiliate were to withdraw completely from all
Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made. Neither any
Consolidated Party nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in
reorganization (within the meaning of Section 4241 of
ERISA), is insolvent (within the meaning of Section 4245 of
ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best
knowledge of the Credit Parties, reasonably expected to be
in reorganization, insolvent, or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach
of fiduciary responsibility has occurred with respect to a
Plan which has subjected or may subject any Consolidated
Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to
which any Consolidated Party or any ERISA Affiliate has
agreed or is required to indemnify any person against any
such liability.
(e) Neither any Consolidated Party nor any ERISA
Affiliates has any material liability with respect to
"expected post-retirement benefit obligations" within the
meaning of the Financial Accounting Standards Board
Statement 106. Each Plan which is a welfare plan (as defined
in Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in
compliance in all material respects of such sections.
6.13 Subsidiaries.
Set forth on Schedule 6.13 is a complete and accurate list
of all Subsidiaries of each Consolidated Party as of the Closing
Date. Information on Schedule 6.13 includes jurisdiction of
incorporation, the number of shares of each class of Capital
Stock outstanding, the number and percentage of outstanding
shares of each class owned (directly or indirectly) by such
Consolidated Party; and the number and effect, if exercised, of
all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The
outstanding Capital Stock of all such Subsidiaries is validly
issued, fully paid and non-assessable and is owned by each such
Consolidated Party, directly or indirectly, free and clear of all
Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth
in Schedule 6.13, no Consolidated Party has outstanding any
securities convertible into or exchangeable for its Capital Stock
nor does any such Person have outstanding any rights to subscribe
for or to purchase or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating
to its Capital Stock.
6.14 Governmental Regulations, Etc.
(a) No part of the Letters of Credit or proceeds of
the Revolving Loans will be used, directly or indirectly,
for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation G or Regulation U, or for
the purpose of purchasing or carrying or trading in any such
"margin stock". If requested by any Lender or the Agent,
the Borrower will furnish to the Agent and each Lender a
statement to the foregoing effect in conformity with the
requirements of FR Form U-1 referred to in Regulation U. No
indebtedness being reduced or retired out of the proceeds of
the Revolving Loans was or will be incurred for the purpose
of purchasing or carrying any margin stock within the
meaning of Regulation U or any "margin security" within the
meaning of Regulation T. "Margin stock" within the meaning
of Regulation U does not constitute more than 25% of the
value of the consolidated assets of the Consolidated
Parties. None of the transactions contemplated by this
Credit Agreement (including, without limitation, the direct
or indirect use of the proceeds of the Revolving Loans) will
violate or result in a violation of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as
amended, or regulations issued pursuant thereto, or
Regulation G, T, U or X.
(b) No Consolidated Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company Act of 1940,
each as amended. In addition, no Consolidated Party is (i)
an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as
amended, and is not controlled by such a company, or (ii) a
"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal
shareholder of any Consolidated Party is a director,
executive officer or principal shareholder of any Lender.
For the purposes hereof the terms "director", "executive
officer" and "principal shareholder" (when used with
reference to any Lender) have the respective meanings
assigned thereto in Regulation O issued by the Board of
Governors of the Federal Reserve System.
(d) Each Consolidated Party has obtained, and holds in
full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications,
accreditations, easements, rights of way and other rights,
consents and approvals which are necessary for the ownership
of its respective Property and to the conduct of its
respective businesses as presently conducted.
(e) No Consolidated Party is in violation of any
applicable statute, regulation or ordinance of the United
States of America, or of any state, city, town,
municipality, county or any other jurisdiction, or of any
agency thereof (including without limitation, environmental
laws and regulations), which violation is reasonably likely
to have a Material Adverse Effect.
(f) Each Consolidated Party is current with all
material reports and documents, if any, required to be filed
with any state or federal securities commission or similar
agency and is in full compliance in all material respects
with all applicable rules and regulations of such
commissions.
6.15 Purpose of Revolving Loans and Letters of Credit.
The proceeds of the Revolving Loans hereunder shall be used
solely by the Borrower to refinance at Closing certain existing
indebtedness of the Borrower (the "Refinancing"); to pay at
Closing fees and expenses incurred in connection with the
Refinancing; and to provide for working capital and general
corporate purposes of the Consolidated Parties on and after
Closing Date. The Letters of Credit shall be used only for or in
connection with appeal bonds, reimbursement obligations arising
in connection with surety, reclamation and workers compensation
bonds, reinsurance, domestic or international trade transactions
and obligations not otherwise aforementioned relating to
transactions entered into by the applicable account party in the
ordinary course of business.
6.16 Environmental Matters.
Except as otherwise disclosed on Schedule 6.16:
(a) Each of the facilities and properties owned,
leased or operated by the Consolidated Parties or any
Affiliate of any Consolidated Party (the "Properties") and
all operations at the Properties are in material compliance
with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the
Properties or the businesses operated by the Consolidated
Parties or any Affiliate of any Consolidated Party(the
"Businesses"), and there are no conditions relating to the
Businesses or Properties that could give rise to material
liability under any applicable Environmental Laws.
(b) None of the Properties contains, or has previously
contained, any Materials of Environmental Concern at, on or
under the Properties in amounts or concentrations that
constitute or constituted a material violation of, or could
reasonably be expected to give rise to material liability
under, Environmental Laws.
(c) Neither any Consolidated Party or any Affiliate
of any Consolidated Party has received any written or verbal
notice of, or inquiry from any Governmental Authority
regarding, any material violation, alleged violation, non-
compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Businesses, nor
does any Consolidated Party or any Affiliate of any
Consolidated Party have knowledge or reason to believe that
any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties, or
generated, treated, stored or disposed of at, on or under
any of the Properties or any other location, in each case by
or on behalf of any Consolidated Party or any Affiliate of
any Consolidated Party in violation of, or in a manner that
could reasonably be expected to give rise to liability
under, any applicable Environmental Law that in any case
would have a Material Adverse Effect.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the best knowledge
of any Credit Party, threatened, under any Environmental Law
to which any Consolidated Party or any Affiliate of any
Consolidated Party is or will be named as a party, nor are
there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law with respect to the Consolidated
Parties, any Affiliate of any Consolidated Party, the
Properties or the Businesses.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations
(including, without limitation, disposal) of any
Consolidated Party or any Affiliate of any Consolidated
Party in connection with the Properties or otherwise in
connection with the Businesses, in violation of or in
amounts or in a manner that could reasonably expected to
give rise to liability under Environmental Laws that in any
case would have a Material Adverse Effect.
6.17 Intellectual Property.
Each Consolidated Party owns, or has the legal right to use,
all trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of
them to conduct its business as currently conducted except for
those the failure to own or have such legal right to use could
not have a Material Adverse Effect. Set forth on Schedule 6.17
is a list of all Intellectual Property owned by each Consolidated
Party or that any Consolidated Party has the right to use.
Except as provided on Schedule 6.17, no claim has been asserted
and is pending by any Person challenging or questioning the use
by any Consolidated Party of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property,
nor does any Credit Party know of any such claim, and to the
Credit Parties' knowledge the use of such Intellectual Property
by any Consolidated Party does not infringe on the rights of any
Person, except for such claims and infringements that in the
aggregate, could not have a Material Adverse Effect.
6.18 Solvency.
Each Credit Party is Solvent.
6.19 Investments.
All Investments of each Consolidated Party are Permitted
Investments.
6.20 Location of Collateral.
Set forth on Schedule 6.20(a) is a list of all locations
where any tangible personal property of a Credit Party is located
as of the Closing Date, including county and state where located.
Set forth on Schedule 6.20(b) is the chief executive office and
principal place of business of each Credit Party as of the
Closing Date.
6.21 Disclosure.
Neither this Credit Agreement nor any financial statements
delivered to the Lenders nor any other document, certificate or
statement furnished to the Lenders by or on behalf of any
Consolidated Party in connection with the transactions
contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained therein or herein not misleading.
6.22 No Burdensome Restrictions.
No Consolidated Party is a party to any agreement or
instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
6.23 Brokers' Fees.
No Consolidated Party has any obligation to any Person other
than NationsBank Securities, Inc. in respect of any finder's,
broker's, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit
Documents.
6.24 Labor Matters.
There are no collective bargaining agreements or
Multiemployer Plans covering the employees of a Consolidated
Party as of the Closing Date and none of the Consolidated Parties
has suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five years.
6.25 Nature of Business.
As of the Closing Date, the Consolidated Parties are engaged
in the business of manufacturing and selling fabrics, apparel and
exercise equipment and related services.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close
of each fiscal year of the Consolidated Parties, a
consolidated balance sheet and income statement of the
Consolidated Parties, as of the end of such fiscal year,
together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal
year, setting forth in comparative form consolidated figures
for the preceding fiscal year, all such financial
information described above to be in reasonable form and
detail and audited by independent certified public
accountants of recognized national standing reasonably
acceptable to the Agent and whose opinion shall be to the
effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope
of the audit or qualified as to the status of the
Consolidated Parties as a going concern.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close
of each fiscal quarter of the Consolidated Parties (other
than the fourth fiscal quarter, in which case 90 days after
the end thereof) a consolidated and consolidating balance
sheet and income statement of the Consolidated Parties, as
of the end of such fiscal quarter, together with related
consolidated and consolidating statements of operations and
of cash flows for such fiscal quarter, in each case setting
forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable
form and detail and reasonably acceptable to the Agent, and
accompanied by a certificate of the chief financial officer
of the Borrower to the effect that such quarterly financial
statements fairly present in all material respects the
financial condition of the Consolidated Parties and have
been prepared in accordance with GAAP, subject to changes
resulting from audit and normal year-end audit adjustments.
(c) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer
of the Borrower substantially in the form of Exhibit 7.1(c),
(i) demonstrating compliance with the financial covenants
contained in Section 7.11 by calculation thereof as of the
end of each such fiscal period and (ii) stating that no
Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to
take with respect thereto.
(d) Borrowing Base Certificates. Within 15 days after
the end of each fiscal month, a Borrowing Base Certificate
as of the end of the immediately preceding month,
substantially in the form of Exhibit 7.1(d) and certified by
the chief financial officer of the Borrower to be true and
correct as of the date thereof.
(e) Annual Business Plan and Budgets. As soon as
available, and in any event within 30 days after the close
of each fiscal year of the Consolidated Parties beginning
with the fiscal year ending June 27, 1998, an annual
business plan and budget of the Consolidated Parties
containing, among other things, projected financial
statements for the next fiscal year.
(f) Compliance With Certain Provisions of the Credit
Agreement. Within 90 days after the end of each fiscal year
of the Borrower, a certificate containing information
regarding the amount of all Asset Dispositions, Debt
Issuances and Equity Issuances that were made during the
prior fiscal year.
(g) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in
Section 7.1(a), a certificate of the accountants conducting
the annual audit stating that they have reviewed this Credit
Agreement and stating further whether, in the course of
their audit, they have become aware of any Default or Event
of Default and, if any such Default or Event of Default
exists, specifying the nature and extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof,
a copy of any other report or "management letter" submitted
by independent accountants to any Consolidated Party in
connection with any annual, interim or special audit of the
books of such Person.
(i) Reports. Promptly upon transmission or receipt
thereof, (i) copies of any filings and registrations with,
and reports to, the Securities and Exchange Commission, or
any successor agency, and copies of all financial
statements, proxy statements, notices and reports as any
Consolidated Party shall file with the Securities and
Exchange Commission or shall send to a holder of any
Indebtedness owed by any Consolidated Party in its capacity
as such a holder and (ii) upon the request of the Agent, all
reports and written information to and from the United
States Environmental Protection Agency, or any state or
local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration,
or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities
concerning environmental, health or safety matters.
(j) Notices. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Agent immediately
of (i) the occurrence of an event or condition consisting of
a Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose
to take with respect thereto, and (ii) the occurrence of any
of the following with respect to any Consolidated Party (A)
the pendency or commencement of any litigation, arbitral or
governmental proceeding against such Person which if
adversely determined is reasonably likely to have a Material
Adverse Effect, (B) the institution of any governmental
proceedings against such Person with respect to, or the
receipt of notice by such Person of potential liability or
responsibility for, violation or alleged violation of any
federal, state or local law, rule or regulation, including
but not limited to, Environmental Laws, the violation of
which could reasonably be expected to have a Material
Adverse Effect, or (C) any notice or determination
concerning the imposition of any withdrawal liability by a
Multiemployer Plan against such Person or any ERISA
Affiliate, the determination that a Multiemployer Plan is,
or is expected to be, in reorganization within the meaning
of Title IV of ERISA or the termination of any Plan.
(k) ERISA. Upon obtaining knowledge thereof, the
Borrower will give written notice to the Agent promptly (and
in any event within five business days) of: (i) of any event
or condition, including, but not limited to, any Reportable
Event, that constitutes, or might reasonably lead to, an
ERISA Event; (ii) with respect to any Multiemployer Plan,
the receipt of notice as prescribed in ERISA or otherwise of
any withdrawal liability assessed against the Borrower or
any of its ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both
within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including
extensions) thereof of all amounts which any Consolidated
Party or any ERISA Affiliate is required to contribute to
each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code
with respect thereto; or (iv) any change in the funding
status of any Plan that could have a Material Adverse
Effect, together with a description of any such event or
condition or a copy of any such notice and a statement by
the chief financial officer of the Borrower briefly setting
forth the details regarding such event, condition, or
notice, and the action, if any, which has been or is being
taken or is proposed to be taken by the Credit Parties with
respect thereto. Promptly upon request, the Credit Parties
shall furnish the Agent and the Lenders with such additional
information concerning any Plan as may be reasonably
requested, including, but not limited to, copies of each
annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service
pursuant to ERISA and the Code, respectively, for each "plan
year" (within the meaning of Section 3(39) of ERISA).
(l) Environmental.
(i) Upon the reasonable written request of the
Agent, the Credit Parties will furnish or cause to be
furnished to the Agent, at the Borrower's reasonable
expense, a report of an environmental assessment of
reasonable scope, form and depth, (including, where
appropriate, invasive soil or groundwater sampling) by
a consultant reasonably acceptable to the Agent as to
the nature and extent of the presence of any Materials
of Environmental Concern on any Properties (as defined
in Section 6.16) and as to the compliance by any
Consolidated Party with Environmental Laws at such
Properties. If the Credit Parties fail to deliver such
an environmental report within seventy-five (75) days
after receipt of such reasonable written request then
the Agent may arrange for same, and the Consolidated
Parties hereby grant to the Agent and their
representatives access to the Properties to reasonably
undertake such an assessment (including, where
appropriate, invasive soil or groundwater sampling).
The reasonable cost of any assessment arranged for by
the Agent pursuant to this provision will be payable by
the Borrower on demand and added to the obligations
secured by the Collateral Documents.
(ii) The Consolidated Parties will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
necessary to address all Materials of Environmental
Concern on , from or affecting any of the Properties to
the extent necessary to be in compliance with all
Environmental Laws and with the validly issued orders
and directives of all Governmental Authorities with
jurisdiction over such Properties to the extent any
failure could have a Material Adverse Effect.
(m) Additional Trademarks. At the time of delivery of
the financial statements and reports provided for in Section
7.1(a), a report signed by the chief financial officer or
treasurer of the Borrower setting forth (i) a list of
registration numbers for all material trademarks, service
marks and tradenames awarded to any Consolidated Party since
the last day of the immediately preceding fiscal year and
(ii) a list of all material trademark applications, service
xxxx applications and trade name applications submitted by
any Consolidated Party since the last day of the immediately
preceding fiscal year and the status of each such
application, all in such form as shall be reasonably
satisfactory to the Agent.
(n) Other Information. With reasonable promptness
upon any such request, such other information regarding the
business, properties or financial condition of any
Consolidated Party as the Agent or the Required Lenders may
reasonably request.
7.2 Preservation of Existence and Franchises.
Except as a result of or in connection with a dissolution,
merger or disposition of a Subsidiary permitted under Section 8.4
or Section 8.5, each Credit Party will, and will cause each of
its Subsidiaries to, do all things necessary to preserve and keep
in full force and effect its existence, rights, franchises and
authority.
7.3 Books and Records.
Each Credit Party will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of
its transactions in accordance with good accounting practices on
the basis of GAAP (including the establishment and maintenance of
appropriate reserves).
7.4 Compliance with Law.
Each Credit Party will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if
noncompliance with any such law, rule, regulation, order or
restriction is reasonably likely to have a Material Adverse
Effect.
7.5 Payment of Taxes and Other Indebtedness.
Each Credit Party will, and will cause each of its
Subsidiaries to, pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its properties, before they
shall become delinquent, (b) all lawful claims (including claims
for labor, materials and supplies) which, if unpaid, might give
rise to a Lien upon any of its properties, and (c) except as
prohibited hereunder, all of its other Indebtedness as it shall
become due; provided, however, that no Consolidated Party shall
be required to pay any such tax, assessment, charge, levy, claim
or Indebtedness which is being contested in good faith by
appropriate proceedings and as to which adequate reserves
therefor have been established in accordance with GAAP, unless
the failure to make any such payment (i) is reasonably likely to
give rise to an immediate right to foreclose on a Lien securing
such amounts or (ii) is reasonably likely to have a Material
Adverse Effect.
7.6 Insurance.
Each Credit Party will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities
and with such deductibles or self-insurance retentions as are in
accordance with normal industry practice (or as otherwise
required by the Collateral Documents). The Agent shall be named
as loss payee and/or additional insured with respect to any such
insurance providing coverage in respect of any Collateral, and
each provider of any such insurance shall agree, by endorsement
upon the policy or policies issued by it or by independent
instruments furnished to the Agent, that it will give the Agent
thirty (30) days prior written notice before any such policy or
policies shall be canceled, and that no act or default of any
Consolidated Party or any other Person shall affect the rights of
the Agent or the Lenders under such policy or policies.
7.7 Maintenance of Property.
Each Credit Party will, and will cause each of its
Subsidiaries to, maintain and preserve its properties and
equipment material to the conduct of its business in good repair,
working order and condition, normal wear and tear and casualty
and condemnation excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs,
renewals, replacements, extensions, additions, betterments and
improvements thereto as may be needed or proper, to the extent
and in the manner customary for companies in similar businesses.
