Exhibit 8
[EXECUTION COPY]
$250,000,000
SENIOR SUBORDINATED CREDIT AGREEMENT
dated as of
December 19, 1997
among
GALEY & LORD INDUSTRIES, INC.,
as Borrower,
GALEY & LORD, INC.,
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTY HERETO,
as Guarantors,
THE LENDERS PARTIES HERETO
AND
FIRST UNION CORPORATION, as Agent
TABLE OF CONTENTS
Page
SECTION 1 DEFINITIONS ............................................................................................1
1.1 Certain Defined Terms................................................................................1
1.2 Accounting Terms....................................................................................25
1.3 Other Definitional Provisions.......................................................................26
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; NOTES............................................26
2.1 Bridge Loan and Bridge Note.........................................................................26
2.2 Interest on the Bridge Loan.........................................................................28
2.3 Fees ...............................................................................................28
2.4 Prepayments and Payments............................................................................29
2.5 Use of Proceeds.....................................................................................32
SECTION 3 CONDITIONS ............................................................................................33
3.1 Conditions to Initial Bridge Loan and Final Bridge Loan.............................................33
3.2 Additional Conditions to Initial Bridge Loan........................................................35
3.3 Additional Conditions to Final Bridge Loan..........................................................37
SECTION 4 REPRESENTATIONS AND WARRANTIES.........................................................................38
4.1 Organization and Good Standing; Capitalization......................................................38
4.2 Authorization and Power.............................................................................38
4.3 No Conflicts or Consents............................................................................38
4.4 Enforceable Obligations.............................................................................39
4.5 Properties: Liens...................................................................................39
4.6 Financial Condition.................................................................................40
4.7 Full Disclosure.....................................................................................41
4.8 No Default..........................................................................................41
4.9 Compliance with Contracts, Etc......................................................................41
4.10 No Litigation......................................................................................42
4.11 Use of Proceeds; Margin Stock, Etc.................................................................42
4.12 Taxes..............................................................................................42
4.13 ERISA..............................................................................................42
4.14 Compliance with Law................................................................................43
4.15 Government Regulation..............................................................................43
4.16 Intellectual Property..............................................................................43
4.17 Environmental Matters..............................................................................43
4.18 Survival of Representations and Warranties.........................................................45
i
4.19 Permits............................................................................................45
4.20 Insurance..........................................................................................46
4.21 Labor Matters......................................................................................46
4.22 Guarantees.........................................................................................46
4.23 Senior Subordinated Indenture; Etc.................................................................47
4.24 Broker's or Finder's Fees..........................................................................47
SECTION 5 AFFIRMATIVE COVENANTS..................................................................................47
5.1 Financial Statements and Other Reports..............................................................48
5.2 Corporate Existence, Etc............................................................................52
5.3 Payment of Taxes and Claims; Tax Consolidation......................................................52
5.4 Maintenance of Properties; Insurance................................................................52
5.5 Inspection..........................................................................................53
5.6 Equal Security for Bridge Loan......................................................................53
5.7 Compliance with Laws, Etc...........................................................................53
5.8 Maintenance of Accurate Records, Etc................................................................53
5.9 Exchange of Bridge Notes............................................................................53
5.10 ERISA Compliance...................................................................................54
5.11 Payments in U.S. Dollars...........................................................................54
5.12 Register...........................................................................................55
5.13 Lenders Meeting....................................................................................55
5.14 Additional Guarantors..............................................................................55
5.15 Marketing Take-Out Securities......................................................................55
5.16 Environmental Matters..............................................................................56
SECTION 6 NEGATIVE COVENANTS.....................................................................................56
6.1 Indebtedness........................................................................................56
6.2 Liens...............................................................................................58
6.3 Restricted Payments.................................................................................60
6.4 Investments.........................................................................................60
6.5 Contingent Obligations..............................................................................61
6.6 Layering of Indebtedness............................................................................62
6.7 Restriction on Fundamental Changes..................................................................62
6.8 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries........................62
6.9 Transactions with Shareholders and Affiliates.......................................................63
6.10 Subsidiary Stock; Company Restrictions.............................................................63
6.11 Business Activities................................................................................64
6.12 Amendment or Waivers of Certain Documents..........................................................64
6.13 Amendment to Charter Documents.....................................................................64
6.14 Asset Sales........................................................................................64
6.15 Transfer of Assets to Subsidiaries.................................................................64
6.16 Sale and Leaseback Transactions....................................................................65
ii
SECTION 7 EVENTS OF DEFAULT......................................................................................65
7.1 Failure to Make Payments When Due...................................................................65
7.2 Default in Other Agreements.........................................................................65
7.3 Breach of Certain Covenants.........................................................................66
7.4 Breach of Warranty..................................................................................66
7.5 Other Defaults Under Agreement or Loan Documents....................................................66
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc...............................................66
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.................................................66
7.8 Judgments and Attachments...........................................................................67
7.9 Dissolution.........................................................................................67
7.10 Guarantee..........................................................................................67
7.11 ERISA..............................................................................................67
7.12 Foreclosure........................................................................................68
7.13 Failure to Purchase Remaining Dominion Shares......................................................68
SECTION 8 SUBORDINATION .........................................................................................69
8.1 Obligations Subordinated to Senior Indebtedness of the Borrower.....................................69
8.2 Priority and Payment Over of Proceeds in Certain Events.............................................69
8.3 Payments May Be Paid Prior to Dissolution...........................................................71
8.4 Rights of Holders of Senior Indebtedness of the Borrower Not To Be Impaired.........................71
8.5 Subrogation.........................................................................................72
8.6 Obligations of the Borrower Unconditional...........................................................72
8.7 Lenders Authorize Agent to Effectuate Subordination.................................................73
SECTION 9 THE AGENT .............................................................................................73
9.1 Appointment.........................................................................................73
9.2 Delegation of Duties................................................................................74
9.3 Exculpatory Provisions..............................................................................74
9.4 Reliance by Agent...................................................................................74
9.5 Notice of Default...................................................................................75
9.6 Non-Reliance on Agent and Other Lenders.............................................................75
9.7 Indemnification.....................................................................................76
9.8 Agent in Its Individual Capacity....................................................................76
9.9 Resignation of the Agent; Successor Agent...........................................................76
SECTION 10 GUARANTEE ............................................................................................77
10.1 Unconditional Guarantee............................................................................77
10.2 Subordination of Guarantee.........................................................................77
10.3 Severability.......................................................................................78
10.4 Limitation of Guarantor's Liability................................................................78
10.5 Guarantors May Consolidate, etc., on Certain Terms.................................................78
10.6 Contribution.......................................................................................79
iii
10.7 Waiver of Subrogation..............................................................................79
10.8 Evidence Guarantee.................................................................................80
10.9 Waiver of Stay, Extension or Usury Laws............................................................80
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS................................................................80
11.1 Guarantee Obligations Subordinated to Guarantor Senior Indebtedness................................80
11.2 Priority and Payment Over of Proceeds in Certain Events............................................80
11.3 Payments May Be Paid Prior to Dissolution..........................................................82
11.4 Rights of Holders of Guarantor Senior Indebtedness Not To Be Impaired..............................83
11.5 Subrogation........................................................................................83
11.6 Obligations of the Guarantors Unconditional........................................................84
11.7 Lenders Authorize Agent to Effectuate Subordination................................................84
SECTION 12 MISCELLANEOUS ........................................................................................85
12.1 Representation of the Lenders......................................................................85
12.2 Participations in and Assignments of Bridge Loan...................................................85
12.3 Expenses...........................................................................................87
12.4 Indemnity..........................................................................................87
12.5 Setoff.............................................................................................88
12.6 Amendments and Waivers.............................................................................88
12.7 Independence of Covenants..........................................................................89
12.8 Entirety...........................................................................................89
12.9 Notices............................................................................................89
12.10 Survival of Warranties and Certain Agreements.....................................................90
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative.............................................90
12.12 Severability......................................................................................90
12.13 Headings..........................................................................................90
12.14 Applicable Law....................................................................................91
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes........................................91
12.16 Counterparts; Effectiveness.......................................................................91
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial..............................................91
12.18 Payments Pro Rata.................................................................................92
12.19 Taxes.............................................................................................92
12.20 Waiver of Stay, Extension or Usury Laws...........................................................93
12.21 Requirements of Law...............................................................................94
12.22 Confidentiality...................................................................................94
12.23 Compensation......................................................................................95
iv
SCHEDULES
A EXISTING LIENS
B SUBSIDIARIES
C [RESERVED]
D [RESERVED]
E [RESERVED]
F ENVIRONMENTAL MATTERS
G [RESERVED]
H EXISTING INDEBTEDNESS
I [RESERVED]
J [RESERVED]
K [RESERVED]
L [RESERVED]
EXHIBITS
I FORM OF BRIDGE NOTE
II FORM OF COMPLIANCE CERTIFICATE
III FORM OF NOTICE OF BORROWING
IV FORM OF REGISTRATION RIGHTS AGREEMENT
V FORM OF OPINION OF ROSENMAN & COLIN LLP - COUNSEL
FOR THE: COMPANY AND THE GUARANTORS
VI FORM OF OPINION OF CLEARY, GOTTLIEB, STEEN & HAMILTON -
COUNSEL FOR THE LENDERS
VII FORM OF NOTATION OF GUARANTEE
VIII FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
IX FORM OF SECTION 12.2E(ii) CERTIFICATE
v
[EXECUTION COPY]
This Senior Subordinated Credit Agreement is dated as of December 19,
1997, and entered into by and among Galey & Lord Industries, Inc., a Delaware
corporation (the "Borrower"), Galey & Lord, Inc., a Delaware corporation (the
"Company"), G&L Service Company, North America, Inc., a Delaware corporation
("Service Co."), such other Subsidiaries as may from time to time become a party
hereto (together with the Company and Service Co., the "Guarantors"), the banks
and other financial institutions from time to time parties hereto (the "Lenders"
and individually a "Lender") and First Union Corporation ("First Union"), as
agent for the Lenders (in such capacity, the "Agent").
RECITALS
WHEREAS, the Borrower desires that the Lenders extend a senior
subordinated credit facility to the Borrower in connection with the Tender Offer
and Acquisition (as defined herein);
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereby agree as follows:
SECTION 1 DEFINITIONS
1.1 Certain Defined Terms
The following terms used in this Agreement shall have the following
meanings:
"Acquired Assets" means all or substantially all of the assets
constituting the Apparel Fabric Business.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and in each case not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Subsidiary of the
Company or such acquisition, merger or consolidation.
"Acquisition" means the acquisition by the Borrower of the Acquired
Assets pursuant to the Purchase Agreement.
"Acquisition Purchase Price" means the purchase price to be paid by the
Borrower for the Acquired Assets (which shall include all related fees and
expenses and the refinancing of the existing indebtedness of the Acquired
Assets).
"Adjusted Net Assets" shall have the meaning provided in Section 10.6.
"Affiliate," as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (i) the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise, or (ii) the ownership of more than 10% of the voting
securities of that Person; provided that none of First Union or any of its
Affiliates shall be treated as an Affiliate of the Company or of any Subsidiary
of the Company.
"Agent" has the meaning ascribed to it in the introduction to this
Agreement.
"Agreement" means this Senior Subordinated Credit Agreement dated as of
December 19, 1997, as it may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"Amount of Unfunded Benefit Liability" means, with respect to any
Pension Plan, (i) if set forth on the most recent actuarial valuation report
with respect to such Pension Plan, the amount of unfunded benefit liabilities
(as defined in Section 4001(a) (18) of ERISA) and (ii) otherwise, the excess of
(a) the greater of the current liability (as defined in Section 412(1) (7) of
the Internal Revenue Code) or the actuarial present value of the accrued
benefits with respect to such Pension Plan over (b) the market value of the
assets of such Pension Plan.
"Apparel Fabric Business" has the meaning assigned to it in the Initial
Purchase Agreement.
"Applicable Interest Rate" means for each Interest Period, the
Applicable LIBOR Rate then in effect; provided, however, that in no event shall
the Applicable Interest Rate exceed l8% per annum.
"Applicable LIBOR Rate" means for any Interest Period, (i) an interest
rate per annum equal to the rate of interest appearing on Telerate Page 3750 (or
any successor page) or if no such rate is available, the rate of interest
determined by the Agent to be the rate or the arithmetic mean of rates (rounded
upward, if necessary, to the nearest 1/16 of one percentage point) at which
Dollar deposits in immediately available funds are offered by First Union to
first-tier banks in the London interbank Euro-dollar market, at approximately
11:00 a.m., London time, on the Interest Rate Determination Date for such
Interest Period at the amount of the Bridge Loan outstanding plus (ii) the
Applicable LIBOR Rate Spread.
"Applicable LIBOR Rate Spread" means (i) 4.50% per annum for the
Interest Period commencing on the Initial Takedown Closing Date and (ii) for
each subsequent Interest Period, the Applicable LIBOR Rate Spread in effect for
the immediately preceding Interest Period plus .25% per annum.
"Asset Acquisition" means (a) an Investment by the Company or any
Subsidiary of the Company in any other person pursuant to which such Person
shall be merged with or into the Company or any Subsidiary of the Company, or
(b) the acquisition by the Company or any Subsidiary of the Company of the
assets of any person (other than a Subsidiary of the Company) which constitute
all or substantially all of the assets of such Person or comprises any division
or line of business of such Person or any other properties or assets of such
Person other than in the ordinary course of business.
2
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
lease, assignment, transfer or other disposition for value (including, without
limitation, pursuant to any amalgamation, merger or consolidation) by the
Company or by any of its Subsidiaries to any Person other than the Company or
any of its Wholly-Owned Subsidiaries (any such transaction, a "disposition") of
(i) any of the stock of any of the Company's Subsidiaries, (ii) substantially
all of the assets of any division or line of business of the Company or of any
of its Subsidiaries, or (iii) any other assets (whether tangible or intangible)
of the Company or of any of its Subsidiaries; excluding (a) any disposition of
Cash Equivalents or inventory in the ordinary course of business or obsolete
equipment in the ordinary course of business consistent with past practices of
the Company or any of its Subsidiaries or the lease or sublease of any real or
personal property in the ordinary course of business, (b) any disposition of
stock or assets in any single transaction or related series of transactions the
aggregate value of which does not exceed $1,000,000, (c) exchanges of properties
or assets for other properties or assets, excluding cash or Cash Equivalents but
including Capital Stock of a Person if, as a result of such exchange, such
Person becomes a Wholly-Owned Subsidiary of the Company; provided, that the
property or assets so acquired or the property or assets of the Person the
Capital Stock of which is so acquired (i) are useful in the business of the
Company and its Subsidiaries as then being conducted and (ii) have a fair market
value at least equal to the fair market value of the assets or properties being
exchanged (as evidenced by a resolution of the Company's Board of Directors) and
(d) the Darlington Sale and Leaseback Transaction.
"Bankruptcy Law" means Title 11 of the United States Code entitled
"bankruptcy", as now and hereafter in effect, or any successor statute or any
other United States federal, state or local law or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors, whether in effect on the date hereof or
hereafter.
"Bankruptcy Order" means any court order made in a proceeding pursuant
to or within the meaning of any Bankruptcy Law, containing an adjudication of
bankruptcy or insolvency, or providing for liquidation, winding up, dissolution
or reorganization, or appointing a custodian of- a debtor or of all or any
substantial part of a debtor's property, or providing for the staying,
arrangement, adjustment or composition of indebtedness or other relief of a
debtor.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any duly authorized committee of that Board.
"Borrower" has the meaning ascribed to it in the introduction to this
Agreement.
"Bridge Loan" means, collectively, the loans made by the Lenders
pursuant to Section 2.1A
"Bridge Loan Commitment" means the commitment of the Lenders to make
the Bridge Loan as set forth in Section 2.1A.
"Bridge Notes" has the meaning ascribed to it in Section 2.1D.
3
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of Charlotte, North Carolina or New
York, New York or is a day on which banking institutions therein located are
authorized or required by law or other governmental action to close provided,
however, that when used in connection with a rate determination, borrowing or
payment with respect to the Bridge Notes, the term "Business Day" shall also
exclude any day on which banks in London, England are not open for dealings in
Dollar deposits in the London interbank market.
"Capital Lease," as applied to any person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including,
without limitation, each class of Common Stock and Preferred Stock of such
Person and (ii) with respect to any Person that is not a corporation, any and
all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means obligations under a Capital Lease,
and the amount of Indebtedness represented by such obligations shall be the
capitalized amount of such obligations determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Rating Group ("S&P") or Moody's Investors Service,
Inc. ("Moody's); (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P's or Moody's; and (iv) certificates of deposit
or bankers' acceptances maturing within one year from the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least "adequately capitalized" (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than $100,000,000; (v) shares of any money market
mutual fund that (a) has its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P's or Moody's; and (vi) repurchase agreements with respect to, and which are
fully secured by a perfected security interest in, obligations of a type
described in clause (i) or clause (ii) above and are with any commercial bank
described in clause (iv) above.
"Cash Proceeds" means, with respect to any Asset sale, cash payments
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when so
received) received from such Asset Sale.
4
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company or the Borrower to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a "Group"), together
with any Affiliates thereof; (ii) the approval by the holders of Capital Stock
of the Company or the Borrower of any plan or proposal for the liquidation or
dissolution of the Company or the Borrower; (iii) any Person or Group (other
than the Permitted Holders) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 45% of the Voting
Stock of the Company; (iv) the Company shall cease to own beneficially all of
the Voting Stock of the Borrower, free and clear of all Liens other than Liens
granted to secure the Senior Credit Facility or (v) the replacement of a
majority of the Board of Directors of the Company over a two-year period from
the directors who constituted the Board of Directors of the Company at the
beginning of such period, and such replacement shall not have been approved by a
vote of at least a majority of the Board of Directors of the Company then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Date" has the meaning ascribed to it in Section
2.4A(iv).