7.8 Performance of Obligations.
Each Credit Party will, and will cause each of its
Subsidiaries to, perform in all material respects all of its
obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt
instruments to which it is a party or by which it is bound.
7.9 Use of Proceeds.
The Borrower will use the proceeds of the Revolving Loans
and will use the Letters of Credit solely for the purposes set
forth in Section 6.15.
7.10 Audits/Inspections.
Upon reasonable notice and during normal business hours (and
without any unreasonable interference with the business of the
Consolidated Parties), each Credit Party will, and will cause
each of its Subsidiaries to, permit representatives appointed by
the Agent, including, without limitation, independent
accountants, agents, attorneys, and appraisers to visit and
inspect its property, including its books and records, its
accounts receivable and inventory, its facilities and its other
business assets, and to make photocopies or photographs thereof
and to write down and record any information such representative
obtains and shall permit the Agent or its representatives to
investigate and verify the accuracy of information provided to
the Lenders and to discuss all such matters with the officers,
employees and representatives of such Person. The Credit Parties
agree that the Agent and its representatives may, at the expense
of the Credit Parties, conduct an audit of the Collateral (i)
annually and (ii) at any reasonable time and from time to time
during the continuance of any Event of Default.
7.11 Financial Covenants.
(a) Interest Coverage Ratio. The Interest Coverage
Ratio, as of the last day of each fiscal quarter of the
Consolidated Parties, shall be greater than or equal to:
(i) for the period from December 27, 1997 to
and including March 27, 1998, 2.25 to 1.00; and
(ii) for the period from March 27, 1998 and
thereafter, 3.00 to 1.00.
(b) Current Ratio. The Current Ratio, as of the last
day of each fiscal quarter of the Consolidated Parties,
shall be greater than or equal to 2.50 to 1.00
(c) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Consolidated Parties,
shall be less than or equal to 0.25 to 1.00
(d) Consolidated Tangible Net Worth. At all times the
Consolidated Tangible Net Worth shall be greater than or
equal to the sum of $125 million, increased on a cumulative
basis as of the end of each fiscal quarter of the
Consolidated Parties, commencing with the fiscal quarter
ending September 27, 1997 by an amount equal to 50% of
Consolidated Net Income (to the extent positive) for the
fiscal quarter then ended.
7.12 Additional Credit Parties.
As soon as practicable and in any event within 30 days after
any Person becomes a Subsidiary of any Credit Party, the Borrower
shall provide the Agent with written notice thereof and shall (i)
if such Person is a Material Subsidiary, (A) cause such Person to
execute a Joinder Agreement in substantially the same form as
Exhibit 7.12, (B) cause certificates representing 100% (or, if
less, the full amount owned by the Consolidated Parties) of the
Capital Stock of such Person to be delivered to the Agent
(together with undated stock powers signed in blank) and pledged
to the Agent pursuant to an appropriate pledge agreement(s) in
substantially the form of the Pledge Agreement and otherwise in
form acceptable to the Agent and (ii) deliver such other
documentation as the Agent may reasonably request in connection
with the foregoing, including, without limitation, appropriate
UCC-1 financing statements, environmental reports, landlord's
waivers, certified resolutions and other organizational and
authorizing documents of such Person, favorable opinions of
counsel to such Person (which shall cover, among other things,
the legality, validity, binding effect and enforceability of the
documentation referred to above and the perfection of the Agent's
liens thereunder) and other items of the types required to be
delivered pursuant to Section 5.1(d), all in form, content and
scope reasonably satisfactory to the Agent.
7.13 Pledged Assets.
(a) Each Credit Party will, and will cause each of its
Material Subsidiaries to, (i) cause all of its personal
property assets (other than machinery and equipment) located
in the United States to be subject at all times to first
priority and perfected Liens in favor of the Agent pursuant
to the terms and conditions of the Collateral Documents and
(ii) cause 100% (or, if less, the full amount owned by the
Consolidated Parties) of the Capital Stock in each Credit
Party and each direct or indirect Material Subsidiary of the
Borrower to be subject at all times to a first priority,
perfected Lien in favor of the Agent pursuant to the terms
and conditions of the Collateral Documents or such other
security documents as the Agent shall reasonably request.
(b) Each Credit Party shall, and shall cause each of
its Subsidiaries to, take such action (including but not
limited to the actions set forth in Sections 5.1(d)) at its
own expense as requested by the Agent to ensure that the
Agent has a first priority perfected Lien to secure the
Credit Party Obligations in all personal property assets
(other than machinery and equipment) of the Credit Parties
located in the United States, subject only to Permitted
Liens. Each Credit Party shall, and shall cause each of its
Subsidiaries to, adhere to the covenants regarding the
location of Collateral as set forth in the Collateral
Documents.
7.14 Maintenance of Accounts with Agent.
Each Credit Party shall, and shall cause each of its
Subsidiaries to, maintain all of its deposit accounts with the
Agent and, except for the accounts set forth on Schedule 7.14,
shall not open, maintain or otherwise have any other account
(including any checking or savings account) where money in excess
of $5 million in the aggregate for all such accounts is or may be
deposited or maintained with such Person,
7.15 Factoring Agreements.
Promptly upon the Borrower or any Material Subsidiary
entering into a Factoring Agreement, deliver or cause such Person
to deliver an assignment of factoring proceeds, consented to in
writing by the applicable Factor and otherwise in form and
substance satisfactory to the Agent, with respect to such
Factoring Agreement.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that, so long
as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain
outstanding, and until all of the Commitments hereunder shall
have terminated:
8.1 Indebtedness.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness of the Borrower existing as of the
Closing Date and set forth in Schedule 8.1 (and renewals,
refinancings and extensions thereof on terms and conditions
no less favorable to such Person than such existing
Indebtedness);
(c) purchase money Indebtedness (including Capital
Leases and Synthetic Leases) hereafter incurred by the
Borrower to finance the purchase of fixed assets provided
that (i) the total of all such Indebtedness shall not exceed
an aggregate principal amount of $2,500,000 at any one time
outstanding (including any such Indebtedness referred to in
subsection (b) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) obligations of the Borrower or any of its
Subsidiaries in respect of Hedging Agreements entered into
in order to manage existing or anticipated interest rate or
exchange rate risks and not for speculative purposes;
(e) intercompany Indebtedness arising out of loans and
advances permitted under Section 8.6 and
(f) Indebtedness of Alchem arising under the pledge
agreement executed by Alchem in connection with the New
Delta Xxxxx Credit Facility.
Notwithstanding anything to the contrary set forth in this
Section 8.1 or in any other provision of this Credit Agreement,
none of the Consolidated Parties shall be permitted to contract,
create, incur, assume or permit to exist any Guaranty Obligations
in respect of any Indebtedness of Delta Xxxxx or any of its
Subsidiaries other than Guaranty Obligations arising in
connection with standby letters of credit or surety bonds issued
to satisfy worker's compensation requirements.
8.2 Liens.
The Credit Parties will not permit any Consolidated Party to
contract, create, incur, assume or permit to exist any Lien with
respect to any of its Property, whether now owned or after
acquired, except for Permitted Liens.
8.3 Nature of Business.
The Credit Parties will not permit any Consolidated Party to
substantively alter the character or fields of the business
conducted by such Person as of the Closing Date.
8.4 Consolidation, Merger, Dissolution, etc.
Except in connection with an Asset Disposition permitted by
the terms of Section 8.5, the Credit Parties will not permit any
Consolidated Party to enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution); provided that, notwithstanding
the foregoing provisions of this Section 8.4, (a) the Borrower
may merge or consolidate with any of its Subsidiaries provided
that (i) the Borrower shall be the continuing or surviving
corporation, (ii) the Credit Parties shall cause to be executed
and delivered such documents, instruments and certificates as the
Agent may reasonably request so as to cause the Credit Parties to
be in compliance with the terms of Section 7.13 after giving
effect to such transaction and (iii) the Borrower shall have
delivered to the Agent a certificate demonstrating that after
giving effect to such transaction no Default or Event of Default
would exist, (b) any Credit Party other than the Borrower may
merge or consolidate with any other Credit Party other than the
Borrower provided that (i) the Credit Parties shall cause to be
executed and delivered such documents, instruments and
certificates as the Agent may reasonably request so as to cause
the Credit Parties to be in compliance with the terms of Section
7.13 after giving effect to such transaction and (ii) the
Borrower shall have delivered to the Agent a certificate
demonstrating that after giving effect to such transaction no
Default or Event of Default would exist, (c) any Consolidated
Party which is not a Credit Party may be merged or consolidated
with or into any Credit Party provided that (i) such Credit Party
shall be the continuing or surviving corporation, (ii) the Credit
Parties shall cause to be executed and delivered such documents,
instruments and certificates as the Agent may reasonably request
so as to cause the Credit Parties to be in compliance with the
terms of Section 7.13 after giving effect to such transaction and
(iii) the Borrower shall have delivered to the Agent a
certificate demonstrating that after giving effect to such
transaction no Default or Event of Default would exist, (d) any
Consolidated Party which is not a Credit Party may be merged or
consolidated with or into any other Consolidated Party which is
not a Credit Party provided the Borrower shall have delivered to
the Agent a certificate demonstrating that after giving effect to
such transaction, no Default or Event of Default would exist, and
(e) any Wholly-Owned Subsidiary of the Borrower may dissolve,
liquidate or wind up its affairs at any time.
8.5 Asset Dispositions.
The Credit Parties will not permit any Consolidated Party to
make any Asset Disposition (including, without limitation, any
Sale and Leaseback Transaction) other than Excluded Asset
Dispositions unless (a) the consideration paid in connection
therewith is cash or Cash Equivalents, (b) if such transaction is
a Sale and Leaseback Transaction, such transaction is permitted
by the terms of Section 8.13, (c) such transaction does not
involve the sale or other disposition of a minority equity
interest in any Consolidated Party, (d) the aggregate net book
value of all of the assets sold or otherwise disposed of by the
Consolidated Parties in all such transactions after the Closing
Date shall not exceed $5,000,000, (e) no Default or Event of
Default shall have occurred and be continuing or would occur as a
consequence thereof, (f) if the aggregate net book value of all
of the assets sold or otherwise disposed of in such transaction
exceeds $500,000, then the Agent and the Lenders shall have
received a certificate of an officer of the Borrower specifying
the anticipated or actual date of such Asset Disposition no later
than 30 days prior to such Asset Disposition, in each case
briefly describing the assets to be sold or otherwise disposed of
and setting forth the net book value of such assets, the
aggregate consideration and the Net Cash Proceeds to be received
for such assets in connection with such Asset Disposition and (g)
within the period of 60 days following the consummation of such
Asset Disposition (with respect to any such Asset Disposition,
the "Application Period"), the Borrower shall apply (or cause to
be applied) an amount equal to the Net Cash Proceeds of such
Asset Disposition to (i) the purchase, acquisition or, in the
case of improvements to real property, construction of Eligible
Assets or (ii) to the prepayment of the Revolving Loans in
accordance with the terms of Section 3.3(b)(ii).
Upon a sale of assets or the sale of Capital Stock of a
Consolidated Party permitted by this Section 8.5, the Agent shall
(to the extent applicable) deliver to the Borrower, upon the
Borrower's request and at the Borrower's expense, such
documentation as is reasonably necessary to evidence the release
of the Agent's security interest, if any, in such assets or
Capital Stock, including, without limitation, amendments or
terminations of UCC financing statements, if any, the return of
stock certificates, if any, and the release of such Subsidiary
from all of its obligations, if any, under the Credit Documents.
8.6 Investments.
The Credit Parties will not permit any Consolidated Party to
make Investments in or to any Person, except for Permitted
Investments.
8.7 Restricted Payments.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, declare, order, make or set apart any
sum for or pay any Restricted Payment, except (a) to make
dividends payable solely in the same class of Capital Stock of
such Person, (b) to make dividends or other distributions payable
to the Borrower (directly or indirectly through Subsidiaries),
(c) as permitted by Section 8.8 or Section 8.9, (d) Investments
in Delta Xxxxx and its Subsidiaries that do not, taken together
with Investments made pursuant to Section 8.6 and clause (vii) of
the definition of "Permitted Investments" set forth in Section
1.1, exceed $500,000 in the aggregate at any one time outstanding
for all of the Consolidated Parties and (e) any other Restricted
Payment provided that (y) no Default or Event of Default shall
have occurred and be continuing or would occur as a consequence
thereof and (z) such Restricted Payment, together with the
aggregate of all other Restricted Payments declared or made by
the Consolidated Parties after the Closing Date (excluding
Restricted Payments permitted by clause (a), (b), (c) or (d) of
this paragraph or clause (ii) of the next succeeding paragraph),
is less than the sum of (1) $12.5 million, plus (2) 50% of
Consolidated Net Income for the period (taken as one accounting
period) from the beginning of the fiscal quarter commencing June
29, 1997 to the last day of the most recently ended fiscal
quarter with respect to which the Agent shall have received the
financial statements required to be delivered pursuant to Section
7.1(a) or (b) (or, if Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (3) 100% of the
aggregate Net Cash Proceeds received by the Consolidated Parties
from any Excluded Equity Issuance after the Closing Date and 50%
of the aggregate Net Cash Proceeds received by the Consolidated
Parties from any Equity Issuance which is not an Excluded Equity
Issuance after the Closing Date, plus (4) the aggregate amount of
dividends and other distributions received by the Borrower on
account of any shares of any class of Capital Stock of Delta
Xxxxx for the period (taken as one accounting period) from the
Closing Date to the date of any determination under this Section
8.7(e).
The foregoing provisions shall not prohibit 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
this Section 8.7.
The amount of any Restricted Payments (other than cash Restricted
Payments) shall be equal to the fair market value (evidenced by a
resolution of the board of directors of the applicable
Consolidated Party delivered together with the certificate
referred to below) on the date of the Restricted Payment of the
asset(s) proposed to be transferred by the Borrower or such
Subsidiary, as the case may be, pursuant to such Restricted
Payment. Not later than the date of making any Restricted
Payment, the Borrower shall deliver to the Agent a certificate
executed by an Executive Officer of the Borrower stating that
such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this Section 8.7 were
computed, which calculations may be based upon the Borrower's
latest available financial statements.
8.8 Prepayments of Indebtedness, etc.
If any Default or Event of Default has occurred and is
continuing or would be directly or indirectly caused as a result
thereof, the Credit Parties will not permit any Consolidated
Party to (a) after the issuance thereof, amend or modify (or
permit the amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the issuer of such
Indebtedness, or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof, or (b) make (or give
any notice with respect thereto) any voluntary or optional
payment or prepayment or redemption or acquisition for value of
(including without limitation, by way of depositing money or
securities with the trustee with respect thereto before due for
the purpose of paying when due), refund, refinance or exchange of
any other Indebtedness.
8.9 Transactions with Affiliates.
The Credit Parties will not permit any Consolidated Party to
enter into or permit to exist any transaction or series of
transactions with any officer, director, shareholder, Subsidiary
or Affiliate of such Person other than (a) advances of working
capital to any Credit Party, (b) transfers of cash and assets to
any Credit Party, (c) transactions permitted by Section 8.1,
Section 8.4, Section 8.5, Section 8.6, or Section 8.7, (d) normal
compensation and reimbursement of expenses of officers and
directors, (e) the provision by the Borrower to Delta Xxxxx and
its Subsidiaries of management services pursuant to the
Management Services Agreement dated as of August 1, 1997, as the
same may be amended from time to time, between the Borrower and
Delta Xxxxx, (f) transactions contemplated by the Tax Sharing
Agreement dated as of August 1, 1997, as the same may be amended
from time to time, between the Borrower and Delta Xxxxx and (g)
except as otherwise specifically limited in this Credit
Agreement, other transactions which are entered into in the
ordinary course of such Person's business on terms and conditions
substantially as favorable to such Person as would be obtainable
by it in a comparable arms-length transaction with a Person other
than an officer, director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year.
The Credit Parties will not permit any Consolidated Party to
change its fiscal year.
8.11 Limitation on Restricted Actions.
The Credit Parties will not permit any Consolidated Party
to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on
the ability of any such Person to (a) pay dividends or make any
other distributions to any Credit Party on its Capital Stock or
with respect to any other interest or participation in, or
measured by, its profits, (b) pay any Indebtedness or other
obligation owed to any Credit Party, (c) make loans or advances
to any Credit Party, (d) sell, lease or transfer any of its
properties or assets to any Credit Party, or (e) act as a
Guarantor and pledge its assets pursuant to the Credit Documents
or any renewals, refinancings, exchanges, refundings or extension
thereof, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for such encumbrances or restrictions
existing under or by reason of (i) this Credit Agreement and the
other Credit Documents, (ii) the New Delta Xxxxx Credit Facility,
(iii) applicable law or (iv) any document or instrument governing
Indebtedness incurred pursuant to Section 8.1(c), provided that
any such restriction contained therein relates only to the asset
or assets constructed or acquired in connection therewith or (v)
any Permitted Lien or any document or instrument governing any
Permitted Lien, provided that any such restriction contained
therein relates only to the asset or assets subject to such Lien.
8.12 Ownership of Subsidiaries.
The Credit Parties will not permit any Consolidated
Party to (i) permit any Person (other than the Borrower or
any Wholly-Owned Subsidiary of the Borrower) to own any
Capital Stock of any Subsidiary of the Borrower, (ii) permit
any Subsidiary of the Borrower to issue Capital Stock
(except to the Borrower or to a Wholly-Owned Subsidiary of
the Borrower), (iii) permit, create, incur, assume or suffer
to exist any Lien on any Capital Stock of any Subsidiary of
the Borrower, in each case except (A) to qualify directors
where required by applicable law or to satisfy other
requirements of applicable law with respect to the ownership
of Capital Stock of Foreign Subsidiaries, (B) as a result of
or in connection with a dissolution, merger or disposition
of a Subsidiary permitted under Section 8.4 or Section 8.5
or (C) for Permitted Liens and (iv) notwithstanding anything
to the contrary contained in clause (ii) above, permit any
Subsidiary of the Borrower to issue any shares of preferred
Capital Stock.
8.13 Sale Leasebacks.
Except for transactions entered into prior to the Closing
Date, the Credit Parties will not permit any Consolidated Party
to, directly or indirectly, become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether
an Operating Lease or a Capital Lease, of any Property (whether
real, personal or mixed), whether now owned or hereafter
acquired, (a) which such Consolidated Party has sold or
transferred or is to sell or transfer to a Person which is not a
Consolidated Party or (b) which such Consolidated Party intends
to use for substantially the same purpose as any other Property
which has been sold or is to be sold or transferred by such
Consolidated Party to another Person which is not a Consolidated
Party in connection with such lease.
8.14 Capital Expenditures.
The Credit Party will not permit Consolidated Capital
Expenditures for any fiscal year to exceed an amount equal to
150% of depreciation expense of the Borrower and its Subsidiaries
on a consolidated basis for the immediately preceding fiscal year
as determined in accordance with GAAP.
8.15 No Further Negative Pledges.
Except (a) pursuant to this Credit Agreement and the other
Credit Documents and (b) pursuant to any document or instrument
governing Indebtedness incurred pursuant to Section 8.1(c),
provided that any such restriction contained therein relates only
to the asset or assets constructed or acquired in connection
therewith, the Credit Parties will not permit any Consolidated
Party to enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption
of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for
such obligation if security is given for some other obligation.
8.16 Operating Lease Obligations.
The Credit Parties will not permit any Consolidated Party to
enter into, assume or permit to exist any obligations for the
payment of rental under Operating Leases which in the aggregate
for all such Persons would exceed $5,000,000 in any fiscal year.
8.17 Limitation on Foreign Operations.
The Credit Parties will not permit (i) the Borrower and its
Domestic Subsidiaries to own at any time less than 85% of
Consolidated Total Assets or (ii) as of as of the last day of
each fiscal quarter, the portion attributable to the Borrower and
its Domestic Subsidiaries of Consolidated Net Income for the four
quarters then ended to be less than 85% of Consolidated Net
Income for such period.
8.18 Factoring Agreements.
The Credit Parties will not permit any Consolidated Party to
incur or permit to exist any loans or advances from a Factor
(excluding charges, fees and interest accruing in the ordinary
course of business) under any Factoring Agreement.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any
of the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall
(i) default in the payment when due of any
principal of any of the Revolving Loans or of any
reimbursement obligations arising from drawings under
Letters of Credit, or
(ii) default, and such default shall continue
for three (3) or more Business Days, in the payment
when due of any interest on the Revolving Loans or on
any reimbursement obligations arising from drawings
under Letters of Credit, or of any Fees or other
amounts owing hereunder, under any of the other Credit
Documents or in connection herewith or therewith; or
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party
herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was deemed
to have been made; or
(c) Covenants.
(i) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.2, 7.9, 7.11, 7.12,
7.13 or 8.1 through 8.18, inclusive;
(ii) Any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement contained in Sections 7.1(a), (b) (c) or (d)
and such default shall continue unremedied for a period
of at least 5 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Agent; or
(iii) Any Credit Party shall default in
the due performance or observance by it of any term,
covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section
9.1) contained in this Credit Agreement and such
default shall continue unremedied for a period of at
least 30 days after the earlier of a responsible
officer of a Credit Party becoming aware of such
default or notice thereof by the Agent; or
(d) Other Credit Documents. (i) Any Credit Party
shall default in the due performance or observance of any
term, covenant or agreement in any of the other Credit
Documents (subject to applicable grace or cure periods, if
any), or (ii) except as a result of or in connection with a
dissolution, merger or disposition of a Subsidiary permitted
under Section 8.4 or Section 8.5, any Credit Document shall
fail to be in full force and effect or to give the Agent
and/or the Lenders the Liens, rights, powers and privileges
purported to be created thereby, or any Credit Party shall
so state in writing; or
(e) Guaranties. Except as the result of or in
connection with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4 or Section 8.5, the
guaranty given by any Guarantor hereunder (including any
Additional Credit Party) or any provision thereof shall
cease to be in full force and effect, or any Guarantor
(including any Additional Credit Party) hereunder or any
Person acting by or on behalf of such Guarantor shall deny
or disaffirm such Guarantor's obligations under such
guaranty, or any Guarantor shall default in the due
performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to any
guaranty; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur
with respect to any Consolidated Party; or
(g) Defaults under Other Agreements.
(i) Any Consolidated Party shall default in
the performance or observance (beyond the applicable
grace period with respect thereto, if any) of any
material obligation or condition of any contract or
lease material to the Consolidated Parties and the
other Person party to such contract or lease shall have
notified the applicable Consolidated Party that such
other Person considers such Consolidated Party to be in
default of such contract or lease; or
(ii) With respect to any Indebtedness (other
than Indebtedness outstanding under this Credit
Agreement) in excess of $250,000 in the aggregate for
the Consolidated Parties taken as a whole, (A) any
Consolidated Party shall (1) default in any payment
(beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness,
or (2) the occurrence and continuance of a default in
the observance or performance relating to such
Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition
exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders
of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to
whether any notice or lapse of time is required), any
such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid
other than by a regularly scheduled required
prepayment, prior to the stated maturity thereof; or
(h) Judgments. One or more judgments or decrees shall
be entered against one or more of the Consolidated Parties
involving a liability of $250,000 or more in the aggregate
(to the extent not paid or fully covered by insurance
provided by a carrier who has acknowledged coverage and has
the ability to perform) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded
pending appeal within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions,
if such event or condition could have a Material Adverse
Effect: (i) any "accumulated funding deficiency," as such
term is defined in Section 302 of ERISA and Section 412 of
the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of any
Consolidated Party or any ERISA Affiliate in favor of the
PBGC or a Plan; (ii) an ERISA Event shall occur with respect
to a Single Employer Plan, which is, in the reasonable
opinion of the Agent, likely to result in the termination of
such Plan for purposes of Title IV of ERISA; (iii) an ERISA
Event shall occur with respect to a Multiemployer Plan or
Multiple Employer Plan, which is, in the reasonable opinion
of the Agent, likely to result in (A) the termination of
such Plan for purposes of Title IV of ERISA, or (B) any
Consolidated Party or any ERISA Affiliate incurring any
liability in connection with a withdrawal from,
reorganization of (within the meaning of Section 4241 of
ERISA), or insolvency or (within the meaning of Section 4245
of ERISA) such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975
of the Code) or breach of fiduciary responsibility shall
occur which may subject any Consolidated Party or any ERISA
Affiliate to any liability under Sections 406, 409, 502(i),
or 502(l) of ERISA or Section 4975 of the Code, or under any
agreement or other instrument pursuant to which any
Consolidated Party or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability;
or
(j) Ownership. There shall occur a Change of Control.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived
by the requisite Lenders (pursuant to the voting requirements of
Section 11.6) or cured to the reasonable satisfaction of the
requisite Lenders (pursuant to the voting procedures in Section
11.6), the Agent shall, upon the request and direction of the
Required Lenders, by written notice to the Credit Parties take
any of the following actions:
(a) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(b) Acceleration. Declare the unpaid principal of and
any accrued interest in respect of all Revolving Loans, any
reimbursement obligations arising from drawings under
Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to
the Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or
upon the occurrence of an Event of Default under Section
9.1(f), it will immediately pay) to the Agent additional
cash, to be held by the Agent, for the benefit of the
Lenders, in a cash collateral account as additional security
for the LOC Obligations in respect of subsequent drawings
under all then outstanding Letters of Credit in an amount
equal to the maximum aggregate amount which may be drawn
under all Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit
Documents including, without limitation, all rights and
remedies existing under the Collateral Documents, all rights
and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default
specified in Section 9.1(f) shall occur, then the Commitments
shall automatically terminate and all Revolving Loans, all
reimbursement obligations arising from drawings under Letters of
Credit, all accrued interest in respect thereof, all accrued and
unpaid Fees and other indebtedness or obligations owing to the
Agent and/or any of the Lenders hereunder automatically shall
immediately become due and payable without the giving of any
notice or other action by the Agent or the Lenders.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment, Powers and Immunities.
Each Lender hereby irrevocably appoints and authorizes the
Agent to act as its agent under this Credit Agreement and the
other Credit Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Credit
Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. The Agent
(which term as used in this sentence and in Section 10.5 and the
first sentence of Section 10.6 hereof shall include its
Affiliates and its own and its Affiliates' officers, directors,
employees, and agents): (a) shall not have any duties or
responsibilities except those expressly set forth in this Credit
Agreement and shall not be a trustee or fiduciary for any Lender;
(b) shall not be responsible to the Lenders for any recital,
statement, representation, or warranty (whether written or oral)
made in or in connection with any Credit Document or any
certificate or other document referred to or provided for in, or
received by any of them under, any Credit Document, or for the
value, validity, effectiveness, genuineness, enforceability, or
sufficiency of any Credit Document, or any other document
referred to or provided for therein or for any failure by any
Credit Party or any other Person to perform any of its
obligations thereunder; (c) shall not be responsible for or have
any duty to ascertain, inquire into, or verify the performance or
observance of any covenants or agreements by any Credit Party or
the satisfaction of any condition or to inspect the property
(including the books and records) of any Credit Party or any of
its Subsidiaries or Affiliates; (d) shall not be required to
initiate or conduct any litigation or collection proceedings
under any Credit Document; and (e) shall not be responsible for
any action taken or omitted to be taken by it under or in
connection with any Credit Document, except for its own gross
negligence or willful misconduct. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
10.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification,
notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telecopy)
believed by it to be genuine and correct and to have been signed,
sent or made by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel
for any Credit Party), independent accountants, and other experts
selected by the Agent. The Agent may deem and treat the payee of
any Revolving Note as the holder thereof for all purposes hereof
unless and until the Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.3(b) hereof.
As to any matters not expressly provided for by this Credit
Agreement, the Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the
Lenders; provided, however, that the Agent shall not be required
to take any action that exposes the Agent to personal liability
or that is contrary to any Credit Document or applicable law or
unless it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be
incurred by it by reason of taking any such action.
10.3 Defaults.
The Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or Event of Default unless the Agent
has received written notice from a Lender or the Borrower
specifying such Default or Event of Default and stating that such
notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default or Event of
Default, the Agent shall give prompt notice thereof to the
Lenders. The Agent shall (subject to Section 10.2 hereof) take
such action with respect to such Default or Event of Default as
shall reasonably be directed by the Required Lenders, provided
that, unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as it shall deem advisable in
the best interest of the Lenders.
10.4 Rights as a Lender.
With respect to its Commitment and the Revolving Loans made
by it, NationsBank (and any successor acting as Agent) in its
capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as
though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include
the Agent in its individual capacity. NationsBank (and any
successor acting as Agent) and its Affiliates may (without having
to account therefor to any Lender) accept deposits from, lend
money to, make investments in, provide services to, and generally
engage in any kind of lending, trust, or other business with any
Credit Party or any of its Subsidiaries or Affiliates as if it
were not acting as Agent, and NationsBank (and any successor
acting as Agent) and its Affiliates may accept fees and other
consideration from any Credit Party or any of its Subsidiaries or
Affiliates for services in connection with this Credit Agreement
or otherwise without having to account for the same to the
Lenders.
10.5 Indemnification.
The Lenders agree to indemnify the Agent (to the extent not
reimbursed under Section 11.5 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in
accordance with their respective Commitments, for any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including attorneys' fees), or
disbursements of any kind and nature whatsoever that may be
imposed on, incurred by or asserted against the Agent (including
by any Lender) in any way relating to or arising out of any
Credit Document or the transactions contemplated thereby or any
action taken or omitted by the Agent under any Credit Document;
provided that no Lender shall be liable for any of the foregoing
to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation
of the foregoing, each Lender agrees to reimburse the Agent
promptly upon demand for its ratable share of any costs or
expenses payable by the Borrower under Section 11.5, to the
extent that the Agent is not promptly reimbursed for such costs
and expenses by the Borrower. The agreements in this Section 10.5
shall survive the repayment of the Revolving Loans, LOC
Obligations and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without
reliance on the Agent or any other Lender, and based on such
documents and information as it has deemed appropriate, made its
own credit analysis of the Credit Parties and their Subsidiaries
and Affiliates and made its own decision to enter into this
Credit Agreement and that it will, independently and without
reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking
or not taking action under the Credit Documents. Except for
notices, reports, and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder,
the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the
affairs, financial condition, or business of any Credit Party or
any of its Subsidiaries or Affiliates that may come into the
possession of the Agent or any of its Affiliates.
10.7 Successor Agent.
The Agent may resign at any time by giving notice thereof to
the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor
Agent. If no successor Agent shall have been so appointed by the
Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent which shall be a commercial
bank organized under the laws of the United States of America
having combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a
successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges, and
duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any
retiring Agent's resignation hereunder as Agent, the provisions
of this Section 10 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while
it was acting as Agent.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be
effective (a) when delivered, (b) upon acknowledgement of
receipt, when transmitted via telecopy (or other facsimile
device) to the number set out below, (c) the Business Day
following the day on which the same has been delivered prepaid to
a reputable national overnight air courier service, or (d) the
third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to
the respective parties at the address, in the case of the
Borrower, Guarantors and the Agent, set forth below, and, in the
case of the Lenders, set forth on Schedule 2.1(a), or at such
other address as such party may specify by written notice to the
other parties hereto:
if to the Borrower or the Guarantors:
Delta Woodside Industries, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Post Office Xxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Telephone: 000-000-0000
Telecopy: 803-637-6066)
with a copy to:
Xxxx X. Xxxxxxx, Esq.
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
00 Xxxx Xxxxxxxxxx Xxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Xxxx Xxxxxx Xxx 000 (00000-0000)
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
if to the Agent:
NationsBank, N.A.
Independence Center, 15th Floor
NC1-001-15-04
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Agency Services
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
NationsBank, N.A.
NationsBank Corporate Center, 8th Floor
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: X. Xxxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
11.2 Right of Set-Off; Adjustments.
Upon the occurrence and during the continuance of any Event
of Default, each Lender (and each of its Affiliates) is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by such Lender (or any of its Affiliates) to or for the credit or
the account of any Credit Party against any and all of the
obligations of such Person now or hereafter existing under this
Credit Agreement, under the Revolving Notes, under any other
Credit Document or otherwise, irrespective of whether such Lender
shall have made any demand under hereunder or thereunder and
although such obligations may be unmatured. Each Lender agrees
promptly to notify any affected Credit Party after any such set-
off and application made by such Lender; provided, however, that
the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender under
this Section 11.2 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) that
such Lender may have.
11.3 Benefit of Agreement.
(a) This Credit Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto; provided that
none of the Credit Parties may assign or transfer any of its
interests and obligations without prior written consent of
the Lenders; provided further that the rights of each Lender
to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth
in this Section 11.3.
(b) Each Lender may assign to one or more Eligible
Assignees all or a portion of its rights and obligations
under this Credit Agreement (including, without limitation,
all or a portion of its Revolving Loans, its Revolving Note,
and its Commitment); provided, however, that
(i) each such assignment shall be to an
Eligible Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's
rights and obligations under this Credit Agreement, any
such partial assignment shall be in an amount at least
equal to $5,000,000 (or, if less, the remaining amount
of the Commitment being assigned by such Lender) or an
integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender
shall be of a constant, and not varying, percentage of
all of its rights and obligations under this Credit
Agreement and the Revolving Notes; and
(iv) the parties to such assignment shall
execute and deliver to the Agent for its acceptance an
Assignment and Acceptance in the form of Exhibit
11.3(b) hereto, together with any Revolving Note
subject to such assignment and a processing fee of
$3,500.
Upon execution, delivery, and acceptance of such Assignment
and Acceptance, the assignee thereunder shall be a party
hereto and, to the extent of such assignment, have the
obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such
assignment, relinquish its rights and be released from its
obligations under this Credit Agreement. Upon the
consummation of any assignment pursuant to this Section
11.3(b), the assignor, the Agent and the Borrower shall make
appropriate arrangements so that, if required, new Revolving
Notes are issued to the assignor and the assignee. If the
assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall deliver to
the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with
Section 3.11.
(c) The Agent shall maintain at its address referred
to in Section 11.1 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Revolving
Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agent and the Lenders may treat
each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Credit Agreement.
The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance
executed by the parties thereto, together with any Revolving
Note subject to such assignment and payment of the
processing fee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the
form of Exhibit 11.3(b) hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof
to the parties thereto.
(e) Each Lender may sell participations to one or more
Persons in all or a portion of its rights and obligations
under this Credit Agreement (including all or a portion of
its Commitment and its Revolving Loans); provided, however,
that (i) such Lender's obligations under this Credit
Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) the participant
shall be entitled to the benefit of the yield protection
provisions contained in Sections 3.7 through 3.12,
inclusive, and the right of set-off contained in Section
11.2, and (iv) the Borrower shall continue to deal solely
and directly with such Lender in connection with such
Lender's rights and obligations under this Credit Agreement,
and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Revolving Loans
and its Revolving Note and to approve any amendment,
modification, or waiver of any provision of this Credit
Agreement (other than amendments, modifications, or waivers
decreasing the amount of principal of or the rate at which
interest is payable on such Revolving Loans or Revolving
Note, extending any scheduled principal payment date or date
fixed for the payment of interest on such Revolving Loans or
Revolving Note, or extending its Commitment).
(f) Notwithstanding any other provision set forth in
this Credit Agreement, any Lender may at any time assign and
pledge all or any portion of its Revolving Loans and its
Revolving Note to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank. No such assignment
shall release the assigning Lender from its obligations
hereunder.