"Change of Control Offer" has the meaning ascribed to it in Section
2.4A(iv).
"Commission" means the Securities and Exchange Commission.
"Commitment Letter" means the (i) letter agreement dated November 17,
1997, between the Borrower and First Union pursuant to which First Union
committed to provide the Bridge Loan to the Borrower, subject to the terms and
conditions thereof, (ii) the letter agreement dated November 17, 1997 between
the Borrower and First Union (and the supplement thereto dated as of December
16, 1997) pursuant to which the Borrower committed to pay First Union certain
fees and to satisfy certain other obligations to First Union in respect of the
commitment set forth in (i) above.
"Common Stock" of any person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of, such Person's common stock, whether outstanding on the
Closing Date or issued after the Closing Date, and includes, without limitation,
all series and classes of such common stock
"Company" has the meaning ascribed to it in the introduction to this
Agreement.
"Company Junior Capital Contribution" means the unsecured subordinated
loan to be made by the Company or the Borrower to DT Acquisition on or prior to
the Initial Takedown Closing Date as contemplated by the Purchase Agreement.
"Compliance Certificate" means a certificate substantially in the form
of Exhibit II delivered to the Agent by the Company pursuant to Section 5.l (iv)
(b).
5
"Consolidated EBITDA" means, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense and (C) Consolidated Non-Cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a PRO
FORMA basis, in accordance with Article II of Regulation S-X under the
Securities Act of 1933, as amended, for the period of such calculation to (a)
the incurrence or repayment of any Indebtedness of the Company or any of its
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of its Subsidiaries incurring, assuming or otherwise being liable
for Acquired Indebtedness and also including any Consolidated EBITDA
attributable to the assets which are the subject of the Asset Acquisition or
Asset Sale during the Four Quarter Period) occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four Quarter Period and
on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
occurred on the first day of the Four Quarter Period. If the Company or any of
its Subsidiaries directly or indirectly guarantees Indebtedness of a third
Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Company or such Subsidiary, as the case may
be, had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (i) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate PER ANNUM
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (ii) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the
6
interest rate in effect on the Transaction Date will be deemed to have been in
effect during the Four Quarter Period; and (iii) notwithstanding clause (i)
above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap Obligations
shall be deeded to accrue at the rate PER ANNUM resulting after giving effect to
the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness), PLUS (b) the
product of (i) the amount of all dividend payments on any series of Preferred
Stock of the Company (other than dividends paid in Qualified Capital Stock)
paid, accrued or scheduled to be paid or accrued during such period times (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the then-current effective consolidated federal, state and local income
tax rate of the Company, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of, without duplication: (i) the aggregate of all cash and
non-cash interest expense (minus amortization or write-off of deferred financing
costs included in cash or non-cash interest expense) of such person and its
Subsidiaries for such period determined on a consolidated basis in accordance
with GAAP, including, without limitation, (a) any amortization of debt discount,
(b) the net costs under Interest Swap Obligations, (c) all capitalized interest
and (d) the interest portion of any deferred payment obligation; and (ii) the
interest component of Capitalized Lease Obligations paid, accrued and/or
scheduled to be paid or accrued by such Person and its Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the consolidated net income (or loss) of such person and its
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
and losses from Asset Sales or abandonment or reserves relating thereto, (b)
items classified as extraordinary, nonrecurring or unusual gains, losses or
charges, and the related tax effects, each determined in accordance with GAAP,
(c) the net income of any Person acquired in a "pooling of interests"
transaction accrued prior to the date it becomes a Subsidiary of the referent
Person or is merged or consolidated with the referent person or any Subsidiary
of the referent person, (d) the net income (but not loss) of any Subsidiary of
the referent Person to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by a contract,
operation of law or otherwise, (e) the net income of any other Person, other
than a Subsidiary of the referent Person, except to the extent of cash dividends
or distributions paid to the referent Person or to a Wholly Owned Subsidiary of
the referent Person by such Person, (f) any restoration to income of any
contingency reserve, except to the extent that provision for such reserve was
made out of Consolidated Net Income accrued at any time after September 30,
1997, (g) income or loss attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued), and (h) in the case of a
successor to the
7
referent Person by consolidation or merger or as a transferee of the referent
Person's assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-Cash Charges" means, with respect to the Company, for
any period, the aggregate depreciation, amortization and other non-cash expenses
of the Company and its Subsidiaries reducing Consolidated Net Income of the
Company for such period, determined on a consolidated basis in accordance with
GAAP (excluding any such charges constituting an extraordinary item or loss or
any such charge which requires an accrual of or a reserve for cash charges for
any future period).
"Contested Claim" means any Tax, Indebtedness or other claim or
liability (i) the validity or amount of which is being diligently contested in
good faith, (ii) for which adequate reserve, or other appropriate provision, if
any, as required in conformity with GAAP shall have been made, and (iii) with
respect to which any right to execute upon or sell any assets of the Company or
of any of its Subsidiaries has not matured or has been and continues to be
effectively enjoined, superseded or stayed.
"Contingent Obligation," as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence. The amount of any Contingent Obligation
shall be equal to the amount of the obligation so guaranteed or otherwise
supported or, if less, the amount to which such Contingent Obligation is
specifically limited.
"Contractual Obligation", as applied to any Person, means any provision
of any Security issued by that Person or of any indenture, mortgage, deed of
trust, contract, undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to which it or
any of its properties is subject.
8
"Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.
"Custodian" means any receiver, interim receiver, receiver and manager,
trustee, assignee, liquidator, sequestrator or similar official charged with
maintaining possession or control over property for one or more creditors,
whether under any Bankruptcy Law or otherwise.
"Darlington Sale and Leaseback Transaction" means the transaction
involving the sale and leaseback of the Borrower's textile manufacturing
facility located in Darlington County, South Carolina pursuant to an Inducement
and Millage Rate Agreement and a Lease Purchase Agreement, in each case between
the Borrower and Darlington County, South Carolina and dated as of December 1,
1997.
"Definitive Purchase Agreement" means the definitive agreement or
agreements contemplated by Section 2 of the Initial Purchase Agreement, as
amended or modified from time to time.
"Depositary" means the Montreal Trust Company of Canada.
"Disqualified Capital Stock" means any Capital Stock which, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event (other than an event
which would constitute a Change of Control), matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable
at the sole option of the holder thereof (except upon the occurrence of a Change
of Control), in whole or in part, on or prior to the final maturity date of the
Bridge Loan.
"Dollars" or the sign "$" means the lawful money of the United States
of America.
"Dominion" means Dominion Textile, Inc., a corporation organized under
the laws of Canada.
"Dominion Public Filings" means, collectively, (i) the prospectus dated
October 25, 1993, prepared in connection with the offering by Dom Tex USA of its
8.875% Guaranteed Senior Notes due 2003, (ii) the prospectus dated March 26,
1996 prepared in connection with the offering by Dom Tex USA of its 9.25%
Guaranteed Senior Notes due 2006, (iii) the Annual Report to Shareholders of
Dominion for the fiscal year ended June 30, 1997, and (iv) Form 40F for Dominion
for the fiscal year ended June 30, 1996 filed with the Securities and Exchange
Commission.
"Dom Tex USA" shall mean Dominion Textile (U.S.A.), a corporation
organized under the laws of the State of Delaware.
"DT Acquisition" means DT Acquisition, Inc., a corporation organized
under the laws of Canada.
9
"Eligible Assignee" means (A) (i) a commercial bank organized under the
laws of the United States of America or any state thereof; (ii) a savings and
loan association or savings bank organized under the laws of the United States
or any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an "accredited investor" (as defined
in Regulation D under the Securities Act of 1933) which extends credit or buys
loans as one of its businesses including, but not limited to, insurance
companies, mutual funds and lease financing companies, in each case (under
clauses (i) through (iv) above) that is reasonably acceptable to the Agent; and
(B) any Lender and any Affiliate of any Lender.
"Employee Pension Benefit Plan" means any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (i) which is, or, at any time within
the five calendar years immediately preceding the date hereof, was at any time,
sponsored, maintained or contributed to by the Company or its Subsidiaries or
any of their respective ERISA Affiliates or (ii) with respect to which the
Company or its Subsidiaries retains any liability, including any potential joint
and several liability as a result of an affiliation with an ERISA Affiliate or a
party that would be an ERISA Affiliate except for the fact the affiliation
ceased more than five calendar years prior to the date hereof.