(g) Any Lender may furnish any information concerning
the Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to assignees and participants
(including prospective assignees and participants), subject,
however, to the provisions of Section 11.14 hereof.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of the Agent or any Lender
in exercising any right, power or privilege hereunder or under
any other Credit Document and no course of dealing between the
Agent or any Lender and any of the Credit Parties shall operate
as a waiver thereof; nor shall any single or partial exercise of
any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or
thereunder. The rights and remedies provided herein are
cumulative and not exclusive of any rights or remedies which the
Agent or any Lender would otherwise have. No notice to or demand
on any Credit Party in any case shall entitle the Borrower or any
other Credit Party to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the
rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.5 Expenses; Indemnification.
(a) The Borrower agrees to pay on demand all reasonable
costs and expenses of the Agent in connection with the
syndication, preparation, execution, delivery, administration,
modification, and amendment of this Credit Agreement, the other
Credit Documents, and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
expenses of counsel for the Agent (including the cost of internal
counsel) with respect thereto and with respect to advising the
Agent as to its rights and responsibilities under the Credit
Documents. The Borrower further agrees to pay on demand all
reasonable costs and expenses of the Agent and the Lenders, if
any (including, without limitation, reasonable attorneys' fees
and expenses and the cost of internal counsel), in connection
with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of the Credit Documents and the other
documents to be delivered hereunder.
(b) The Borrower agrees to indemnify and hold harmless the
Agent and each Lender and each of their Affiliates and their
respective officers, directors, employees, agents, and advisors
(each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' fees) that
may be incurred by or asserted or awarded against any Indemnified
Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of
defense in connection therewith) the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of
the proceeds of the Revolving Loans, except to the extent such
claim, damage, loss, liability, cost, or expense is found in a
final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an
investigation, litigation or other proceeding to which the
indemnity in this Section 11.5 applies, such indemnity shall be
effective whether or not such investigation, litigation or
proceeding is brought by the Borrower, its directors,
shareholders or creditors or an Indemnified Party or any other
Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against
the Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and
advisers, on any theory of liability, for special, indirect,
consequential, or punitive damages arising out of or otherwise
relating to the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds
of the Revolving Loans. The Agent and the Lenders agree not to
assert any claim against any of the Credit Parties, or any of
their respective directors, officers, employees, attorneys,
agents, and advisers, on any theory of liability, for special,
indirect, consequential, or punitive damages arising out of or
otherwise relating to the Credit Documents or any of the
transactions contemplated herein.
(c) Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in this Section 11.5 shall
survive the repayment of the Revolving Loans, LOC Obligations and
other obligations under the Credit Documents and the termination
of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document
nor any of the terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change,
waiver, discharge or termination is in writing entered into by,
or approved in writing by, the Required Lenders and the Borrower,
provided, however, that:
(a) without the consent of each Lender affected
thereby, neither this Credit Agreement nor any other Credit
Document may be amended to
(i) extend the final maturity of any
Revolving Loan or the time of payment of any
reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit,
(ii) reduce the rate or extend the time of
payment of interest (other than as a result of waiving
the applicability of any post-default increase in
interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal
amount of any Revolving Loan or of any reimbursement
obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over
the amount thereof in effect (it being understood and
agreed that a waiver of any Default or Event of Default
or mandatory reduction in the Commitments shall not
constitute a change in the terms of any Commitment of
any Lender),
(v) except as the result of or in connection
with an Asset Disposition permitted by Section 8.5,
release all or substantially all of the Collateral,
(vi) except as the result of or in connection
with a dissolution, merger or disposition of a
Subsidiary permitted under Section 8.4, release the
Borrower or substantially all of the other Credit
Parties from its or their obligations under the Credit
Documents,
(vii) amend, modify or waive any
provision of this Section 11.6 or Section 3.6, 3.7,
3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15, 9.1(a),
11.2, 11.3, 11.5 or 11.9,
(viii) reduce any percentage specified in,
or otherwise modify, the definition of Required
Lenders, or
(ix) consent to the assignment or transfer by
the Borrower or all or substantially all of the other
Credit Parties of any of its or their rights and
obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) without the consent of the Agent, no provision of
Section 10 may be amended;
(c) without the consent of the Issuing Lender, no
provision of Section 2.2 may be amended.
Notwithstanding the fact that the consent of all the Lenders
is required in certain circumstances as set forth above, (x)
each Lender is entitled to vote as such Lender sees fit on
any bankruptcy reorganization plan that affects the
Revolving Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code
supersedes the unanimous consent provisions set forth herein
and (y) the Required Lenders may consent to allow a Credit
Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall
be an original, but all of which shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by
facsimile by any of the parties hereto of an executed counterpart
of this Credit Agreement shall be as effective as an original
executed counterpart hereof and shall be deemed a representation
that an original executed counterpart hereof will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit
Agreement.
11.9 Survival.
All indemnities set forth herein, including, without
limitation, in Section 2.2(i), 3.11, 3.12, 10.5 or 11.5 shall
survive the execution and delivery of this Credit Agreement, the
making of the Revolving Loans, the issuance of the Letters of
Credit, the repayment of the Revolving Loans, LOC Obligations and
other obligations under the Credit Documents and the termination
of the Commitments hereunder, and all representations and
warranties made by the Credit Parties herein shall survive
delivery of the Revolving Notes and the making of the Revolving
Loans hereunder.
11.10 Governing Law; Submission to Jurisdiction; Venue.
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT
DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NORTH CAROLINA. Any legal action or proceeding with respect
to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina in
Mecklenburg County, or of the United States for the Western
District of North Carolina, and, by execution and delivery
of this Credit Agreement, each of the Credit Parties hereby
irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the nonexclusive
jurisdiction of such courts. Each of the Credit Parties
further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set
out for notices pursuant to Section 11.1, such service to
become effective three (3) days after such mailing. Nothing
herein shall affect the right of the Agent or any Lender to
serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against
any Credit Party in any other jurisdiction.
(b) Each of the Credit Parties hereby irrevocably
waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts
referred to in subsection (a) above and hereby further
irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE AGENT,
THE LENDERS, THE BORROWER AND THE CREDIT PARTIES HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
11.11 Severability.
If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
11.12 Entirety.
This Credit Agreement together with the other Credit
Documents represent the entire agreement of the parties hereto
and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
11.13 Binding Effect; Termination.
(a) This Credit Agreement shall become effective at
such time on or after the Closing Date when it shall have
been executed by the Borrower, the Guarantors and the Agent,
and the Agent shall have received copies hereof (telefaxed
or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit
Agreement shall be binding upon and inure to the benefit of
the Borrower, the Guarantors, the Agent and each Lender and
their respective successors and assigns.
(b) The term of this Credit Agreement shall be until
no Revolving Loans, LOC Obligations or any other amounts
payable hereunder or under any of the other Credit Documents
shall remain outstanding, no Letters of Credit shall be
outstanding, all of the Credit Party Obligations have been
irrevocably satisfied in full and all of the Commitments
hereunder shall have expired or been terminated.
11.14 Confidentiality.
The Agent and each Lender (each, a "Lending Party") agrees
to keep confidential any information furnished or made available
to it by the Borrower pursuant to this Credit Agreement that is
marked confidential; provided that nothing herein shall prevent
any Lending Party from disclosing such information (a) to any
other Lending Party or any Affiliate of any Lending Party, or any
officer, director, employee, agent, or advisor of any Lending
Party or Affiliate of any Lending Party, (b) to any other Person
if reasonably incidental to the administration of the credit
facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative
agency, (e) upon the request or demand of any regulatory agency
or authority, (f) that is or becomes available to the public or
that is or becomes available to any Lending Party other than as a
result of a disclosure by any Lending Party prohibited by this
Credit Agreement, (g) in connection with any litigation to which
such Lending Party or any of its Affiliates may be a party, (h)
to the extent necessary in connection with the exercise of any
remedy under this Credit Agreement or any other Credit Document,
and (i) subject to provisions substantially similar to those
contained in this Section 11.14, to any actual or proposed
participant or assignee.
11.15 Conflict.
To the extent that there is a conflict or inconsistency
between any provision hereof, on the one hand, and any provision
of any Credit Document, on the other hand, this Credit Agreement
shall control.
[Signature Pages to Follow]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Credit Agreement to be duly executed and
delivered as of the date first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
GUARANTORS: ALCHEM CAPITAL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DUCK HEAD APPAREL COMPANY, INC.,
a Tennessee corporation
By: Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
NAUTILUS INTERNATIONAL, INC,
a Virginia corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DELTA CONSOLIDATED CORPORATION,
a New York corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
DELTA MERCHANDISING, INC.,
a South Carolina corporation
By: /s/ Xxxxxx X. Xxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxx
Title: Executive Vice President,
Treasurer and Chief Financial Officer
LENDER
AND AGENT: NATIONSBANK, N.A.,
in its individual capacity and
as Agent
By: /s/ X. Xxxxxx Xxxxx
Name: X. Xxxxxx Xxxxx
Title: Senior Vice President
Exhibit 1.1A
FORM OF PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is entered
into as of August 25, 1997 among DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation (the "Borrower"), certain
Subsidiaries of the Borrower (individually a "Guarantor", and
collectively the "Guarantors"; together with the Borrower,
individually a "Pledgor", and collectively the "Pledgors") and
NATIONSBANK, N.A., in its capacity as agent (in such capacity,
the "Agent") for the lenders from time to time party to the
Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement") among the
Borrower, the Guarantors, the Lenders and the Agent, the Lenders
have agreed to make Revolving Loans and issue Letters of Credit
upon the terms and subject to the conditions set forth therein;
and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Revolving Loans and to issue Letters of Credit
under the Credit Agreement that the Pledgors shall have executed
and delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to
such terms in the Credit Agreement. For purposes of this Pledge
Agreement, the term "Lender" shall include any Affiliate of any
Lender which has entered into a Hedging Agreement with the
Borrower or any of its Subsidiaries.
2. Pledge and Grant of Security Interest. To secure the
prompt payment and performance in full when due, whether by lapse
of time or otherwise, of the Pledgor Obligations (as defined in
Section 3 hereof), each Pledgor hereby pledges and assigns to the
Agent, for the benefit of the Lenders, and grants to the Agent,
for the benefit of the Lenders, a continuing security interest in
any and all right, title and interest of such Pledgor in and to
the following, whether now owned or existing or owned, acquired,
or arising hereafter (collectively, the "Pledged Collateral"):
(a) Pledged Shares. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of capital stock owned by such Pledgor of each
Material Subsidiary set forth on Schedule 2(a) attached, in
each case together with the certificates (or other
agreements or instruments), if any, representing such
shares, and all options and other rights, contractual or
otherwise, with respect thereto (collectively, together with
the shares of capital stock described in Section 2(b) and
2(c) below, the "Pledged Shares"), including, but not
limited to, the following:
(y) all shares or securities representing a
dividend on any of the Pledged Shares, or representing
a distribution or return of capital upon or in respect
of the Pledged Shares, or resulting from a stock split,
revision, reclassification or other exchange therefor,
and any subscriptions, warrants, rights or options
issued to the holder of, or otherwise in respect of,
the Pledged Shares; and
(z) without affecting the obligations of
such Pledgor under any provision prohibiting such
action hereunder, in the event of any consolidation or
merger in which a Pledgor is not the surviving
corporation, all shares of each class of the capital
stock of the successor corporation formed by or
resulting from such consolidation or merger.
(b) Additional Shares. 100% (or, if less, the full
amount owned by such Pledgor) of the issued and outstanding
shares of capital stock owned by such Pledgor of any Person
which hereafter becomes a Material Subsidiary, including,
without limitation, the certificates representing such
shares.
(c) Other Equity Interests. Any and all other Capital
Stock of each Pledgor in any Material Subsidiary.
(d) Proceeds. All proceeds and products of the
foregoing, however and whenever acquired and in whatever
form.
Without limiting the generality of the foregoing, it is
hereby specifically understood and agreed that a Pledgor may from
time to time hereafter deliver additional shares of stock to the
Agent as collateral security for the Pledgor Obligations. Upon
delivery to the Agent, such additional shares of stock shall be
deemed to be part of the Pledged Collateral of such Pledgor and
shall be subject to the terms of this Pledge Agreement whether or
not Schedule 2(a) is amended to refer to such additional shares.
3. Security for Pledgor Obligations. The security
interest created hereby in the Pledged Collateral of each Pledgor
constitutes continuing collateral security for all of the
following, whether now existing or hereafter incurred (the
"Pledgor Obligations"):
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement, the
Revolving Notes, this Pledge Agreement and the other Credit
Documents to which the Borrower is a party;
(b) In the case of the Guarantors, the prompt
performance and observance by such Guarantor of all
obligations of such Guarantor under the Credit Agreement,
this Pledge Agreement and the other Credit Documents to
which such Guarantor is a party, including, without
limitation, its guaranty obligations arising under Section 4
of the Credit Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature owing from any Pledgor to
any Lender or the Agent arising under the Credit Agreement,
the Credit Documents or the Hedging Agreements and all
obligations and liabilities incurred in connection with
collecting and enforcing the Pledgor Obligations.
4. Delivery of the Pledged Collateral. Each Pledgor
hereby agrees that:
(a) Each Pledgor shall deliver to the Agent (i)
simultaneously with or prior to the execution and delivery
of this Pledge Agreement, all certificates representing the
Pledged Shares of such Pledgor and (ii) promptly upon the
receipt thereof by or on behalf of a Pledgor, all other
certificates and instruments constituting Pledged Collateral
of a Pledgor. Prior to delivery to the Agent, all such
certificates and instruments constituting Pledged Collateral
of a Pledgor shall be held in trust by such Pledgor for the
benefit of the Agent pursuant hereto. All such certificates
shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of
transfer or assignment in blank, substantially in the form
provided in Exhibit 4(a) attached hereto.
(b) Additional Securities. If such Pledgor shall
receive by virtue of its being or having been the owner of
any Pledged Collateral, any (i) stock certificate, including
without limitation, any certificate representing a stock
dividend or distribution in connection with any increase or
reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock
splits, spin-off or split-off, promissory notes or other
instrument; (ii) option or right, whether as an addition to,
substitution for, or an exchange for, any Pledged Collateral
or otherwise; (iii) dividends payable in securities; or
(iv) distributions of securities in connection with a
partial or total liquidation, dissolution or reduction of
capital, capital surplus or paid-in surplus, then such
Pledgor shall receive such stock certificate, instrument,
option, right or distribution in trust for the benefit of
the Agent, shall segregate it from such Pledgor's other
property and shall deliver it forthwith to the Agent in the
exact form received together with any necessary endorsement
and/or appropriate stock power duly executed in blank,
substantially in the form provided in Exhibit 4(a), to be
held by the Agent as Pledged Collateral and as further
collateral security for the Pledgor Obligations.
(c) Financing Statements. Each Pledgor shall execute
and deliver to the Agent such UCC or other applicable
financing statements as may be reasonably requested by the
Agent in order to perfect and protect the security interest
created hereby in the Pledged Collateral of such Pledgor.
5. Representations and Warranties. Each Pledgor hereby
represents and warrants to the Agent, for the benefit of the
Lenders, that so long as any of the Pledgor Obligations remain
outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated:
(a) Authorization of Pledged Shares. The Pledged
Shares are duly authorized and validly issued, are fully
paid and nonassessable and are not subject to the preemptive
rights of any Person. All other shares of stock
constituting Pledged Collateral will be duly authorized and
validly issued, fully paid and nonassessable and not subject
to the preemptive rights of any Person.
(b) Title. Each Pledgor has good and indefeasible
title to the Pledged Collateral of such Pledgor and will at
all times be the legal and beneficial owner of such Pledged
Collateral free and clear of any Lien, other than Permitted
Liens. There exists no "adverse claim" within the meaning
of Section 8-302 of the Uniform Commercial Code as in effect
in the State of North Carolina (the "UCC") with respect to
the Pledged Shares of such Pledgor.
(c) Exercising of Rights. The exercise by the Agent
of its rights and remedies hereunder will not violate any
law or governmental regulation or any material contractual
restriction binding on or affecting a Pledgor or any of its
property.
(d) Pledgor's Authority. No authorization, approval
or action by, and no notice or filing with any Governmental
Authority or with the issuer of any Pledged Stock is
required either (i) for the pledge made by a Pledgor or for
the granting of the security interest by a Pledgor pursuant
to this Pledge Agreement or (ii) for the exercise by the
Agent or the Lenders of their rights and remedies hereunder
(except as may be required by laws affecting the offering
and sale of securities).
(e) Security Interest/Priority. This Pledge Agreement
creates a valid security interest in favor of the Agent for
the benefit of the Lenders, in the Pledged Collateral. The
taking possession by the Agent of the certificates
representing the Pledged Shares and all other certificates
and instruments constituting Pledged Collateral will perfect
and establish the first priority of the Agent's security
interest in the Pledged Shares and, when properly perfected
by filing or registration, in all other Pledged Collateral
represented by such Pledged Shares and instruments securing
the Pledgor Obligations. Except as set forth in this
Section 5(e), no action is necessary to perfect or otherwise
protect such security interest.
(f) No Other Shares. No Pledgor owns any shares of
stock other than as set forth on Schedule 2(a) attached
hereto.
6. Covenants. Each Pledgor hereby covenants, that so long
as any of the Pledgor Obligations remain outstanding or any
Credit Document or Hedging Agreement is in effect or any Letter
of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated, such Pledgor shall:
(a) Books and Records. Xxxx its books and records
(and shall cause the issuer of the Pledged Shares of such
Pledgor to xxxx its books and records) to reflect the
security interest granted to the Agent, for the benefit of
the Lenders, pursuant to this Pledge Agreement.
(b) Defense of Title. Warrant and defend title to and
ownership of the Pledged Collateral of such Pledgor at its
own expense against the claims and demands of all other
parties claiming an interest therein, keep the Pledged
Collateral free from all Liens, except for Permitted Liens,
and not sell, exchange, transfer, assign, lease or otherwise
dispose of Pledged Collateral of such Pledgor or any
interest therein, except as permitted under the Credit
Agreement and the other Credit Documents.