"Environmental Claim" means any allegation, notice of violation, claim,
demand, abatement order or other order or direction (conditional or otherwise)
by any governmental authority or any person for any response or corrective
action, any damage, including, without limitation, personal injury (including
sickness, disease or death), property damage, contribution, indemnity, indirect
or consequential damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, in each case arising under any Environmental Law,
including without limitation, relating to, resulting from or in connection with
Hazardous Materials and relating to the Company, any of its Subsidiaries or any
of their respective Facilities or predecessors in interest.
"Environmental Laws" means the common law and all statutes, ordinances,
orders, rules, regulations, requirements, judgments, plans, policies or decrees
relating to (i) the Release or threatened Release of Hazardous Materials, (ii)
the generation, use, storage, transportation or disposal of Hazardous Materials
including, without limitation, investigation, study, assessment, testing,
monitoring, containment, removal, remediation, or clean-up of any such Release,
or (iii) occupational safety and health, industrial hygiene or the protection of
the environment, natural resources, human, plant or animal health or welfare,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. ss. 9601 et. seq.), the Hazardous
Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42 U.S.C.
ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. ss. 136
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and
the Emergency Planning and Community Right-to-Know Act (42 U.S.C. ss.
10
11001 et seq.), each as amended or supplemented, and any analogous future or
present statutes, orders, rules, regulations, requirements, judgments or decrees
promulgated pursuant thereto, each as in effect as of the date of determination.
"Environmental Liabilities and Costs" means any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the actual and reasonable fees and disbursements of counsel
in connection with any investigative, administrative or judicial proceeding
commenced or threatened), suffered by, imposed on, incurred by or asserted
against the Lenders, the Agent, and any holders of the Bridge Notes and their
respective officers, directors, employees, agents, representatives and
affiliates arising from or relating to any: (1) Environmental Claim; (2) failure
of the Company and its Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities) to comply with applicable
Environmental Laws, including without limitation fines, penalties, and costs or
expenses incurred to achieve compliance with applicable Environmental Laws; (3)
presence of Hazardous Materials on or related to or generated by the operations
at or in the Facilities; or (4) assertion or attachment of any lien under
Environmental Laws on any of the Facilities.
"Environmental Lien" means a Lien in favor of a Tribunal or other
Person (i) for any liability under an Environmental Law or (ii) for damages
arising from or costs incurred by such Tribunal or other Person in response to a
release or threatened release of Hazardous Materials into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder and any successor statute, regulations and rulings.
"ERISA Affiliate," as applied to any Person, means (i) any corporation
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a controlled group of corporations within
the meaning of Section 414(b) of the Internal Revenue Code of which that Person
is, or was at any time within the five calendar years immediately preceding the
date hereof, a member; (ii) any trade or business (whether or not incorporated)
which is, or was at any time within the five calendar years immediately
preceding the date hereof, a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Internal Revenue Code
of which that Person is, or was at any time within the five calendar years
immediately preceding the date hereof, a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the
Internal Revenue Code of which that Person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above is, or was at
any time within the five calendar years immediately preceding the date hereof, a
member.
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived) or the failure to make any required
11
contribution within 30 days of its due date with respect to any Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041 (a) (2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by the Company or any of its Subsidiaries or any of their respective ERISA
Affiliates from any Multiple Employer Plan or the termination of any such
Multiple Employer Plan resulting in liability pursuant to Sections 4063 or 4064
of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might reasonably
be expected to constitute grounds under ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan; (vi) the imposition of
liability on the Company or any of its Subsidiaries or any of their respective
ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (vii) the withdrawal by the Company
or any of its Subsidiaries or any of their respective ERISA Affiliates in a
complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of
ERISA) from any Multiemployer Plan if there is any potential liability therefor,
or the receipt by the Company or any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could reasonably be expected
to give rise to the imposition on the Company or any of its Subsidiaries or any
of their respective ERISA Affiliates of fines, penalties, taxes or related
charges under Chapter 43 of the Internal Revenue Code or under Section 406, 409
or 502(i) or (1) of ERISA in respect of any Employee Benefit Pension Plan; (ix)
receipt from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Pension Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to qualify under
Section 401(a) of the Internal Revenue Code, or the failure of any trust forming
part of any Pension Plan or Employee Pension Benefit Plan to qualify for
exemption from taxation under Section 501(a) of the Internal Revenue Code; or
(x) the imposition of a Lien pursuant to Section 401(a) (29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"Event of Default" means each of the events set forth in Section 7.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time and any successor statute.
"Exchange Notes" has the meaning ascribed to it in Section 5.9(ii).
"Exchange Request" has the meaning ascribed to it in Section 5.9.
"Existing Senior Credit Facility" means the Amended and Restated Credit
Agreement dated as of June 4, 1996 among the Borrower, the lenders named therein
and First Union National Bank of North Carolina, as agent pursuant to which the
Borrower may borrow up to $218,000,000 in the aggregate at any one time
outstanding, together with the documents related thereto (including, without
limitation, the Wachovia Letter of Credit, any guarantee agreements and security
documents), as such agreements have been or may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time,
12
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company, its
Subsidiaries or any of their respective predecessors in interest.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
"Final Bridge Loan" has the meaning assigned to it in Section 2.1A.
"Final Takedown Closing Date" means the date on or before the earlier
of 364 days after the consummation of the Tender Offer and 180 days after the
Merger, on which all the conditions set forth in Section 3.1 and 3.3 to the
making of the Final Bridge Loan are satisfied or waived in accordance with
Section 12.6.
"First Union" has the meaning assigned to it in the recitals hereto.
"First Union Currency Agreement" means the currency agreement number
144A207 dated as of November 19, 1997 between the Borrower and First Union
National Bank.
"Foreign Plan" means any employee benefit plan maintained outside the
U.S. by the Company, any of its Subsidiaries or any of their respective
Affiliates for employees substantially all of whom are non-resident aliens of
the U.S. and for which the Company or any of its Subsidiaries may be directly or
indirectly liable.
"FUCMC" means First Union Capital Markets Corp.
"Funding Guarantor" has the meaning ascribed to it in Section 10.6.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by The Financial Accounting Standards
Board and which are consistently applied for all periods after the date hereof
so as to properly reflect the financial condition, and the results of operations
and changes in financial position, of the Company and its Subsidiaries, except
that any accounting principle or practice required to be changed in order to
continue as a generally accepted accounting principle or practice may be so
changed.
13
"Guarantee Obligations" has the meaning ascribed to it in Section 11.1.
"Guarantees" means, collectively, the guarantees delivered to the
Lenders by the Guarantors pursuant to Section 10 which are evidenced by
notations of guarantee substantially in the form of Exhibit VII.
"Guarantor Payment Blockage Period" has the meaning ascribed to it in
Section 11.2(b).
"Guarantor Senior Indebtedness" means, with respect to any Guarantor,
the principal of, premium, if any, and interest on, and all amounts payable in
respect of, all obligations of every nature of such Guarantor from time to time
owed to the lenders under the Senior Credit Facility, including, without
limitation, all obligations with respect to letters of credit and principal of
and interest on, and all fees, indemnities and expenses payable under, the
Senior Credit Facility and all obligations under Interest Rate Agreements
entered into with lenders under the Senior Credit Facility and their respective
Affiliates and any guarantees thereof including any agreement refinancing all or
any portion of the Indebtedness under such Senior Credit Facility but only to
the extent such Indebtedness is fully and adequately secured. Without limiting
the generality of the foregoing, "Guarantor Senior Indebtedness" shall include
interest accruing thereon subsequent to the occurrence of any Event of Default
specified in Sections 7.6 and 7.7 relating to the Guarantors, whether or not the
claim for such interest is allowed under any applicable Bankruptcy Law.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not include
that portion of any Indebtedness which is incurred by such Guarantor in
violation of this Agreement.
"Guarantors" means the Company, Service Co. and each future
Wholly-Owned Subsidiary of the Borrower that is organized under the laws of the
United States or any state or commonwealth thereof or under the laws of the
District of Columbia.
"Hazardous Materials" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous waste,"
"restricted hazardous waste," "infectious waste," "toxic substances" or any
other formulations intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable Environmental Laws or
publications promulgated pursuant thereto; (ii) any oil, petroleum, petroleum
fraction or petroleum derived substance; (iii) any flammable substances or
explosives; (iv) any radioactive materials; (v) asbestos in any form; (vi) urea
formaldehyde foam insulation; (vii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (viii) pesticides; and (ix) any other chemical,
material or substance, exposure to which is prohibited, limited or regulated by
any governmental authority or which may or could pose a hazard to human health
or safety or the environment.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required
14
pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on
the balance sheet of such Person (and "Incurrence," "Incurred," "Incurrable" and
"Incurring" shall have meanings correlative to the foregoing); provided that any
amendment, modification or waiver of any document pursuant to which Indebtedness
was previously Incurred shall only be deemed to be an Incurrence of Indebtedness
if and to the extent such amendment, modification or waiver (i) increases the
principal thereof or interest rate or premium payable thereon or (ii) changes to
an earlier date the stated maturity thereof or the date of any scheduled or
required principal payment thereon or the time or circumstances under which such
Indebtedness shall be redeemed; provided, further, that any Indebtedness of a
Person existing at the time such Person becomes a Subsidiary of the Company
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Subsidiary at the time it becomes a Subsidiary of the
Company.