(c) Further Assurances. Promptly execute and deliver
at its expense all further instruments and documents and
take all further action that may be necessary and desirable
or that the Agent may reasonably request in order to (i)
perfect and protect the security interest created hereby in
the Pledged Collateral of such Pledgor (including without
limitation any and all action necessary to satisfy the Agent
that the Agent has obtained a first priority perfected
security interest in any capital stock); (ii) enable the
Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral of such
Pledgor; and (iii) otherwise effect the purposes of this
Pledge Agreement, including, without limitation and if
requested by the Agent, delivering to the Agent irrevocable
proxies in respect of the Pledged Collateral of such
Pledgor.
(d) Amendments. Not make or consent to any amendment
or other modification or waiver with respect to any of the
Pledged Collateral of such Pledgor or enter into any
agreement or allow to exist any restriction with respect to
any of the Pledged Collateral of such Pledgor other than
pursuant hereto or as may be permitted under the Credit
Agreement.
(e) Compliance with Securities Laws. File all reports
and other information now or hereafter required to be filed
by such Pledgor with the United States Securities and
Exchange Commission and any other state, federal or foreign
agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
7. Advances by Lenders. On failure of any Pledgor to
perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the
Lenders may make for the protection of the security hereof or
which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Pledgors
on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Pledgor
Obligations and shall bear interest from the date said amounts
are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Base Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of
any Pledgor, and no such advance or expenditure therefor, shall
relieve the Pledgors of any default under the terms of this
Pledge Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in
accordance with any xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by a Pledgor in
appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.
8. Events of Default. The occurrence of an event which
under the Credit Agreement would constitute an Event of Default
shall be an Event of Default hereunder (an "Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during the continuation thereof, the Agent
and the Lenders shall have, in respect of the Pledged
Collateral of any Pledgor, in addition to the rights and
remedies provided herein, in the Credit Documents, in the
Hedging Agreements or by law, the rights and remedies of a
secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence
of an Event of Default and during the continuation thereof,
without limiting the generality of this Section and without
notice, the Agent may, in its sole discretion, sell or
otherwise dispose of or realize upon the Pledged Collateral,
or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker's board or
elsewhere, at such price or prices and on such other terms
as the Agent may deem commercially reasonable, for cash,
credit or for future delivery or otherwise in accordance
with applicable law. To the extent permitted by law, any
Lender may in such event, bid for the purchase of such
securities. Each Pledgor agrees that, to the extent notice
of sale shall be required by law and has not been waived by
such Pledgor, any requirement of reasonable notice shall be
met if notice, specifying the place of any public sale or
the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to such
Pledgor, in accordance with the notice provisions of Section
11.1 of the Credit Agreement at least 10 days before the
time of such sale. The Agent shall not be obligated to make
any sale of Pledged Collateral of such Pledgor regardless of
notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to
which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of
Default and during the continuation thereof, the Pledgors
recognize that the Agent may deem it impracticable to effect
a public sale of all or any part of the Pledged Shares or
any of the securities constituting Pledged Collateral and
that the Agent may, therefore, determine to make one or more
private sales of any such securities to a restricted group
of purchasers who will be obligated to agree, among other
things, to acquire such securities for their own account,
for investment and not with a view to the distribution or
resale thereof. Each Pledgor acknowledges that any such
private sale may be at prices and on terms less favorable to
the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the
foregoing, agrees that such private sale shall be deemed to
have been made in a commercially reasonable manner and that
the Agent shall have no obligation to delay sale of any such
securities for the period of time necessary to permit the
issuer of such securities to register such securities for
public sale under the Securities Act of 1933. Each Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been (i) publicly advertised on a bona
fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York
(to the extent that such offer may be advertised without
prior registration under the Securities Act of 1933), or
(ii) made privately in the manner described above shall be
deemed to involve a "public sale" under the UCC,
notwithstanding that such sale may not constitute a "public
offering" under the Securities Act of 1933, and the Agent
may, in such event, bid for the purchase of such securities.
(d) Retention of Pledged Collateral. In addition to
the rights and remedies hereunder, upon the occurrence of an
Event of Default, the Agent may, after providing the notices
required by Section 9-505(2) of the UCC or otherwise
complying with the requirements of applicable law of the
relevant jurisdiction, retain all or any portion of the
Pledged Collateral in satisfaction of the Pledgor
Obligations. Unless and until the Agent shall have provided
such notices, however, the Agent shall not be deemed to have
retained any Pledged Collateral in satisfaction of any
Pledgor Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agent or the Lenders are legally
entitled, the Pledgors shall be jointly and severally liable
for the deficiency, together with interest thereon at the
default rate specified in Section 3.1 of the Credit
Agreement for Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed
by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the
Pledgor Obligations shall be returned to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Pledgor hereby designates
and appoints the Agent, on behalf of the Lenders, and each
of its designees or agents as attorney-in-fact of such
Pledgor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of
Default:
(i) to demand, collect, settle,
compromise, adjust and give discharges and releases
concerning the Pledged Collateral of such Pledgor, all
as the Agent may reasonably determine;
(ii) to commence and prosecute any
actions at any court for the purposes of collecting any
of the Pledged Collateral of such Pledgor and enforcing
any other right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the Agent
may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens,
security interests, or other encumbrances levied or
placed on or threatened against the Pledged Collateral
of such Pledgor;
(v) to direct any parties liable for
any payment under any of the Pledged Collateral to make
payment of any and all monies due and to become due
thereunder directly to the Agent or as the Agent shall
direct;
(vi) to receive payment of and receipt
for any and all monies, claims, and other amounts due
and to become due at any time in respect of or arising
out of any Pledged Collateral of such Pledgor;
(vii) to sign and endorse any
drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to
the Pledged Collateral of such Pledgor;
(viii) to settle, compromise or
adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges
or releases as the Agent may deem reasonably
appropriate;
(ix) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, pledge
agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine
necessary in order to perfect and maintain the security
interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the
transactions contemplated therein;
(x) to exchange any of the Pledged
Collateral of such Pledgor or other property upon any
merger, consolidation, reorganization, recapitalization
or other readjustment of the issuer thereof and, in
connection therewith, deposit any of the Pledged
Collateral of such Pledgor with any committee,
depository, transfer agent, registrar or other
designated agency upon such terms as the Agent may
determine;
(xi) to vote for a shareholder
resolution, or to sign an instrument in writing,
sanctioning the transfer of any or all of the Pledged
Shares of such Pledgor into the name of the Agent or
one or more of the Lenders or into the name of any
transferee to whom the Pledged Shares of such Pledgor
or any part thereof may be sold pursuant to Section 10
hereof; and
(xii) to do and perform all such
other acts and things as the Agent may reasonably deem
to be necessary, proper or convenient in connection
with the Pledged Collateral of such Pledgor.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Pledgor Obligations remain outstanding, any Credit Document
or any Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding and (ii) until all of the
Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Pledge Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of
attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in Pledged
Collateral.
(b) Performance by the Agent of Pledgor's Obligations.
If any Pledgor fails to perform any agreement or obligation
contained herein, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall
be payable by the Pledgors on a joint and several basis
pursuant to Section 13 hereof.
(c) Assignment by the Agent. The Agent may from time
to time assign the Pledgor Obligations and any portion
thereof and/or the Pledged Collateral and any portion
thereof, and the assignee shall be entitled to all of the
rights and remedies of the Agent under this Pledge Agreement
in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that
Pledgors shall be responsible for preservation of all rights
in the Pledged Collateral of such Pledgor, and the Agent
shall be relieved of all responsibility for Pledged
Collateral upon surrendering it or tendering the surrender
of it to the Pledgors. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of
the Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that
which the Agent accords its own property, which shall be no
less than the treatment employed by a reasonable and prudent
agent in the industry, it being understood that the Agent
shall not have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Agent has or is deemed to
have knowledge of such matters; or (ii) taking any necessary
steps to preserve rights against any parties with respect to
any Pledged Collateral.
(e) Voting Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing, to the extent
permitted by law, each Pledgor may exercise any and all
voting and other consensual rights pertaining to the
Pledged Collateral of such Pledgor or any part thereof
for any purpose not inconsistent with the terms of this
Pledge Agreement or the Credit Agreement; and
(ii) Upon the occurrence and during the
continuance of an Event of Default, all rights of a
Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise
pursuant to paragraph (i) of this Section shall cease
and all such rights shall thereupon become vested in
the Agent which shall then have the sole right to
exercise such voting and other consensual rights.
(f) Dividend Rights in Respect of the Pledged
Collateral.
(i) So long as no Event of Default
shall have occurred and be continuing and subject to
Section 4(b) hereof, each Pledgor may receive and
retain any and all dividends (other than stock
dividends and other dividends constituting Pledged
Collateral which are addressed hereinabove) or interest
paid in respect of the Pledged Collateral to the extent
they are allowed under the Credit Agreement.
(ii) Upon the occurrence and during the
continuance of an Event of Default:
(A) all rights of a Pledgor to
receive the dividends and interest payments which
it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this Section
shall cease and all such rights shall thereupon be
vested in the Agent which shall then have the sole
right to receive and hold as Pledged Collateral
such dividends and interest payments; and
(B) all dividends and interest
payments which are received by a Pledgor contrary
to the provisions of paragraph (A) of this Section
shall be received in trust for the benefit of the
Agent, shall be segregated from other property or
funds of such Pledgor, and shall be forthwith paid
over to the Agent as Pledged Collateral in the
exact form received, to be held by the Agent as
Pledged Collateral and as further collateral
security for the Pledgor Obligations.
(g) Release of Pledged Collateral. The Agent may
release any of the Pledged Collateral from this Pledge
Agreement or may substitute any of the Pledged Collateral
for other Pledged Collateral without altering, varying or
diminishing in any way the force, effect, lien, pledge or
security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this
Pledge Agreement shall continue as a first priority lien on
all Pledged Collateral not expressly released or
substituted.
11. Rights of Required Lenders. All rights of the Agent
hereunder, if not exercised by the Agent, may be exercised by the
Required Lenders.
12. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Pledgor Obligations and any proceeds of any
Pledged Collateral, when received by the Agent or any of the
Lenders in cash or its equivalent, will be applied in reduction
of the Pledgor Obligations in the order set forth in Section
3.15(b) of the Credit Agreement, and each Pledgor irrevocably
waives the right to direct the application of such payments and
proceeds and acknowledges and agrees that the Agent shall have
the continuing and exclusive right to apply and reapply any and
all such payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books
and records.
13. Costs of Counsel. At all times hereafter, the Pledgors
agree to promptly pay upon demand any and all reasonable costs
and expenses of the Agent or the Lenders, (a) as required under
Section 11.5 of the Credit Agreement and (b) as necessary to
protect the Pledged Collateral or to exercise any rights or
remedies under this Pledge Agreement or with respect to any
Pledged Collateral. All of the foregoing costs and expenses
shall constitute Pledgor Obligations hereunder.
14. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Pledgor Obligations remain
outstanding or any Credit Document or Hedging Agreement is
in effect or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth
in the Credit Documents). Upon such payment and
termination, this Pledge Agreement shall be automatically
terminated and the Agent and the Lenders shall, upon the
request and at the expense of the Pledgors, forthwith
release all of its liens and security interests hereunder
and shall executed and deliver all UCC termination
statements and/or other documents reasonably requested by
the Pledgors evidencing such termination. Notwithstanding
the foregoing all releases and indemnities provided
hereunder shall survive termination of this Pledge
Agreement.
(b) This Pledge Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Pledgor Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Pledgor Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Pledgor Obligations.
15. Amendments; Waivers; Modifications. This Pledge
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
16. Successors in Interest. This Pledge Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Pledgor, its successors and assigns and
shall inure, together with the rights and remedies of the Agent
and the Lenders hereunder, to the benefit of the Agent and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Pledgor
hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to
this Pledge Agreement or the Collateral, except for any liability
arising from the gross negligence or willful misconduct of the
Agent, or such Lender, or its officers, employees or agents.
17. Notices. All notices required or permitted to be given
under this Pledge Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
18. Counterparts. This Pledge Agreement may be executed in
any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute
one and the same instrument. It shall not be necessary in making
proof of this Pledge Agreement to produce or account for more
than one such counterpart.
19. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Pledge Agreement.
20. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NORTH CAROLINA. Any legal action or proceeding
with respect to this Security Agreement may be brought in
the courts of the State of North Carolina, or of the United
States for the Western District of North Carolina, and, by
execution and delivery of this Security Agreement, each
Pledgor hereby irrevocably accepts for itself and in respect
of its property, generally and unconditionally, the
jurisdiction of such courts. Each Pledgor further
irrevocably consents to the service of process out of any of
the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified
mail, postage prepaid, to it at the address for notices
pursuant to Section 11.1 of the Credit Agreement, such
service to become effective 30 days after such mailing.
Nothing herein shall affect the right of the Agent to serve
process in any other manner permitted by law or to commence
legal proceedings or to otherwise proceed against any
Pledgor in any other jurisdiction.
(b) Each Pledgor hereby irrevocably waives any
objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Pledge Agreement
brought in the courts referred to in subsection (a) hereof
and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS PLEDGE AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
22. Severability. If any provision of any of the Pledge
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
23. Entirety. This Pledge Agreement, the other Credit
Documents and the Hedging Agreements represent the entire
agreement of the parties hereto and thereto, and supersede all
prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to
the Credit Documents, the Hedging Agreements or the transactions
contemplated herein and therein.
24. Survival. All representations and warranties of the
Pledgors hereunder shall survive the execution and delivery of
this Pledge Agreement, the other Credit Documents and the Hedging
Agreements, the delivery of the Revolving Notes and the making of
the Revolving Loans and the issuance of the Letters of Credit
under the Credit Agreement.
25. Other Security. To the extent that any of the Pledgor
Obligations are now or hereafter secured by property other than
the Pledged Collateral (including, without limitation, real and
other personal property owned by a Pledgor), or by a guarantee,
endorsement or property of any other Person, then the Agent and
the Lenders shall have the right to proceed against such other
property, guarantee or endorsement upon the occurrence of any
Event of Default, and the Agent and the Lenders have the right,
in their sole discretion, to determine which rights, security,
liens, security interests or remedies the Agent and the Lenders
shall at any time pursue, relinquish, subordinate, modify or take
with respect thereto, without in any way modifying or affecting
any of them or any of the Agent's and the Lenders' rights or the
Pledgor Obligations under this Pledge Agreement, under any other
of the Credit Documents or under any Hedging Agreement.
26. Limitation on Liability. Notwithstanding any provision
to the contrary contained herein or in any other of the Credit
Documents, to the extent the obligations of a Pledgor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Pledgor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this
Pledge Agreement to be duly executed and delivered as of the date
first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.,
a South Carolina corporation
By:
Name:
Title:
GUARANTORS: _______________________________,
a _______________ corporation
By:
Name:
Title:
_______________________________,
a _______________ corporation
By:
Name:
Title:
_______________________________,
a _______________ corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Schedule 2(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Agent
PLEDGED STOCK
Pledgor: DELTA WOODSIDE INDUSTRIES,INC
Certificate Percentage
Name of Subsidiary Number of Share Number Ownership
100%
Pledgor:
Name of Subsidiary Certificate Percentage
Number of Shares Number Ownership
100%
Exhibit 4(a)
to
Pledge Agreement
dated as of August 25, 1997
in favor of NationsBank, N.A.
as Agent
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers to
the following shares of capital stock of _____________________, a
____________ corporation:
No. of Shares Certificate No.
and irrevocably appoints __________________________________ its
agent and attorney-in-fact to transfer all or any part of such
capital stock and to take all necessary and appropriate action to
effect any such transfer. The agent and attorney-in-fact may
substitute and appoint one or more persons to act for him. The
effectiveness of a transfer pursuant to this stock power shall be
subject to any and all transfer restrictions referenced on the
face of the certificates evidencing such interest or in the
certificate of incorporation or bylaws of the subject
corporation, to the extent they may from time to time exist.
_______________,
a ______________ corporation
By:
Name:
Title:
Exhibit 1.1B
FORM OF SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is
entered into as of August 25, 1997 among DELTA WOODSIDE
INDUSTRIES, INC., a South Carolina corporation (the "Borrower"),
certain Subsidiaries of the Borrower (individually a "Guarantor"
and collectively the "Guarantors"; together with the Borrower,
individually an "Obligor", and collectively the "Obligors") and
NATIONSBANK, N.A., in its capacity as agent (in such capacity,
the "Agent") for the lenders from time to time party to the
Credit Agreement described below (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as
of the date hereof (as amended, modified, extended, renewed or
replaced from time to time, the "Credit Agreement"), among the
Borrower, the Guarantors, the Lenders and the Agent, the Lenders
have agreed to make Revolving Loans and issue Letters of Credit
upon the terms and subject to the conditions set forth therein;
and
WHEREAS, it is a condition precedent to the effectiveness of
the Credit Agreement and the obligations of the Lenders to make
their respective Revolving Loans and to issue Letters of Credit
under the Credit Agreement that the Obligors shall have executed
and delivered this Security Agreement to the Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms
used herein shall have the meanings ascribed to such terms
in the Credit Agreement, and the following terms which are
defined in the Uniform Commercial Code in effect in the
State of North Carolina on the date hereof are used herein
as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Farm Products, General Intangibles, Instruments,
Inventory and Proceeds. For purposes of this Security
Agreement, the term "Lender" shall include any Affiliate of
any Lender which has entered into a Hedging Agreement with
the Borrower.
(b) In addition, the following terms shall have the
following meanings:
"Secured Obligations": the collective reference to the
following:
(a) In the case of the Borrower, the prompt
performance and observance by the Borrower of all
obligations of the Borrower under the Credit Agreement,
the Revolving Notes, this Security Agreement and the
other Credit Documents to which the Borrower is a
party;
(b) In the case of the Guarantors, the
prompt performance and observance by such Guarantor of
all obligations of such Guarantor under the Credit
Agreement, this Security Agreement and the other Credit
Documents to which such Guarantor is a party,
including, without limitation, its guaranty obligations
arising under Section 4 of the Credit Agreement; and
(c) All other indebtedness, liabilities and
obligations of any kind or nature owing from any
Obligor to any Lender or the Agent arising under the
Credit Agreement, the Credit Documents or the Hedging
Agreements and all obligations and liabilities incurred
in connection with collecting and enforcing the Secured
Obligations.