"Indebtedness" means, with respect to any Person, (i) all indebtedness,
obligations and liabilities of such Person for borrowed money, (ii) that portion
of obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet of such person in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit, whether or not
representing obligations for borrowed money, of such Person, (iv) any
indebtedness, obligation or liability of such Person owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (a) due more than six
months (or a longer period of up to one year, if such terms are available from
suppliers in the ordinary course of business) from the date of incurrence of the
obligation in respect thereof or (b) evidenced by a note or similar written
instrument, (v) all indebtedness, obligations and liabilities secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person except that "Indebtedness" shall not
include trade payables and accrued liabilities Incurred in the ordinary course
of business for the purchase of goods or services which are not secured by a
Lien other than a Lien permitted pursuant to Section 6.2(ii) and obligations
under Interest Rate Agreements and Currency Agreements (which constitute
Contingent Obligations, not Indebtedness), (vi) guarantees of such Person in
respect of Indebtedness of other Persons and (vii) all Disqualified Capital
Stock issued by such Person with the amount of Indebtedness represented by such
Disqualified Capital Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed repurchase price, but
excluding accrued dividends, if any. For purposes hereof, the "maximum fixed
repurchase price" of any Disqualified Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value to be
determined reasonably and in good faith by the board of directors of the issuer
of such Disqualified Capital Stock.
"Indemnified Liabilities" has the meaning ascribed to it in Section
12.4.
"Indemnitees" has the meaning ascribed to it in Section 12.4.
15
"Independent Financial Advisor" means a firm (i) which does not, and
whose directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company or any of its Subsidiaries and (ii)
which, in the judgment of the Board of Directors of the Company or any of its
Subsidiaries is otherwise independent and qualified to perform the task for
which it is to be engaged.
"Initial Bridge Loan" has the meaning assigned to it in Section 2.1A.
"Initial Purchase Agreement" means the Purchase Agreement dated as of
October 27, 1997 among the Company, Polymer and DT Acquisition, as amended or
modified from time to time.
"Initial Takedown Closing Date" means the date that is on or before
February 26, 1998 on which all of the conditions contained in Section 3.1 and
3.2 to the making of the Initial Bridge Loan are satisfied or waived in
accordance with Section 12.6.
"Initial Transactions" means, collectively, (i) the incurrence of the
Initial Bridge Loan hereunder on the Initial Takedown Closing Date, (ii) the
taking-up and acceptance for payment by DT Acquisition of the Remaining Dominion
Shares validly deposited with the Depositary pursuant to the Offer to Purchase,
(iii) the placement of the Junior Capital, (iv) any other transaction on or
prior to the Initial Takedown Closing Date contemplated in relation to the
foregoing and (v) the payment of fees and expenses in connection with the
foregoing.
"Intellectual Property" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of the Company as currently conducted that are material
to the condition (financial or otherwise), business, operations or prospects of
the Company and its Subsidiaries, taken as a whole.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" shall mean, in respect of the Bridge Loan and subject
to Section 2.2E, (a) the period commencing on the Initial Takedown Closing Date
and ending one month thereafter on the same day of the month as the Initial
Takedown Closing Date and (b) each subsequent period beginning on the last day
of the preceding Interest Period and ending one month thereafter on the same day
of the month as that last day.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collateral agreement or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means, with respect to any Interest
Period, the second Business Day on which banks in New York and London are open
prior to the first Business Day of such Interest Period.
"Interest Swap Obligations" means the obligations of any Person,
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed
16
rate of interest on a stated notional amount in exchange for periodic payments
made by such other Person calculated by applying a fixed or floating rate of
interest on the same notional amount.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor code or statute.
"Investment" means (i) any direct or indirect purchase or other
acquisition of, or of a beneficial interest in, any Securities of any other
Person or (ii) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business), extension of credit or
capital contribution to any other Person, including all indebtedness and
accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment.
"Junior Capital" means, collectively, (i) the Company Junior Capital
Contribution, (ii) the Polymer Junior Capital Contribution and (iii) the ZB
Holdings Junior Capital Contribution.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that, as to any such arrangement in corporate form, such corporation shall not,
as to any Person of which such corporation is a Subsidiary, be considered to be
a Joint Venture to which such Person is a party
"Laws" means all applicable statutes, laws, ordinances, regulations,
rules, orders, judgments, writs, injunctions or decrees of any state,
commonwealth, nation, territory, possession, province, county, parish, township,
village, municipality or Tribunal, and "Law" means each of the foregoing.
"Lenders" has the meaning ascribed to that term in the introduction to
this Agreement and shall include any assignee of any Bridge Loan, Bridge Note or
Bridge Loan Commitment to the extent of such assignment.
"Lien" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"Litigation" means any action, suit, proceeding, claim, lawsuit and/or
investigation conducted or threatened by or before any Tribunal.
"Loan Documents" means this Agreement, the Bridge Notes, the
Guarantees, the Senior Subordinated Indenture, the Exchange Notes and the
Registration Rights Agreement.
17
"Margin Stock" has the meaning assigned to that term in Regulation U
and Regulation G of the Board of Governors of the Federal Reserve System as in
effect from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of the Company and its Subsidiaries, taken as a whole, whether before
or after giving effect to the Transactions or (ii) a material impairment of the
ability of the Company and its Subsidiaries, taken as a whole, to perform or
consummate, or the material impairment of the ability of the Agent or Lenders to
enforce, the Obligations or the Transactions.
"Material Subsidiary" means, with respect to any accounting period, (a)
any Subsidiary of the Company (i) whose revenues constitute greater than 10% of
the aggregate dollar value of the revenues of the Company and its Subsidiaries,
taken as a whole, for such accounting period or (ii) the fair market value of
whose assets at any time during such accounting period is greater than 10% of
the fair market value of all of the assets of the Company and its Subsidiaries
at such time.
"Maturity Date" has the meaning assigned to it in Section 2.1E.
"Maximum Cash Interest Rate" means an interest rate of 14% per annum;
provided that in computing such interest rate, fees paid to the Lenders shall
not be deemed an interest payment.
"Merger" means the acquisition by DT Acquisition, directly or
indirectly, of all of the Common Stock of, or all or substantially all of the
assets or operations of, Dominion.
"Merger Agreement" means the Merger Agreement to be entered into
between DT Acquisition, Dominion and certain other parties pursuant to which DT
Acquisition, directly or indirectly, shall acquire all of the Common Stock of,
or all or substantially all of the assets or operations of, Dominion, as the
same shall be amended or modified from time to time.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Company, its Subsidiaries or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, its Subsidiaries or any of their ERISA Affiliates and at least one
Person other than the Company, its Subsidiaries and their ERISA Affiliates or
(ii) was so maintained and in respect of which such Company, Subsidiaries or
ERISA Affiliates could have liability under Section 4064 or Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Net Cash Proceeds" means, with respect to any Asset Sale, Cash
Proceeds of such Asset Sale net of bona fide direct costs of sale including, but
not limited to, (i) income taxes reasonably estimated to be actually payable as
a result of such Asset Sale within two years of the
18
date of such Asset Sale, (ii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on, any Indebtedness that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale, (iii) out-of-pocket
expenses and fees relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees and sales commissions) and (iv)
any portion of cash proceeds which the Company determines in good faith should
be reserved for post-closing adjustments or liabilities relating to the Asset
Sale retained by the Company or any of its Subsidiaries, it being understood and
agreed that on the day that all such post-closing adjustments have been
determined, the amount (if any) by which the reserved amount in respect of such
Asset Sale exceeds the actual post-closing adjustments, payable by the Company
or any of its Subsidiaries, shall constitute Net Cash Proceeds on such date.
"New Senior Credit Facility" means the Loan Agreement to be entered
into on or before the Initial Takedown Closing Date as a replacement of the
Existing Senior Credit Facility between the Borrower, the lenders listed therein
and First Union National Bank, as agent, pursuant to which the Company may
borrow up to $470,000,000 in the aggregate at any one time outstanding together
with the documents related thereto (including, without limitation, the Wachovia
Letter of Credit, any guarantee agreements and security documents), as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreement
extending the maturity of, refinancing, replacing or otherwise restructuring
(including adding Subsidiaries of the Company as additional borrowers or
guarantors thereunder) all or any portion of the Indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agent, lender or group of lenders.
"Non-Payment Default" means any event (other than a Payment Default)
the occurrence of which entitles one or more Persons to act to accelerate the
maturity of any Senior Indebtedness.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit III with respect to a proposed borrowing.
"Obligations" means all obligations of every nature of the Borrower
from time to time owed to the Lenders and the Agent under the Loan Documents,
whether for principal, reimbursements, interest, fees, expenses, indemnities or
otherwise, and whether primary, secondary, direct, indirect, contingent, fixed
or otherwise (including obligations of performance).