"Trademark License": means any agreement, written or
oral, providing for the grant by or to an Obligor of any
right to use any Trademark, including, without limitation,
any thereof referred to in Schedule 1(b) hereto.
"Trademarks": (a) all trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other
source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired,
all registrations and recordings thereof, and all
applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office
or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof
referred to in Schedule 1(b) hereto, and (b) all renewals
thereof.
2. Grant of Security Interest in the Collateral. To
secure the prompt payment and performance in full when due,
whether by lapse of time, acceleration or otherwise, of the
Secured Obligations, each Obligor hereby grants to the Agent, for
the benefit of the Lenders, a continuing security interest in,
and a right to set off against, any and all right, title and
interest of such Obligor in and to the following, whether now
owned or existing or owned, acquired, or arising hereafter
(collectively, the "Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all General Intangibles;
(f) all Instruments;
(g) all Inventory;
(h) all Trademarks;
(i) all Trademark Licenses;
(j) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks,
and related data processing software (owned by
such Obligor or in which it has an interest) that
at any time evidence or contain information
relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or
realization thereupon;
(k) all contract rights under the Factoring
Agreements; and
(l) to the extent not otherwise included,
all Proceeds and products of any and all of the
foregoing.
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest created hereby
in the Collateral (i) constitutes continuing collateral security
for all of the Secured Obligations, whether now existing or
hereafter arising and (ii) is not to be construed as an
assignment of any Trademarks or Trademark Licenses.
3. Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding,
each of the Obligors shall remain liable under each of the
Accounts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder,
all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender
shall have any obligation or liability under any Account (or
any agreement giving rise thereto) by reason of or arising
out of this Security Agreement or the receipt by the Agent
or any Lender of any payment relating to such Account
pursuant hereto, nor shall the Agent or any Lender be
obligated in any manner to perform any of the obligations of
an Obligor under or pursuant to any Account (or any
agreement giving rise thereto), to make any payment, to make
any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement
giving rise thereto), to present or file any claim, to take
any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) Once during each calendar year or at any time
after the occurrence and during the continuation of an Event
of Default, the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in
any manner and through any medium that it reasonably
considers advisable, and the Obligors shall furnish all such
assistance and information as the Agent may require in
connection with such test verifications. At any time and
from time to time, upon the Agent's request and at the
expense of the Obligors, the Obligors shall cause
independent public accountants or others satisfactory to the
Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Accounts. The Agent in its own name or in
the name of others may communicate with account debtors on
the Accounts to verify with them to the Agent's satisfaction
the existence, amount and terms of any Accounts.
4. Representations and Warranties. Each Obligor hereby
represents and warrants to the Agent, for the benefit of the
Lenders, that so long as any of the Secured Obligations remain
outstanding or any Credit Document or Hedging Agreement is in
effect or any Letter of Credit shall remain outstanding, and
until all of the Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each
Obligor's chief executive office and chief place of business
is (and for the prior four months have been) located at the
locations set forth on Schedule 4(a) hereto, and each
Obligor keeps its books and records at such locations.
(b) Location of Collateral. The location of all
Collateral owned by each Obligor is as shown on Schedule
4(b) hereto.
(c) Ownership. Each Obligor is the legal and
beneficial owner of its Collateral and has the right to
pledge, sell, assign or transfer the same. Each Obligor's
legal name is as shown in this Security Agreement and no
Obligor has in the past four months changed its name, been
party to a merger, consolidation or other change in
structure or used any tradename except as set forth in
Schedule 4(c) attached hereto.
(d) Security Interest/Priority. This Security
Agreement creates a valid security interest in favor of the
Agent, for the benefit of the Lenders, in the Collateral of
such Obligor and, when properly perfected by filing, shall
constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by
filing under the UCC, free and clear of all Liens except for
Permitted Liens.
(e) Farm Products. None of the Collateral
constitutes, or is the Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Obligors and
the papers and documents relating thereto are genuine and in
all material respects what they purport to be, (ii) each
Account arises out of (A) a bona fide sale of goods sold and
delivered by such Obligor (or is in the process of being
delivered) or (B) services theretofore actually rendered by
such Obligor to, the account debtor named therein, (iii) no
Account or other right of an Obligor to payment for goods
sold and delivered or services rendered is evidenced by any
Instrument or Chattel Paper unless such Instrument or
Chattel Paper has been theretofore endorsed over and
delivered to the Agent and (iv) no surety bond was required
or given in connection with any Account of an Obligor or the
contracts or purchase orders out of which they arose.
(g) Inventory. No Inventory is held by an Obligor
pursuant to consignment, sale or return, sale on approval or
similar arrangement.
(h) Trademarks.
(i) Schedule 1(b) hereto includes all
Trademarks and Trademark Licenses owned by the Obligors
in their own names as of the date hereof.
(ii) To the best of each Obligor's knowledge,
each Trademark of such Obligor is valid, subsisting,
unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule
1(b) hereto, none of such Trademarks is the subject of
any licensing or franchise agreement.
(iv) No holding, decision or judgment has
been rendered by any Governmental Authority which would
limit, cancel or question the validity of any
Trademark.
(v) No action or proceeding is pending
seeking to limit, cancel or question the validity of
any Trademark, or which, if adversely determined, would
have a material adverse effect on the value of any
Trademark.
(vi) All applications pertaining to the
Trademarks of each Obligor have been duly and properly
filed, and all registrations or letters pertaining to
such Trademarks have been duly and properly filed and
issued, and all of such Trademarks are valid and
enforceable.
(vii) No Obligor has made any assignment
or agreement in conflict with the security interest in
the Trademarks of each Obligor hereunder.
5. Covenants. Each Obligor covenants that, so long as any
of the Secured Obligations remain outstanding or any Credit
Document or Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Obligor shall:
(a) Other Liens. Defend the Collateral against the
claims and demands of all other parties claiming an interest
therein, keep the Collateral free from all Liens, except for
Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of the Collateral or any interest
therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral
in good order, condition and repair and not use the
Collateral in violation of the provisions of this Security
Agreement or any other agreement relating to the Collateral
or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance.
(c) Instruments/Chattel Paper. If any amount payable
under or in connection with any of the Collateral shall be
or become evidenced by any Instrument or Chattel Paper,
immediately deliver such Instrument or Chattel Paper to the
Agent, duly indorsed in a manner satisfactory to the Agent,
to be held as Collateral pursuant to this Security
Agreement.
(d) Change in Location. Not, without providing 30
days prior written notice to the Agent and without filing
such amendments to any previously filed financing statements
as the Agent may require, (a) change the location of its
chief executive office and chief place of business (as well
as its books and records) from the locations set forth on
Schedule 4(a) hereto, (b) change the location of its
Collateral from the locations set forth for such Obligor on
Schedule 4(b) hereto, or (c) change its name, be party to a
merger, consolidation or other change in structure or use
any tradename other than as set forth on Schedule 4(c)
attached hereto.
(e) Inspection. Upon reasonable notice, and during
reasonable hours, at all times allow the Agent or its
representatives to visit and inspect the Collateral as set
forth in Section 7.10 of the Credit Agreement.
(f) Perfection of Security Interest. Execute and
deliver to the Agent such agreements, assignments or
instruments (including affidavits, notices, reaffirmations
and amendments and restatements of existing documents, as
the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or
appropriate (i) to assure to the Agent its security
interests hereunder, including (A) such financing statements
(including renewal statements) or amendments thereof or
supplements thereto or other instruments as the Agent may
from time to time reasonably request in order to perfect and
maintain the security interests granted hereunder in
accordance with the UCC and (B) with regard to Trademarks, a
Notice of Grant of Security Interest in Trademarks for
filing with the United States Patent and Trademark Office in
the form of Schedule 5(f) attached hereto, (ii) to
consummate the transactions contemplated hereby and (iii) to
otherwise protect and assure the Agent of its rights and
interests hereunder. To that end, each Obligor agrees that
the Agent may file one or more financing statements
disclosing the Agent's security interest in any or all of
the Collateral of such Obligor without, to the extent
permitted by law, such Obligor's signature thereon, and
further each Obligor also hereby irrevocably makes,
constitutes and appoints the Agent, its nominee or any other
person whom the Agent may designate, as such Obligor's
attorney in fact with full power and for the limited purpose
to sign in the name of such Obligor any such financing
statements, or amendments and supplements to financing
statements, renewal financing statements, notices or any
similar documents which in the Agent's reasonable discretion
would be necessary, appropriate or convenient in order to
perfect and maintain perfection of the security interests
granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable so long as the
Credit Agreement is in effect or any amounts payable
thereunder or under any other Credit Document, any Letter of
Credit or any Hedging Agreement shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated. Each Obligor hereby agrees that a carbon,
photographic or other reproduction of this Security
Agreement or any such financing statement is sufficient for
filing as a financing statement by the Agent without notice
thereof to such Obligor wherever the Agent may in its sole
discretion desire to file the same. In the event for any
reason the law of any jurisdiction other than North Carolina
becomes or is applicable to the Collateral of any Obligor or
any part thereof, or to any of the Secured Obligations, such
Obligor agrees to execute and deliver all such instruments
and to do all such other things as the Agent in its sole
discretion reasonably deems necessary or appropriate to
preserve, protect and enforce the security interests of the
Agent under the law of such other jurisdiction (and, if an
Obligor shall fail to do so promptly upon the request of the
Agent, then the Agent may execute any and all such requested
documents on behalf of such Obligor pursuant to the power of
attorney granted hereinabove). If any Collateral is in the
possession or control of an Obligor's agents and the Agent
so requests, such Obligor agrees to notify such agents in
writing of the Agent's security interest therein and, upon
the Agent's request, instruct them to hold all such
Collateral for the Lenders' account and subject to the
Agent's instructions. Each Obligor agrees to xxxx its books
and records to reflect the security interest of the Agent in
the Collateral.
(g) Treatment of Accounts. Not grant or extend the
time for payment of any Account, or compromise or settle any
Account for less than the full amount thereof, or release
any person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, other than
as normal and customary in the ordinary course of an
Obligor's business.
(h) Covenants Relating to Trademarks.
(i) (A) Continue to use each Trademark on
each and every trademark class of goods applicable to
its current line as reflected in its current catalogs,
brochures and price lists in order to maintain such
Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past
the quality of products and services offered under such
Trademark, (C) employ such Trademark with the
appropriate notice of registration, (D) not adopt or
use any xxxx which is confusingly similar or a
colorable imitation of such Trademark unless the Agent,
for the ratable benefit of the Lenders, shall obtain a
perfected security interest in such xxxx pursuant to
this Security Agreement, and (E) not (and not permit
any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby any Trademark may
become invalidated.
(ii) Notify the Agent and the Lenders
immediately if it knows, or has reason to know, that
any application or registration relating to any
Trademark may become abandoned or dedicated, or of any
adverse determination or development (including,
without limitation, the institution of, or any such
determination or development in, any proceeding in the
United States Patent and Trademark Office or any court
or tribunal in any country) regarding an Obligor's
ownership of any Trademark or its right to register the
same or to keep and maintain the same.
(iii) Whenever an Obligor, either by
itself or through an agent, employee, licensee or
designee, shall file an application for the
registration of any Trademark with the United States
Patent and Trademark Office or any similar office or
agency in any other country or any political
subdivision thereof, an Obligor shall report such
filing to the Agent and the Lenders within five
Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the
Agent, an Obligor shall execute and deliver any and all
agreements, instruments, documents and papers as the
Agent may request to evidence the Agent's and the
Lenders' security interest in any Trademark and the
goodwill and general intangibles of an Obligor relating
thereto or represented thereby.
(iv) Take all reasonable and necessary steps,
including, without limitation, in any proceeding before
the United States Patent and Trademark Office, or any
similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant
registration) and to maintain each registration of the
Trademarks, including, without limitation, filing of
applications for renewal, affidavits of use and
affidavits of incontestability.
(v) Promptly notify the Agent and the
Lenders after it learns that any Trademark included in
the Collateral is infringed, misappropriated or diluted
by a third party and promptly xxx for infringement,
misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages
for such infringement, misappropriation or dilution, or
take such other actions as it shall reasonably deem
appropriate under the circumstances to protect such
Trademark.
(vi) Not make any assignment or agreement in
conflict with the security interest in the Trademarks
of each Obligor hereunder.
(i) New Trademarks. Promptly provide the Agent with
(i) a listing of all applications, if any, for new
Trademarks (together with a listing of the issuance of
registrations or letters on present applications), which new
applications and issued registrations or letters shall be
subject to the terms and conditions hereunder, and (ii) (A)
with respect to Trademarks, a duly executed Notice of
Security Interest in Trademarks or (B) such other duly
executed documents as the Agent may request in a form
acceptable to counsel for the Agent and suitable for
recording to evidence the security interest in the Trademark
which is the subject of such new application.
(j) Insurance. Insure, repair and replace the
Collateral of such Obligor as set forth in the Credit
Agreement. All insurance proceeds shall be subject to the
security interest of the Agent hereunder.
6. Advances by Lenders. On failure of any Obligor to
perform any of the covenants and agreements contained herein, the
Agent may, at its sole option and in its sole discretion, perform
the same and in so doing may expend such sums as the Agent may
reasonably deem advisable in the performance thereof, including,
without limitation, the payment of any insurance premiums, the
payment of any taxes, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any
adverse claim and all other expenditures which the Agent or the
Lenders may make for the protection of the security hereof or
which may be compelled to make by operation of law. All such
sums and amounts so expended shall be repayable by the Obligors
on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts
are expended at the default rate specified in Section 3.1 of the
Credit Agreement for Base Rate Loans. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of
any Obligor, and no such advance or expenditure therefor, shall
relieve the Obligors of any default under the terms of this
Security Agreement, the other Credit Documents or any Hedging
Agreement. The Lenders may make any payment hereby authorized in
accordance with any xxxx, statement or estimate procured from the
appropriate public office or holder of the claim to be discharged
without inquiry into the accuracy of such xxxx, statement or
estimate or into the validity of any tax assessment, sale,
forfeiture, tax lien, title or claim except to the extent such
payment is being contested in good faith by an Obligor in
appropriate proceedings and against which adequate reserves are
being maintained in accordance with GAAP.
7. Events of Default.
The occurrence of an event which under the Credit Agreement
would constitute an Event of Default shall be an Event of Default
hereunder (an "Event of Default").
8. Remedies.
(a) General Remedies. Upon the occurrence of an Event
of Default and during continuation thereof, the Lenders
shall have, in addition to the rights and remedies provided
herein, in the Credit Documents, in the Hedging Agreements
or by law (including, but not limited to, the rights and
remedies set forth in the Uniform Commercial Code of the
jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the
jurisdiction where the rights and remedies are asserted and
regardless of whether the UCC applies to the affected
Collateral), and further, the Agent may, with or without
judicial process or the aid and assistance of others, (i)
enter on any premises on which any of the Collateral may be
located and, without resistance or interference by the
Obligors, take possession of the Collateral, (ii) dispose of
any Collateral on any such premises, (iii) require the
Obligors to assemble and make available to the Agent at the
expense of the Obligors any Collateral at any place and time
designated by the Agent which is reasonably convenient to
both parties, (iv) remove any Collateral from any such
premises for the purpose of effecting sale or other
disposition thereof, and/or (v) without demand and without
advertisement, notice, hearing or process of law, all of
which each of the Obligors hereby waives to the fullest
extent permitted by law, at any place and time or times,
sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or
more parcels, for cash, upon credit or otherwise, at such
prices and upon such terms as the Agent deems advisable, in
its sole discretion (subject to any and all mandatory legal
requirements). In addition to all other sums due the Agent
and the Lenders with respect to the Secured Obligations, the
Obligors shall pay the Agent and each of the Lenders all
reasonable documented costs and expenses incurred by the
Agent or any such Lender, including, but not limited to,
reasonable attorneys' fees and court costs, in obtaining or
liquidating the Collateral, in enforcing payment of the
Secured Obligations, or in the prosecution or defense of any
action or proceeding by or against the Agent or the Lenders
or the Obligors concerning any matter arising out of or
connected with this Security Agreement, any Collateral or
the Secured Obligations, including, without limitation, any
of the foregoing arising in, arising under or related to a
case under the Bankruptcy Code. To the extent the rights of
notice cannot be legally waived hereunder, each Obligor
agrees that any requirement of reasonable notice shall be
met if such notice is personally served on or mailed,
postage prepaid, to the Borrower in accordance with the
notice provisions of Section 11.1 of the Credit Agreement at
least 10 days before the time of sale or other event giving
rise to the requirement of such notice. The Agent and the
Lenders shall not be obligated to make any sale or other
disposition of the Collateral regardless of notice having
been given. To the extent permitted by law, any Lender may
be a purchaser at any such sale. To the extent permitted by
applicable law, each of the Obligors hereby waives all of
its rights of redemption with respect to any such sale.
Subject to the provisions of applicable law, the Agent and
the Lenders may postpone or cause the postponement of the
sale of all or any portion of the Collateral by announcement
at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be
made at the time and place to which the sale was postponed,
or the Agent and the Lenders may further postpone such sale
by announcement made at such time and place.
(b) Remedies relating to Accounts. Subject to the
limitations set forth in any assignment of factoring
proceeds with respect to any Factoring Agreement, upon the
occurrence of an Event of Default and during the
continuation thereof, whether or not the Agent has exercised
any or all of its rights and remedies hereunder, each
Obligor will promptly upon request of the Agent instruct all
account debtors or the applicable factors to remit all
payments in respect of the Accounts or the receivables to a
mailing location selected by the Agent, provided that, in
accordance with the applicable assignment of factoring
proceeds, the Agent shall also be entitled to give such
instruction directly to the Factor. In addition, the Agent
or its designee may notify any Obligor's customers and
account debtors that the Accounts of such Obligor have been
assigned to the Agent or of the Agent's security interest
therein, and may (either in its own name or in the name of
an Obligor or both) demand, collect (including without
limitation by way of a lockbox arrangement), receive, take
receipt for, sell, xxx for, compound, settle, compromise and
give acquittance for any and all amounts due or to become
due on any Account, and, in the Agent's discretion, file any
claim or take any other action or proceeding to protect and
realize upon the security interest of the Lenders in the
Accounts. Each Obligor acknowledges and agrees that the
Proceeds of its Accounts remitted to or on behalf of the
Agent in accordance with the provisions hereof shall be
solely for the Agent's own convenience and that such Obligor
shall not have any right, title or interest in such Accounts
or in any such other amounts except as expressly provided
herein. The Agent and the Lenders shall have no liability
or responsibility to any Obligor for acceptance of a check,
draft or other order for payment of money bearing the legend
"payment in full" or words of similar import or any other
restrictive legend or endorsement or be responsible for
determining the correctness of any remittance. Each Obligor
hereby agrees to indemnify the Agent and the Lenders from
and against all liabilities, damages, losses, actions,
claims, judgments, costs, expenses, charges and reasonable
attorneys' fees suffered or incurred by the Agent or the
Lenders (each, an "Indemnified Party") because of the
maintenance of the foregoing arrangements except as relating
to or arising out of the gross negligence or willful
misconduct of an Indemnified Party or its officers,
employees or agents. In the case of any investigation,
litigation or other proceeding, the foregoing indemnity
shall be effective whether or not such investigation,
litigation or proceeding is brought by an Obligor, its
directors, shareholders or creditors or an Indemnified Party
or any other Person or any other Indemnified Party is
otherwise a party thereto.
(c) Access. In addition to the rights and remedies
hereunder, upon the occurrence of an Event of Default and
during the continuance thereof, the Agent shall have the
right to enter and remain upon the various premises of the
Obligors without cost or charge to the Agent, and use the
same, together with materials, supplies, books and records
of the Obligors for the purpose of collecting and
liquidating the Collateral, or for preparing for sale and
conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Agent
may remove Collateral, or any part thereof, from such
premises and/or any records with respect thereto, in order
to effectively collect or liquidate such Collateral.
(d) Factoring Agreements. In addition to the remedies
identified above, if any Event of Default has occurred and
is continuing, the Agent my exercise all of the rights,
powers, privileges and remedies of the Borrower permitted
under the Factoring Agreements. Anything contained herein
or in the Factoring Agreements to the contrary
notwithstanding, the Borrower shall at all times remain
liable under the Factoring Agreements to perform all of the
duties and obligations of the Borrower thereunder to the
same extent as if this Agreement had not been executed, and
the Agent and the Lenders shall not have any obligation or
liability under the Factoring Agreements by reason of or
arising out of this Agreement, nor shall the Agent or any of
the Lenders be required or obligated in any manner to
perform or fulfill any obligation of the Borrower under or
pursuant to the Factoring Agreements or to make any payment,
or to make any inquiry as to the nature or sufficiency of
any payment received by it, or to present or file any claim,
or take any action to collect or enforce the payment of any
amounts which have been assigned to it or to which it may be
entitled at any time or times.
(e) Nonexclusive Nature of Remedies. Failure by the
Agent or the Lenders to exercise any right, remedy or option
under this Security Agreement, any other Credit Document,
any Hedging Agreement or as provided by law, or any delay by
the Agent or the Lenders in exercising the same, shall not
operate as a waiver of any such right, remedy or option. No
waiver hereunder shall be effective unless it is in writing,
signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated,
which in the case of the Agent or the Lenders shall only be
granted as provided herein. To the extent permitted by law,
neither the Agent, the Lenders, nor any party acting as
attorney for the Agent or the Lenders, shall be liable
hereunder for any acts or omissions or for any error of
judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and
remedies of the Agents and the Lenders under this Security
Agreement shall be cumulative and not exclusive of any other
right or remedy which the Agent or the Lenders may have.
(f) Retention of Collateral. The Agent may, after
providing the notices required by Section 9-505(2) of the
UCC or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, to the extent
the Agent is in possession of any of the Collateral, retain
the Collateral in satisfaction of the Secured Obligations.
Unless and until the Agent shall have provided such notices,
however, the Agent shall not be deemed to have retained any
Collateral in satisfaction of any Secured Obligations for
any reason.
(g) Deficiency. In the event that the proceeds of any
sale, collection or realization are insufficient to pay all
amounts to which the Agent or the Lenders are legally
entitled, the Obligors shall be jointly and severally liable
for the deficiency, together with interest thereon at the
default rate specified in Section 3.1 of the Credit
Agreement for Base Rate Loans, together with the costs of
collection and the reasonable fees of any attorneys employed
by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the
Secured Obligations shall be returned to the Obligors or to
whomsoever a court of competent jurisdiction shall determine
to be entitled thereto.
9. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of
attorney contained herein, each Obligor hereby designates
and appoints the Agent, on behalf of the Lenders, and each
of its designees or agents, as attorney-in-fact of such
Obligor, irrevocably and with power of substitution, with
authority to take any or all of the following actions upon
the occurrence and during the continuance of an Event of
Default subject to other provisions hereof and as set forth
in any assignment of factoring proceeds with respect to any
Factoring Agreement (the taking of any such action shall be
at the direction of the Agent):
(i) to demand, collect, settle,
compromise, adjust, give discharges and releases,
all as the Agent may reasonably determine;
(ii) to commence and prosecute any
actions at any court for the purposes of
collecting any Collateral and enforcing any other
right in respect thereof;
(iii) to defend, settle or
compromise any action brought and, in connection
therewith, give such discharge or release as the
Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail
addressed to an Obligor and endorse checks, notes,
drafts, acceptances, money orders, bills of
lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage
of the goods giving rise to the Collateral of such
Obligor on behalf of and in the name of such
Obligor, or securing, or relating to such
Collateral;
(v) sell, assign, transfer, make any
agreement in respect of, or otherwise deal with or
exercise rights in respect of, any Collateral or
the goods or services which have given rise
thereto, as fully and completely as though the
Agent were the absolute owner thereof for all
purposes;
(vi) adjust and settle claims under any
insurance policy relating thereto;
(vii) execute and deliver all
assignments, conveyances, statements, financing
statements, renewal financing statements, security
agreements, affidavits, notices and other
agreements, instruments and documents that the
Agent may determine necessary in order to perfect
and maintain the security interests and liens
granted in this Security Agreement and in order to
fully consummate all of the transactions
contemplated therein;
(viii) institute any foreclosure
proceedings that the Agent may deem appropriate;
and
(ix) do and perform all such other acts
and things as the Agent may reasonably deem to be
necessary, proper or convenient in connection with
the Collateral.
This power of attorney is a power coupled with an interest
and shall be irrevocable (i) for so long as any of the
Secured Obligations remain outstanding, any Credit Document
or any Hedging Agreement is in effect or any Letter of
Credit shall remain outstanding and (ii) until all of the
Commitments shall have been terminated. The Agent shall be
under no duty to exercise or withhold the exercise of any of
the rights, powers, privileges and options expressly or
implicitly granted to the Agent in this Security Agreement,
and shall not be liable for any failure to do so or any
delay in doing so. The Agent shall not be liable for any
act or omission or for any error of judgment or any mistake
of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of
attorney is conferred on the Agent solely to protect,
preserve and realize upon its security interest in the
Collateral.
(b) Performance by the Agent of Obligations. If any
Obligor fails to perform any agreement or obligation
contained herein, the Agent itself may perform, or cause
performance of, such agreement or obligation, and the
expenses of the Agent incurred in connection therewith shall
be payable by the Obligors on a joint and several basis
pursuant to Section 24 hereof.
(c) Assignment by the Agent. The Agent may from time
to time assign the Secured Obligations and any portion
thereof and/or the Collateral and any portion thereof, and
the assignee shall be entitled to all of the rights and
remedies of the Agent under this Security Agreement in
relation thereto.
(d) The Agent's Duty of Care. Other than the exercise
of reasonable care to assure the safe custody of the
Collateral while being held by the Agent hereunder, the
Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the
Obligors shall be responsible for preservation of all rights
in the Collateral, and the Agent shall be relieved of all
responsibility for the Collateral upon surrendering it or
tendering the surrender of it to the Obligors. The Agent
shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal
to that which the Agent accords its own property, which
shall be no less than the treatment employed by a reasonable
and prudent agent in the industry, it being understood that
the Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with
respect to any of the Collateral.
10. Application of Proceeds. Upon the occurrence and
during the continuance of an Event of Default, any payments in
respect of the Secured Obligations and any proceeds of the
Collateral, when received by the Agent or any of the Lenders in
cash or its equivalent, will be applied in reduction of the
Secured Obligations in the order set forth in Section 3.15(b) of
the Credit Agreement, and each Obligor irrevocably waives the
right to direct the application of such payments and proceeds and
acknowledges and agrees that the Agent shall have the continuing
and exclusive right to apply and reapply any and all such
payments and proceeds in the Agent's sole discretion,
notwithstanding any entry to the contrary upon any of its books
and records.
11. Costs of Counsel. If at any time hereafter, whether
upon the occurrence of an Event of Default or not, the Agent
employs counsel to prepare or consider amendments, waivers or
consents with respect to this Security Agreement, or to take
action or make a response in or with respect to any legal or
arbitral proceeding relating to this Security Agreement or
relating to the Collateral, or to protect the Collateral or
exercise any rights or remedies under this Security Agreement or
with respect to the Collateral, then the Obligors agree to
promptly pay upon demand any and all such reasonable documented
costs and expenses of the Agent or the Lenders, all of which
costs and expenses shall constitute Secured Obligations
hereunder.
12. Continuing Agreement.
(a) This Security Agreement shall be a continuing
agreement in every respect and shall remain in full force
and effect so long as any of the Secured Obligations remain
outstanding or any Credit Document or Hedging Agreement is
in effect or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have
terminated (other than any obligations with respect to the
indemnities and the representations and warranties set forth
in the Credit Documents). Upon such payment and
termination, this Security Agreement shall be automatically
terminated and the Agent and the Lenders shall, upon the
request and at the expense of the Obligors, forthwith
release all of its liens and security interests hereunder
and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Obligors
evidencing such termination. Notwithstanding the foregoing
all releases and indemnities provided hereunder shall
survive termination of this Security Agreement.
(b) This Security Agreement shall continue to be
effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of
the Secured Obligations is rescinded or must otherwise be
restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any
bankruptcy, insolvency or similar law, all as though such
payment had not been made; provided that in the event
payment of all or any part of the Secured Obligations is
rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation any
reasonable legal fees and disbursements) incurred by the
Agent or any Lender in defending and enforcing such
reinstatement shall be deemed to be included as a part of
the Secured Obligations.
13. Amendments; Waivers; Modifications. This Security
Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth
in Section 11.6 of the Credit Agreement.
14. Successors in Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall
be binding upon each Obligor, its successors and assigns and
shall inure, together with the rights and remedies of the Agent
and the Lenders hereunder, to the benefit of the Agent and the
Lenders and their successors and permitted assigns; provided,
however, that none of the Obligors may assign its rights or
delegate its duties hereunder without the prior written consent
of each Lender or the Required Lenders, as required by the Credit
Agreement. To the fullest extent permitted by law, each Obligor
hereby releases the Agent and each Lender, and its successors and
assigns, from any liability for any act or omission relating to
this Security Agreement or the Collateral, except for any
liability arising from the gross negligence or willful misconduct
of the Agent, or such Lender, or its officers, employees or
agents.
15. Notices. All notices required or permitted to be given
under this Security Agreement shall be in conformance with
Section 11.1 of the Credit Agreement.
16. Counterparts. This Security Agreement may be executed
in any number of counterparts, each of which where so executed
and delivered shall be an original, but all of which shall
constitute one and the same instrument. It shall not be
necessary in making proof of this Security Agreement to produce
or account for more than one such counterpart.
17. Headings. The headings of the sections and subsections
hereof are provided for convenience only and shall not in any way
affect the meaning or construction of any provision of this
Security Agreement.
18. Governing Law; Submission to Jurisdiction; Venue.
(a) THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NORTH CAROLINA. Any legal action
or proceeding with respect to this Security Agreement
may be brought in the courts of the State of North
Carolina, or of the United States for the Western
District of North Carolina, and, by execution and
delivery of this Security Agreement, each Obligor
hereby irrevocably accepts for itself and in respect of
its property, generally and unconditionally, the
jurisdiction of such courts. Each Obligor further
irrevocably consents to the service of process out of
any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at
the address for notices pursuant to Section 11.1 of the
Credit Agreement, such service to become effective 30
days after such mailing. Nothing herein shall affect
the right of the Agent to serve process in any other
manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Obligor
in any other jurisdiction.
(b) Each Obligor hereby irrevocably waives any
objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this
Security Agreement brought in the courts referred to in
subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such
court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES TO THIS SECURITY AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
20. Severability. If any provision of any of the Security
Agreement is determined to be illegal, invalid or unenforceable,
such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or
unenforceable provisions.
21. Entirety. This Security Agreement, the other Credit
Documents and the Hedging Agreements represent the entire
agreement of the parties hereto and thereto, and supersede all
prior agreements and understandings, oral or written, if any,
including any commitment letters or correspondence relating to
the Credit Documents, the Hedging Agreements or the transactions
contemplated herein and therein.
22. Survival. All representations and warranties of the
Obligors hereunder shall survive the execution and delivery of
this Security Agreement, the other Credit Documents and the
Hedging Agreements, the delivery of the Revolving Notes and the
making of the Revolving Loans and the issuance of the Letters of
Credit under the Credit Agreement.
23. Other Security. To the extent that any of the Secured
Obligations are now or hereafter secured by property other than
the Collateral (including, without limitation, real property and
securities owned by an Obligor), or by a guarantee, endorsement
or property of any other Person, then the Agent and the Lenders
shall have the right to proceed against such other property,
guarantee or endorsement upon the occurrence of any Event of
Default, and the Agent and the Lenders have the right, in their
sole discretion, to determine which rights, security, liens,
security interests or remedies the Agent and the Lenders shall at
any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of
them or any of the Agent's and the Lenders' rights or the Secured
Obligations under this Security Agreement, under any other of the
Credit Documents or under any Hedging Agreement.
24. Limitation on Liability. Notwithstanding any provision
to the contrary contained herein or in any other of the Credit
Documents, to the extent the obligations of a Guarantor shall be
adjudicated to be invalid or unenforceable for any reason
(including, without limitation, because of any applicable state
or federal law relating to fraudulent conveyances or transfers)
then the obligations of each Guarantor hereunder shall be limited
to the maximum amount that is permissible under applicable law
(whether federal or state and including, without limitation, the
Bankruptcy Code).
25. Rights of Required Lenders. All rights of the Agent
hereunder, if not exercised by the Agent, may be exercised by the
Required Lenders.
[remainder of page intentionally left blank]
Each of the parties hereto has caused a counterpart of this
Security Agreement to be duly executed and delivered as of the
date first above written.
BORROWER: DELTA WOODSIDE INDUSTRIES, INC.
a South Carolina corporation
By:
Name:
Title:
GUARANTORS: ______________,
a _____________ corporation
By:
Name:
Title:
_______________,
a ______________ corporation
By:
Name:
Title:
Accepted and agreed to in Charlotte, North Carolina as of
the date first above written.
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
SCHEDULE 1(b)
INTELLECTUAL PROPERTY
SCHEDULE 4(a)
CHIEF EXECUTIVE OFFICE
SCHEDULE 4(b)
LOCATIONS OF COLLATERAL
SCHEDULE 4(c)
MERGERS, CONSOLIDATIONS, CHANGE IN STRUCTURE OR USE OF TRADENAMES
SCHEDULE 5(f)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement
dated as of August 25, 1997 (the "Security Agreement") by and
among the Obligors party thereto (each an "Obligor" and
collectively, the "Obligors") and NationsBank, N.A., as Agent
(the "Agent") for the lenders referenced therein (the "Lenders"),
the undersigned Obligor has granted a continuing security
interest in and continuing lien upon, the trademarks and
trademark applications shown below to the Agent for the ratable
benefit of the Lenders:
TRADEMARKS
Description of Trademark Date of
Trademark No. Item Trademark
Trademark Applications
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
The Obligors and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing
trademarks and trademark applications (i) may only be terminated
in accordance with the terms of the Security Agreement and (ii)
is not to be construed as an assignment of any trademark or
trademark application.
Very truly yours,
__________________________________
[Obligor]
By:
Name:
Title:
Acknowledged and Accepted:
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Exhibit 2.1(b)(i)
FORM OF NOTICE OF BORROWING
NationsBank, N.A.,
as Agent for the Lenders
000 Xxxxx Xxxxx Xxxxxx
Independence Center, 00xx Xxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA WOODSIDE INDUSTRIES, INC. (the
"Borrower"), refers to the Credit Agreement dated as of August
25, 1997 (as amended, modified, restated or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section
2.1 of the Credit Agreement that it requests a Revolving Loan
advance under the Credit Agreement, and in connection therewith
sets forth below the terms on which such Revolving Loan advance
is requested to be made:
(A) Date of Borrowing (which is a Business Day)
(B) Principal Amount of Borrowing
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 2.1(e)
FORM OF REVOLVING NOTE
$ August 25, 1997
FOR VALUE RECEIVED, DELTA WOODSIDE INDUSTRIES, INC., a South
Carolina corporation (the "Borrower"), hereby promises to pay to
the order of __________________________, its successors and
assigns (the "Lender"), at the office of NationsBank, N.A., as
Agent (the "Agent"), at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxxx
Center, NC1-001-15-04, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 (or at
such other place or places as the holder hereof may designate),
at the times set forth in the Credit Agreement dated as of the
date hereof among the Borrower, the Guarantors, the Lenders and
the Agent (as it may be as amended, modified, restated or
supplemented from time to time, the "Credit Agreement"; all
capitalized terms not otherwise defined herein shall have the
meanings set forth in the Credit Agreement), but in no event
later than the Maturity Date, in Dollars and in immediately
available funds, the principal amount of
________________________DOLLARS ($____________) or, if less than
such principal amount, the aggregate unpaid principal amount of
all Revolving Loans made by the Lender to the Borrower pursuant
to the Credit Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates selected in accordance with
Section 2.1(d) of the Credit Agreement.