"Offer Payment Date" has the meaning ascribed to it in Section
2.4A(iv).
"Offer to Purchase" means the offers to purchase for cash all of the
outstanding Capital Stock of Dominion dated October 29, 1997 made by DT
Acquisition to all of the holders of the Capital Stock of Dominion, as extended
and varied by (i) a Notice of Extension and Variation dated November 18, 1997
and (ii) a Notice of Extension and Variation dated December 16, 1997, and as the
same may be further modified and supplemented and in effect from time to time.
19
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Financial Officer, the Controller, the Treasurer, the
Secretary or Assistant Secretary of each of the Company and its Subsidiaries.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by two Officers; provided
that every Officers' Certificate with respect to the compliance with a condition
precedent to the making of the Bridge Loans hereunder shall include (i) a
statement that the officer or officers making or giving such Officers'
Certificate have read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement that, in the
opinion of the signers, they have made or have caused to be made such
examination or investigation as is necessary to enable them to express an
informed opinion as to whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the signers, such condition
has been complied with.
"Original Bridge Notes" has the meaning assigned to it in Section 2.1D.
"Pari Passu Indebtedness" means, with respect to the Borrower or any
Guarantor, Indebtedness of such Person which ranks pari passu in right of
payment to the Bridge Loans or the Guarantee of such Guarantor, as the case may
be.
"Payment Blockage Period" has the meaning ascribed to it in Section
8.2(b).
"Payment Default" means any default in the payment of principal,
premium, if any, or interest on any Senior Indebtedness beyond any applicable
grace period with respect thereto.
"Payment Office" shall mean the office of the Agent located at 301
South College Street, Charlotte, NC 28288 or such other office as the Agent may
designate to the Company and the Lenders from time to time.
"Payment Restriction" has the meaning ascribed to it in Section 6.8.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means a Single Employer Plan or Multiple Employer Plan.
"Permits" has the meaning ascribed to it in Section 4.19.
"Permitted Holders" means (i) Citicorp Venture Capital, Ltd., (ii) FMR
Corp., (iii) Arthur C. Weiner, his family members and any trusts, the only
beneficiaries of which are Arthur C. Weiner or his family members and (iv)
partnerships, corporations or limited liability companies which control or are
controlled by the persons or entities described in clauses (i), (ii) or (iii).
"Permitted Preferred Stock" means any Preferred Stock issued by the
Company or the Borrower in an aggregate amount not to exceed $30,000,000 at any
one time outstanding and which by its terms does not permit (i) redemption,
liquidation, mandatory sinking fund
20
payments or the like by a fixed date on or prior to the Maturity Date and (ii)
the payment of cash dividends on or prior to the Maturity Date at a rate in
excess of 8.0%.
"Permitted Refinancing Indebtedness" means (A) any Refinancing by the
Company of Indebtedness of the Company or of its Subsidiaries (other than
Indebtedness Incurred or outstanding pursuant to clause (ii), (iv), (v), (vi),
(vii), (viii), (ix) or (xi) of Section 6.1) and (B) any Indebtedness incurred
pursuant to a Refinancing by any Subsidiary of the Company of Indebtedness
Incurred by such Subsidiary (other than Indebtedness Incurred or outstanding
pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix) or (xi) of Section
6.l), in the case of each of (A) and (B), that does not (1) result in an
increase in the total of the aggregate principal amount of the Indebtedness of
such person being Refinanced as of the date of such proposed Refinancing (if
such Indebtedness that is Refinancing the existing Indebtedness is issued at a
price less than 100% of the principal amount thereof, an increase shall not be
deemed to have occurred unless the gross proceeds of such Indebtedness that is
Refinancing the existing Indebtedness is in excess of the total of the aggregate
principal amount of the Indebtedness being Refinanced as of the date of such
proposed Refinancing) or (2) create Indebtedness with a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced; provided that (x) if such Indebtedness being
Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company, (y) if such Indebtedness being
Refinanced is subordinate or junior in right of payment to the Bridge Loan or
the Guarantees, as the case may be, or if recourse in respect of the
Indebtedness being Refinanced is limited in any respect, then such Indebtedness
proposed to be Incurred to Refinance the existing Indebtedness shall be
Subordinate in right of payment to the Bridge Loan or the Guarantees, as the
case may be, and recourse with respect thereto, as the case may be, shall be
limited at least to the same extent and in the same manner as the Indebtedness
being Refinanced and (z) if such Indebtedness being Refinanced is Pari Passu
Indebtedness, then such Indebtedness proposed to be incurred to Refinance the
existing Indebtedness shall be Pari Passu Indebtedness; provided, further, that
Indebtedness incurred currently with an irrevocable offer to purchase, on a date
not more than 60 days from the date of the incurrence of such Indebtedness, an
amount of Bridge Notes equal to such Indebtedness shall be deemed refinancing
Indebtedness.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities and governments and agencies and political subdivisions thereof.
"PIK Interest Amount" has the meaning ascribed to it in Section 2.2B.
"Polymer" means Polymer Group, Inc., a Delaware corporation.
"Polymer Junior Capital Contribution" means the unsecured subordinated
loan made by Polymer to DT Acquisition on or prior to the Initial Takedown
Closing Date as contemplated by the Purchase Agreement.
21
"Potential Event of Default" means a condition or event which, after
notice or lapse of time or both, would constitute an Event of Default if that
condition or event were not cured or removed within any applicable grace or cure
period.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights (as compared to any other Capital Stock of such
Person) with respect to dividends or redemptions or upon liquidation.
"Pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Agreement, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act as interpreted by the
Company's chief financial officer or Board of Directors in consultation with its
independent certified public accountants.
"Purchase Agreement" means the Initial Purchase Agreement until the
execution and delivery of the Definitive Purchase Agreement and thereafter means
the Definitive Purchase Agreement.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Recovery Event" means the receipt by the Company, the Borrower or any
of their respective Subsidiaries of any cash insurance proceeds or condemnation
award payable by reason of theft, loss, physical destruction or damage, taking
or similar event with respect to any of their respective properties or assets.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund or defease, or to issue a security or
Indebtedness in exchange or replacement for, such security or Indebtedness in
whole or in part. "Refinanced" and "Refinancing" shall have correlative
meanings.
"Register" has the meaning ascribed to it in Section 5.12.
"Registration Rights Agreement" means a registration rights agreement
substantially in the form contemplated by Exhibit V (with such changes therein
as the Agent and the Company shall approve).
"Related Business" means any capital expenditure or Investment in
properties or assets, or in Capital Stock of a Person that as a result of such
capital expenditure or Investment becomes a Wholly-Owned Subsidiary of the
Company, if the property or assets so acquired, or the property and assets of
the Person the Capital Stock of which is so acquired, will be used in the
business of the Company and its Subsidiaries as existing on the Initial Takedown
Closing Date but giving effect to the Acquisition or in businesses reasonably
related thereto.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the environment (including,
without limitation, the abandonment or disposal of any barrels, containers or
other closed receptacles containing any Hazardous Materials), or onto
22
or out of any Facility, including the movement of any Hazardous Material through
the air, soil, surface water, groundwater or property.
"Remaining Dominion Shares" means all of the shares of common stock and
preferred stock of Dominion not beneficially owned by Polymer or DT Acquisition
immediately prior to the commencement of the Tender Offer.
"Required Lenders" means the Lender or Lenders holding at least 51% of
the aggregate outstanding principal amount of Bridge Notes.
"Restricted Payment" has the meaning ascribed to it in Section 6.3.
"Securities" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit
sharing agreement or arrangement, bonds, debentures, options, warrants, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"Senior Credit Facility" means the Existing Senior Credit Facility
until the execution and delivery of the New Senior Credit Facility and the
repayment by the Company of all obligations under the Existing Senior Credit
Facility and thereafter means the New Senior Credit Facility.
"Senior Indebtedness" means for any Person the principal of, premium,
if any, and interest on, and all amounts payable in respect of, all obligations
of every nature of the Company from time to time owed to the lenders under the
Senior Credit Facility; including, without limitation, all obligations in
respect of letters of credit and principal of and interest on and all fees,
indemnities, and expenses payable under the Senior Credit Facility and all
obligations under Interest Rate Agreements entered into with lenders under the
Senior Credit Facility and their respective Affiliates and any guarantees
thereof including any agreement refinancing all or any portion of the
Indebtedness under such Senior Credit Facility but only to the extent such
Indebtedness is fully and adequately secured. Without limiting the generality of
the foregoing "Senior Indebtedness" shall include interest accruing thereon
subsequent to the occurrence of any Event of Default specified in Sections 7.6
and 7.7 relating to the Company, whether or not the claim for such interest is
allowed under any applicable Bankruptcy Law. Notwithstanding the foregoing,
"Senior Indebtedness" of any Person shall not include that portion of any
Indebtedness which is incurred by such Person in violation of this Agreement.