Upon the occurrence and during the continuance of an Event
of Default, the balance outstanding hereunder shall bear interest
as provided in Section 3.1 of the Credit Agreement. Further, in
the event the payment of all sums due hereunder is accelerated
under the terms of the Credit Agreement, this Revolving Note, and
all other indebtedness of the Borrower to the Lender shall become
immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the
Borrower.
In the event this Revolving Note is not paid when due at any
stated or accelerated maturity, the Borrower agrees to pay, in
addition to the principal and interest, all costs of collection,
including reasonable attorneys' fees.
All borrowings evidenced by this Revolving Note and all
payments and prepayments of the principal hereof and interest
hereon and the respective dates thereof shall be endorsed by the
holder hereof on Schedule A attached hereto and incorporated
herein by reference, or on a continuation thereof which shall be
attached hereto and made a part hereof; provided, however, that
any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect the
obligation of the Borrower to make payments of principal and
interest in accordance with the terms of this Revolving Note.
This Revolving Note and the Revolving Loans evidenced hereby
may be transferred in whole or in part only by registration of
such transfer on the Register maintained by or on behalf of the
Borrower as provided in Section 11.3(c) of the Credit Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Revolving
Note to be duly executed by its duly authorized officer as of the
day and year first above written.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
SCHEDULE A TO THE
REVOLVING NOTE
OF _________________
DATED AUGUST 25, 1997
Unpaid Name of
Type Principal Person
of Interest Payments Balance Making
Date Loan Period Principal Interest of Note Notation
Exhibit 3.2
FORM OF NOTICE OF EXTENSION/CONVERSION
NationsBank, N.A.,
as Agent for the Lenders
000 Xxxxx Xxxxx Xxxxxx
Independence Center, 00xx Xxxxx
XX0-000-00-00
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Agency Services
Ladies and Gentlemen:
The undersigned, DELTA WOODSIDE INDUSTRIES, INC. (the
"Borrower"), refers to the Credit Agreement dated as of August
25, 1997 (as amended, modified, restated or supplemented from
time to time, the "Credit Agreement"), among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent.
Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Credit
Agreement. The Borrower hereby gives notice pursuant to Section
3.2 of the Credit Agreement that it requests an extension or
conversion of a Revolving Loan outstanding under the Credit
Agreement, and in connection therewith sets forth below the terms
on which such extension or conversion is requested to be made:
(A) Date of Extension or Conversion
(which is the last day of the
the applicable Interest Period)
(B) Principal Amount of Extension or Conversion
(C) Interest rate basis
(D) Interest Period and the last day thereof
In accordance with the requirements of Section 5.2, the
Borrower hereby reaffirms the representations and warranties set
forth in the Credit Agreement as provided in subsection (b) of
such Section, and confirms that the matters referenced in
subsections (c), (d), (e) and (f) of such Section, are true and
correct.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 7.1(c)
FORM OF OFFICER'S COMPLIANCE CERTIFICATE
For the fiscal quarter ended _________________, 19___.
I, ______________________, [Title] of DELTA WOODSIDE
INDUSTRIES, INC. (the "Borrower") hereby certify that, to the
best of my knowledge and belief, with respect to that certain
Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent:
a. The company-prepared financial statements which
accompany this certificate are true and correct in all
material respects and have been prepared in accordance
with GAAP applied on a consistent basis, subject to
changes resulting from normal year-end audit
adjustments.
b. Since ___________ (the date of the last similar
certification, or, if none, the Closing Date) no
Default or Event of Default has occurred under the
Credit Agreement; and
Delivered herewith are detailed calculations demonstrating
compliance by the Credit Parties with the financial covenants
contained in Section 7.11 of the Credit Agreement as of the end
of the fiscal period referred to above.
This ______ day of ___________, 19__.
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Attachment to Officer's Certificate
Computation of Financial Covenants
Exhibit 7.1(d)
FORM OF
BORROWING BASE CERTIFICATE
For the calendar month ended _______________, 19__.
I, ______________________, Chief Financial Officer of DELTA
WOODSIDE INDUSTRIES, INC. (the "Borrower") hereby certify that,
to the best of my knowledge and belief, with respect to that
certain Credit Agreement dated as of August 25, 1997 (as amended,
modified, restated or supplemented from time to time, the "Credit
Agreement"; all of the defined terms in the Credit Agreement are
incorporated herein by reference) among the Borrower, the
Guarantors, the Lenders and NationsBank, N.A., as Agent:
RECEIVABLES
1. Amounts owing to any Borrowing Base
Party under any Factoring
Agreements at such time (net of any amounts
(i) which the Factors are entitled to offset
against amounts owing to any Borrowing
Base Party under any Factoring Agreement
and (ii) owing by accounts debtors located
outside of the United States or Canada* $
2. Receivables (as defined in the
definition of Eligible Receivables in
Section 1.1 of the Credit Agreement)
subject to a perfected, first priority
Lien in favor of the Agent,
for the benefit of the Lenders $
3. (i) Receivables subject to any
Lien, other than Liens in favor
of the Agent, for the
benefit of the Lenders $
(ii) Receivables which are more
than 60 days past due (net of
reserves for bad debts in
connection with any such Receivables $
(iii) Receivables evidenced by notes,
chattel paper or other instruments
(unless such notes, chattel paper
or instruments have been delivered
to and are in the possession of
the Agent) $
(iv) Receivables owing by an account
debtor which is not solvent or is
subject to any bankruptcy or
insolvency proceeding of any kind
(net of any reserves in connection
with any such Receivables) $
(v) Receivables owing by an account
debtor located outside of the United
States or Canada (unless payment for
the goods shipped is secured by an
irrevocable letter of credit in a form
and from an institution acceptable to
the Agent) $
(vi) Receivables which are contingent
or as to which the account debtor has
made a claim for offset, deduction or
counterclaim, or is disputing, or raising
other defenses to, payment, but in each
case only to the extent of such offset,
deduction, counterclaim, dispute or
other defense and net of any reserves
in connection with any such Receivables $
(vii) Receivables for which any direct
or indirect Subsidiary of the Borrower
or any Affiliate of the Borrower is the
account debtor $
(viii) Receivables, to the extent exceeding
$ in the aggregate at any one
time, representing a sale to the government
of the United States of America or any
subdivision thereof (unless the applicable
Borrowing Base Party has complied (to the
satisfaction of the Agent), with
respect to the granting of a security
interest in such Receivable, with the
Federal Assignment of Claims Act or other
similar applicable law, in which case all
such Receivables may be included as
Eligible Receivables) $
(ix) Receivables which fail to meet
such other specifications and requirements
as have been established by the
Agent in its reasonable discretion $
(x) Receivables arising from the sale to
an account debtor on a xxxx-and-hold,
guaranteed sale, sale or return, sale
on approval, consignment or any other
repurchase or return basis $
(xi) Sum of lines (i) through (x) $
4. Eligible Receivables
(Line 1 plus Line 2 less Line 3(xi)) $
5. Eligible Receivables Borrowing
Base (85% of Eligible Receivables) $
INVENTORY
6. Inventory (the lower of the aggregate
book value (based on a FIFO or a moving
average cost valuation, consistently
applied) or fair market value, less
appropriate reserves determined in
accordance with GAAP, of all
raw materials and finished goods
inventory owned by any Borrowing
Base Party and subject to a perfected,
first priority Lien in favor of the
Agent, for the benefit
of the Lenders $
7. (i) Inventory subject to any Lien,
other than Liens referred to in
clauses (a), (b), (c) and (f) of
the definition of Permitted Liens $
(ii) Inventory which fails to meet
standards for sale or use imposed by
governmental agencies, departments
or divisions having regulatory
authority over such goods $
(iii) Inventory which is not useable
or salable at prices approximating
their cost in the ordinary course of
of the applicable Borrowing Base
Party's business (without duplication,
net of any reserves for obsolescence,
unsalability or decline in value) $
(iv) Inventory located outside of the
United States $
(v) Inventory located at a location not
owned or leased by the applicable
Borrowing Base Party $
(vi) Inventory located at a location
leased by the applicable Borrowing Base
Party with respect to which the
Agent shall not have
received a landlord's waiver satisfactory
to the Agent $
(vii) Inventory which is leased or on
consignment $
(viii) Inventory which fails to meet
such other specifications and
requirements as have been established
by the Agent in its
reasonable discretion $
(ix) Sum of lines (i) through (viii) $
8. Eligible Inventory
(Line 6 less Line 7(ix)) $
9. Eligible Inventory Borrowing
Base (60% of Eligible Inventory) $
BORROWING BASE
10. Total Borrowing Base availability
(Line 5 plus Line 9) $
11. Aggregate Outstanding Revolving Loans
and LOC Obligations under the Credit
Agreement $
12. If Line #10 is greater than Line #11, then
the difference $ (or, if less,
the remaining amount of the Revolving
Committed Amount) is available for
extensions of credit under the Revolving
Commitments and (subject to the terms of
Section 2.2(a)) the LOC Commitment); if
Line #11 is greater than Line #10, then the
Borrower shall prepay or otherwise reduce
so much of the outstanding Revolving
Loans and LOC Obligations as shall be
necessary to eliminate such excess $ .
With reference to this Borrowing Base certificate, I hereby
certify that the above statements are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and seal
this day of , 19 .
DELTA WOODSIDE INDUSTRIES, INC.
By:
Name:
Title:
Exhibit 7.12
FORM OF JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Agreement"), dated as of
_____________, 19__, is by and between _____________________, a
___________________ (the "Subsidiary"), and NATIONSBANK, N.A., in
its capacity as Agent under that certain Credit Agreement (as it
may be amended, modified, restated or supplemented from time to
time, the "Credit Agreement"), dated as of August 25, 1997, by
and among DELTA WOODSIDE INDUSTRIES, INC., a South Carolina
corporation (the "Borrower"), the Guarantors, the Lenders and
NationsBank, N.A., as Agent. All of the defined terms in the
Credit Agreement are incorporated herein by reference.
The Subsidiary is an Additional Credit Party, and,
consequently, the Credit Parties are required by Section 7.12 of
the Credit Agreement to cause the Subsidiary to become a
"Guarantor".
Accordingly, the Subsidiary hereby agrees as follows with
the Agent, for the benefit of the Lenders:
1. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Credit Agreement and a "Guarantor"
for all purposes of the Credit Agreement, and shall have all of
the obligations of a Guarantor thereunder as if it had executed
the Credit Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions applicable to the Guarantors contained
in the Credit Agreement. Without limiting the generality of the
foregoing terms of this paragraph 1, the Subsidiary hereby (i)
jointly and severally together with the other Guarantors,
guarantees to each Lender and the Agent, as provided in Section 4
of the Credit Agreement, the prompt payment and performance of
the Credit Party Obligations in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or
otherwise) strictly in accordance with the terms thereof.
2. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Security Agreement, and shall have
all the obligations of an "Obligor" (as such term is defined in
the Security Agreement) thereunder as if it had executed the
Security Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement.
Without limiting generality of the foregoing terms of this
paragraph 2, the Subsidiary hereby grants to the Agent, for the
benefit of the Lenders, a continuing security interest in, and a
right of set off against any and all right, title and interest of
the Subsidiary in and to the Collateral (as such term is defined
in Section 2 of the Security Agreement) of the Subsidiary. The
Subsidiary hereby represents and warrants to the Agent that:
(i) The Subsidiary's chief executive office and chief
place of business are (and for the prior four months have
been) located at the locations set forth on Schedule 1
attached hereto and the Subsidiary keeps its books and
records at such locations.
(ii) The type of Collateral owned by the Subsidiary and
the location of all Collateral owned by the Subsidiary is as
shown on Schedule 2 attached hereto.
(iii) The Subsidiary's legal name is as shown in
this Agreement and the Subsidiary has not in the past four
months changed its name, been party to a merger,
consolidation or other change in structure or used any
tradename except as set forth in Schedule 3 attached hereto.
(iv) The patents and trademarks listed on Schedule 4
attached hereto constitute all of the registrations and
applications for the patents and trademarks owned by the
Subsidiary.
3. The Subsidiary hereby acknowledges, agrees and confirms
that, by its execution of this Agreement, the Subsidiary will be
deemed to be a party to the Pledge Agreement, and shall have all
the obligations of a "Pledgor" thereunder as if it had executed
the Pledge Agreement. The Subsidiary hereby ratifies, as of the
date hereof, and agrees to be bound by, all the terms, provisions
and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph
3, the Subsidiary hereby pledges and assigns to the Agent, for
the benefit of the Lenders, and grants to the Agent, for the
benefit of the Lenders, a continuing security interest in any and
all right, title and interest of the Subsidiary in and to Pledged
Shares (as such term is defined in Section 2 of the Pledge
Agreement) listed on Schedule 5 attached hereto and the other
Pledged Collateral (as such term is defined in Section 2 of the
Pledge Agreement). 4. The address of the Subsidiary for
purposes of all notices and other communications is
, , Attention of
(Facsimile No. ).
5. The Subsidiary hereby waives acceptance by the Agent
and the Lenders of the guaranty by the Subsidiary under Section 4
of the Credit Agreement upon the execution of this Agreement by
the Subsidiary.
6. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all
of which when taken together shall constitute one contract.
7. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the Subsidiary has caused this Joinder
Agreement to be duly executed by its authorized officers, and the
Agent, for the benefit of the Lenders, has caused the same to be
accepted by its authorized officer, as of the day and year first
above written.
[SUBSIDIARY]
By:
Name:
Title:
Acknowledged and accepted:
NATIONSBANK, N.A., as Agent
By:
Name:
Title:
Schedule 1
TO FORM OF JOINDER AGREEMENT
[Chief Executive Office and
Chief Place of Business of Subsidiary]
Schedule 2
TO FORM OF JOINDER AGREEMENT
[Types and Locations of Collateral]
Schedule 3
TO FORM OF JOINDER AGREEMENT
[Tradenames]
Schedule 4
TO FORM OF JOINDER AGREEMENT[Trademarks]
Schedule 5
TO FORM OF JOINDER AGREEMENT[Pledged Shares]
Exhibit 11.3(b)
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of August
25, 1997, as amended and modified from time to time thereafter
(the "Credit Agreement") among DELTA WOODSIDE INDUSTRIES, INC.,
the other Credit Parties party thereto, the Lenders party thereto
and NationsBank, N.A., as Agent. Terms defined in the Credit
Agreement are used herein with the same meanings.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns to the Assignee,
without recourse and without representation or warranty except as
expressly set forth herein, and the Assignee hereby purchases and
assumes from the Assignor, an interest in and to the Assignor's
rights and obligations under the Credit Agreement and the other
Credit Documents as of the date hereof equal to the percentage
interest specified on Schedule 1 of all outstanding rights and
obligations under the Credit Agreement and the other Credit
Documents. After giving effect to such sale and assignment, the
Assignee's Commitment and the amount of the Revolving Loans owing
to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) 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; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any
other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Credit Party or
the performance or observance by any Credit Party of any of its
obligations under the Credit Documents or any other instrument or
document furnished pursuant thereto; and (iv) attaches the
Revolving Note held by the Assignor and requests that the Agent
exchange such Revolving Note for new Revolving Notes payable to
the order of the Assignee in an amount equal to the Commitment
assumed by the Assignee pursuant hereto and to the Assignor in an
amount equal to the Commitment retained by the Assignor, if any,
as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial
statements referred to in Section 7.1 thereof 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; (ii) agrees that it will,
independently and without reliance upon the Agent, the 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; (iii) confirms that it is an Eligible Assignee;
(iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers and discretion
under the Credit Agreement as are delegated to the Agent by the
terms thereof, together with such powers and discretion as are
reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations that by the
terms of the Credit Agreement are required to be performed by it
as a Lender; and (vi) attaches any U.S. Internal Revenue Service
or other forms required under Section 3.11.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance and
recording by the Agent. The effective date for this Assignment
and Acceptance (the "Effective Date") shall be the date of
acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of
the Effective Date, (i) the 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 (ii) the 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. Upon such acceptance and recording by the Agent, from
and after the Effective Date, the Agent shall make all payments
under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal,
interest and commitment fees with respect thereto) to the
Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by,
and construed in accordance with, the laws of the State of North
Carolina.
8. This Assignment and Acceptance may be executed in any
number of counterparts and by different 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. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have
caused this Assignment and Acceptance to be executed by their
officers thereunto duly authorized as of the date hereof.
, as Assignor
By:
Name:
Title:
, as Assignee
By:
Name:
Title:
Notice address of Assignee:
<>
Attn:
Telephone: ( )
Telecopy: ( )
CONSENTED TO:
NATIONSBANK, N.A., *
as Agent
By:
Name:
Title:
DELTA WOODSIDE INDUSTRIES, INC.*
By:
Name:
Title:
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment* :
(e) Revolving Commitment Percentage Assigned
(expressed as a percentage set forth to
at least 8 decimals) %
(f) Revolving Commitment Percentage of Assignee
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(g) Revolving Commitment Percentage of Assignor
after giving effect to this Assignment and
Acceptance as of the Effective
Date (set forth to at least 8 decimals) %
(h) Revolving Committed Amount as of
Effective Date $_______
(i) Dollar Amount of Assignor's Revolving
Commitment Percentage as of the Effective
Date (the amount set forth in (h) multiplied
by the percentage set forth in (g)) $_______
(j) Dollar Amount of Assignee's Revolving
Commitment Percentage as of the Effective
Date (the amount set forth in (h) multiplied
by the percentage set forth in (f)) $_______
_______________________________
* Except to the extent that (a) payment for the goods
shipped is secured by an irrevocable letter of credit in a form
and from an institution acceptable to the Agent or (b) the Factor
has assumed the credit risk of the related accounts receivable.
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* Required if the Assignee is an Eligible Assignee solely by
reason of clause (iii) of the definition of "Eligible Assignee."
* This date should be no earlier than five Business Days after
delivery of this Assignment and Acceptance to the Agent.