"Senior Subordinated Indenture" means an indenture among the Borrower,
the Guarantors and a trustee substantially in the form contemplated by and in
accordance with Section 5.9 (with such changes therein as the Agent and the
Borrower shall approve, and at such time as notes issued thereunder are sold in
a public offering, with other appropriate changes to reflect such public
offering), as the same may at any time be amended, modified and supplemented and
in effect.
23
"Single Employer Plan" means a "single-employer plan," as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
Company, any of its Subsidiaries or any of their ERISA Affiliates and no Person
other than the Company, any of its Subsidiaries or any of their ERISA Affiliates
or (ii) was so maintained and in respect of which such Company, its Subsidiaries
or their ERISA Affiliates could have liability under Section 4069 of ERISA in
the event such plan has been or were to be terminated.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor which is expressly subordinated in right of payment to the Bridge
Notes or the Guarantee of such Guarantor, as the case may be.
"Subsequent Bridge Note" has the meaning ascribed to it in Section
2.1D.
"Subsequent Transactions" means, collectively, (i) the incurrence of
the revolving loans drawn down on the Final Takedown Closing Date under the
Senior Credit Facility, (ii) the incurrence of the Final Bridge Loan hereunder
on the Final Takedown Closing Date, (iii) the consummation of the Merger, (iv)
the Acquisition, (v) any other transaction on the Final Takedown Closing Date
contemplated in relation to the foregoing and (vi) the payment of fees and
expenses in connection with the foregoing.
"Subsidiary" means, with respect to any person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of stock or other equity interest entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereto is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof.
"Take-Out Securities" means any debt securities of the Company and/or
the Guarantors the proceeds of which are used to repay the Bridge Loan in full.
"Taxes" means any present or future taxes, assessments, fees, levies,
imposts, duties, deductions, liabilities, withholdings or other charges of any
nature whatsoever, including interest, penalties and additions thereto from time
to time or at any time imposed by any Law or any Tribunal.
"Tax Return" means a report, return or other information (including any
amendments) required to be supplied to a Tribunal with respect to Taxes
including, where permitted or required, combined or consolidated returns for any
group of entities that includes the Company or any Subsidiary.
"Tender Credit Agreement" means the loan agreement dated as of December
17, 1997 between Chase Manhattan Bank, as administrative agent, the lenders
named therein, and DT Acquisition pursuant to which DT Acquisition may borrow up
to $600,000,000 in the aggregate, including borrowings under the Tender Term
Loan and the Tender Revolving Credit Loan.
24
"Tender Offer" means the cash tender offer made by DT Acquisition,
pursuant to the terms of the Offer to Purchase, for all of the Remaining
Dominion Shares at a price of Canadian $14.50 per share of common stock and
Canadian $150.00 per share of preferred stock.
"Tender Revolving Credit Loan" means the revolving credit loan of up to
$45,000,000 in the aggregate made to DT Acquisition under the Tender Credit
Agreement.
"Tender Term Loan" means the term loan of $225,000,000 in the aggregate
made to DT Acquisition under the Tender Credit Agreement.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower pursuant hereto and other fees, costs and expenses payable by the
Company or a Subsidiary of the Company in connection with the Transactions.
"Transaction Date" means the date on which any transaction that would
give use to the need to calculate the Consolidated Fixed Change Coverage Ratio
occurs.
"Transactions" means collectively, (i) the Initial Transactions, (ii)
the Subsequent Transactions, (iii) the incurrence by DT Acquisition of the
Tender Term Loan and Tender Revolving Credit Loan and (iv) the payment by DT
Acquisition for all of the Remaining Dominion Shares validly deposited with the
Depositary at or prior to the expiry of the Tender Offer.
"Tribunal" means any government, any arbitration panel, any court or
any governmental department, commission, board, bureau, agency, authority or
instrumentality of any state, province, commonwealth, nation, territory,
possession, county, parish, town, township, village or municipality, whether now
or hereafter constituted and/or existing.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or only so long as no senior class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or the governing body of such Person.
"Wachovia Letter of Credit" means that irrevocable letter of credit no.
LC 968-044594 dated May 17, 1994 issued by Wachovia Bank of North Carolina,
National Association in favor of First Citizens Bank & Trust Company, as Trustee
under those $7,200,000 South Carolina Jobs-Economic Development Authority
Tax-Exempt Adjustable Mode Economic Development Revenue Bonds (Galey & Lord
Industries, Inc. Project) Series 1994, for the account of the Borrower in the
original maximum amount of $7,830,000, as such letter of credit may be modified,
supplemented, extended and replaced from time to time.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the
25
amount of each then remaining installment, sinking fund, serial maturity or
other required payment of principal, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment.
"Wholly-Owned Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which 100% of the total
voting power of shares of stock or other equity interest entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled
directly or indirectly, by that Person or one or more of the other Wholly-Owned
Subsidiaries of that Person or a combination thereof.
"ZB Holdings" means ZB Holdings, a South Carolina corporation.
"ZB Holdings Junior Capital Contribution" means the unsecured
subordinated loan made by ZB Holdings to DT Acquisition on or prior to the
Initial Takedown Closing Date as contemplated by the Purchase Agreement.
1.2 Accounting Terms
For the purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to them in conformity with GAAP.
1.3 Other Definitional Provisions
Any of the terms defined in Section 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.
SECTION 2 AMOUNT AND TERMS OF BRIDGE LOAN COMMITMENT AND LOANS; NOTES
2.1 Bridge Loan and Bridge Note
A. Bridge Loan Commitment. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of the Company
and the Borrower herein set forth, the Lenders hereby agree to lend to the
Borrower on the Initial Takedown Closing Date $145,617,902.25 in the aggregate
(the "Initial Bridge Loan") and on the Final Takedown Closing Date
$104,382,007.75 in the aggregate (the "Final Bridge Loan," and together with the
Initial Bridge Loan, the "Bridge Loan"), each such Lender committing to lend the
aggregate amount set forth next to such Lender's name on the signature pages
hereto. The Lenders' commitments to make the Bridge Loan to the Borrower
pursuant to this Section 2.1 A are herein called individually, the "Bridge Loan
Commitment" and collectively, the "Bridge Loan Commitments."
B. Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.1, it shall deliver to the Agent a Notice of Borrowing no later than
11:00 A.M. (New York time), at least two Business Days in advance of the Initial
Takedown Closing Date or Final
26
Takedown Closing Date, as the case may be, or, in either case, such later date
as shall be agreed to by the Agent. The Notice of Borrowing shall specify the
applicable date of borrowing (which shall be a Business Day). Upon receipt of
such Notice of Borrowing, the Agent shall promptly notify each Lender of its
share of the Bridge Loan and the other matters covered by the Notice of
Borrowing.
C. Disbursement of Funds. (a) No later than 5:00 p.m. (New York time)
on the Initial Takedown Closing Date or Final Takedown Closing Date, as the case
may be, each Lender will make available its pro rata share of the Bridge Loan
requested to be made on such date in the manner provided below. All amounts
shall be made available to the Agent in U.S. Legal Tender and immediately
available funds at the Payment Office and the Agent promptly will make available
to the Borrower by depositing to its account at the Payment Office the aggregate
of the amounts so made available in the type of funds received. Unless the Agent
shall have been notified by any Lender prior to the Initial Takedown Closing
Date or Final Takedown Closing Date, as the case may be, that such Lender does
not intend to make available to the Agent its portion of the Bridge Loan to be
made on such date, the Agent may assume that such Lender has made such amount
available to the Agent on such date, and the Agent, in reliance upon such
assumption, may (in its sole discretion and without any obligation to do so)
make available to the Borrower a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Lender and the Agent
has made available same to the Borrower, the Agent shall be entitled to recover
such corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Agent. The Agent shall also be entitled to recover
from such Lender or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Agent to the Borrower to the date such
corresponding amount is recovered by the Agent, at a rate per annum equal to (x)
if paid by such Lender, the overnight Federal Funds Rate or (y) if paid by the
Borrower, the then applicable rate of interest on the Bridge Loan.
(b) Nothing herein shall be deemed to relieve any Lender from its
obligation to fulfill its Bridge Loan Commitment hereunder or to prejudice any
rights which the Borrower may have against any Lender as a result of any default
by such Lender hereunder or a default by First Union under the Commitment
Letter, including, without limitation, its obligation to make available to the
Borrower the entire Bridge Loan subject to the terms and conditions therein
stated.
D. Bridge Notes. The Borrower shall execute and deliver to each Lender
on the Initial Takedown Closing Date and the Final Takedown Closing Date, as the
case may be, a bridge note dated the Initial Takedown Closing Date and the Final
Takedown Closing Date, as the case may be, substantially in the form of Exhibit
I to evidence such Lender's portion of the Bridge Loan Commitment and with
appropriate insertions (the "Original Bridge Notes"). On each interest payment
date on which the Borrower elects to pay a PIK Interest Amount pursuant to
Section 2.2B, the Borrower shall execute and deliver to each Lender on such
interest payment date a bridge note dated such interest payment date
substantially in the form of Exhibit I annexed hereto in a principal amount
equal to such Lender's pro rata portion of such PIK
27
Interest Amount and with other appropriate insertions (each a "Subsequent Bridge
Note" and, together with the Original Bridge Notes, the "Bridge Notes"). A
Subsequent Bridge Note shall bear interest from the date of its issuance at the
same rate borne by all Bridge Notes.
E. Maturity of Bridge Loan. The Bridge Loan shall mature and the
Borrower shall pay in full the outstanding principal amount thereof and accrued
interest thereon on the tenth anniversary of the Initial Takedown Closing Date
(the "Maturity Date").
F. Termination of Bridge Loan Commitment. The Bridge Loan Commitment
hereunder shall terminate on the earlier of (i) termination of the Tender Offer
prior to its consummation, (ii) February 26, 1998 if the Initial Bridge Loan is
not made on or before such date or (iii) the earlier of 364 days after the
consummation of the Tender Offer and 180 days after the Merger if the Final
Bridge Loan is not made on or before such date.
G. Pro Rata Borrowings. The Bridge Loan made under this Agreement shall
be made by the Lenders pro rata on the basis of their respective Bridge Loan
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make its portion of the Bridge
Loan hereunder and that each Lender shall be obligated to make its portion of
the Bridge Loan hereunder, regardless of the failure of any other Lender to
fulfill its commitments hereunder (subject however to the obligation of First
Union under the Commitment Letter to make available to the Borrower the entire
Bridge Loan subject to the terms and conditions therein stated).
2.2 Interest on the Bridge Loan
A. Rate of Interest. The Bridge Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
prepayment, acceleration or otherwise) at a rate per annum equal to the
Applicable Interest Rate for each Interest Period.
Notwithstanding this Section 2.2A or any other provision herein, in no
event will the combined sum of interest (cash or otherwise) on the Bridge Loan
exceeds 18.00% per annum.
B. Interest Payments. Interest shall be payable with respect to the
Bridge Loan, in arrears, on each Interest Payment Date, commencing on the first
Interest Payment Date following the Initial Takedown Closing Date and upon any
prepayment of the Bridge Loan (to the extent accrued on the amount being
prepaid) and on the Maturity Date; provided, however, that if, on any Interest
Payment Date on which interest is required to be paid (other than the Maturity
Date), the interest rate borne by the Bridge Loan exceeds the Maximum Cash
Interest Rate, the Borrower may pay all or a portion of the interest payable in
excess of the amount of interest that would be payable on such date at the
Maximum Cash Interest Rate by issuance of Subsequent Bridge Notes, in an
aggregate principal amount equal to the amount of such interest being so paid
(the "PIK Interest Amount").
C. Post-Maturity Interest. Any principal payments on the Bridge Loan
not paid when due and, to the extent permitted by applicable law, any interest
payment on the Bridge Loan not paid when due, in each case whether at stated
maturity, by notice of prepayment, by
28
acceleration or otherwise, shall thereafter bear interest payable upon demand at
a rate which is 2.00% per annum in excess of the rate of interest otherwise
payable under this Agreement for the Bridge Loan.
D. Computation of Interest. Interest on the Bridge Loan shall be
computed on the basis of a 360-day year and the actual number of days elapsed in
the period during which it accrues. In computing interest on the Bridge Loan,
the date of the making of the Bridge Loan shall be included and the date of
payment shall be excluded; provided that if the Bridge Loan is repaid on the
same day on which it is made, one day's interest shall be paid on the Bridge
Loan.
E. Making of Payments. Any payment stated to be due in respect of any
Bridge Loan, and any Interest Period stated to end, on a given day in a
specified month shall instead be made or end (as the case may be) (i) if there
is no such day in that month, on the last Business Day of that month or (ii) if
that day is not a Business Day, on the following Business Day, unless that
following Business Day falls in a different calendar month, in which case that
payment shall be made or that Interest Period shall end (as the case may be) on
the preceding Business Day.
2.3 Fees
The Borrower agrees to pay to First Union and its Affiliates all fees
and other obligations in accordance with, and at the times specified by, the
Commitment Letter.
2.4 Prepayments and Payments
A. Prepayments
(i) Voluntary Prepayments. The Borrower may, upon not less
than three Business Days' prior written or telephonic notice confirmed
in writing to the Agent at any time and from time to time, prepay the
Bridge Loan made to the Borrower in whole or in part in an aggregate
minimum amount of $5,000,000 and integral multiples of $1,000,000 in
excess of that amount at a prepayment price equal to the principal
amount thereof plus accrued and unpaid interest thereon to the date of
prepayment.
Notice of prepayment having been given as aforesaid, the
principal amount of the Bridge Loan to be prepaid shall become due and
payable on the prepayment date. Amounts of the Bridge Loan so prepaid
may not be reborrowed.
(ii) Mandatory Prepayments
(a) Prepayments from Asset Sales. Upon receipt by the Company
or any Subsidiary of the Company of Cash Proceeds of any Asset Sale
occurring after the Initial Takedown Closing Date, (A) the Company
shall, or shall cause its Subsidiaries to, apply an amount equal to the
Net Cash Proceeds of such Asset Sale to prepay loans outstanding under
the Senior Credit Facility; provided that the commitment thereunder is
permanently reduced to the extent of the prepayment; and (B) the
Company or any Subsidiary of the Company may apply any Net Cash
Proceeds remaining after any
29
payment pursuant to clause (A) above to a Related Business.
Concurrently with the consummation of any such Asset Sale, the Company
shall deliver to the Agent an Officer's Certificate demonstrating the
derivation of Net Cash Proceeds from the gross sales price of such
Asset Sale.
The Borrower shall prepay the Bridge Loan in an amount equal
to the Net Cash Proceeds not used as provided in the preceding
paragraph on a date not later than the Business Day next succeeding the
180th day after the consummation of such Asset Sale if and to the
extent that such Net Cash Proceeds are not applied by the Company or
any Subsidiary of the Company within 180 days after the consummation of
such Asset Sale pursuant to the immediately preceding paragraph.
(b) Prepayments from Capital Contributions and Equity
Issuances. Concurrently with the receipt by the Company or any
Subsidiary of cash proceeds from any capital contribution or any sale
or issuance of its equity, other than any cash proceeds from any
capital contribution by, or any sale of equity to, the Company or any
of its Subsidiaries, the Borrower shall, to the extent that such
proceeds are not required by the Senior Credit Facility to prepay any
amounts outstanding thereunder, prepay the Bridge Loan in a principal
amount equal to the lesser of the cash proceeds thereof (net of
underwriting or placement discounts commission and other reasonable
costs associated therewith) or the aggregate principal amount of the
Bridge Notes then outstanding. Notwithstanding the foregoing, the
Company may retain the proceeds from the issuance of Permitted
Preferred Stock, provided that such proceeds are used for working
capital purposes.
(c) Prepayments from Issuances of Take-Out Securities and
Certain Other Indebtedness. Concurrently with the receipt by the
Borrower of proceeds from the issuance or incurrence of Take-Out
Securities or other Indebtedness for borrowed money (other than the
Senior Credit Facility), the Borrower shall, to the extent that such
proceeds are not required to be used to prepay any amounts outstanding
under the Senior Credit Facility, prepay the Bridge Loan in an amount
equal to 100% of such proceeds; it being understood, however, that the
Bridge Loan shall be prepaid in full with the proceeds of the Take-Out
Securities.
(d) Prepayments from Recovery Events. Concurrently with the
occurrence of a Recovery Event, the Borrower shall, to the extent that
such proceeds are not required to be used to prepay any amounts
outstanding under the Senior Credit Facility, prepay the Bridge Loan in
an aggregate amount equal to 100% of such cash proceeds.
(e) Prepayments from Payments of the Company Junior Capital
Contribution. Concurrently with the receipt by the Company or the
Borrower of any repayment or prepayment of the Company Junior Capital
Contribution, the Borrower shall, to the extent that any such repayment
or prepayment (i) is not required to be used to prepay amounts
outstanding under the Senior Credit Facility or (ii) is not used to
fund the Subsequent Transactions, prepay the Bridge Loan in an amount
equal to 100% of any such repayment or prepayment.
30
(f) Prepayments from Adjustments to Acquisition Purchase
Price. Concurrently with the receipt by the Company or the Borrower of
any payment or refund arising from an adjustment to the Acquisition
Purchase Price which, when aggregated with any other such payments or
refunds, exceeds $25,000,000, the Borrower shall, to the extent that
any such excess is not required to be used to prepay any amounts
outstanding under the Senior Credit Facility, prepay the Bridge Loan in
an aggregate amount equal to 100% of any such excess.
(g) Any prepayment of the Bridge Loan pursuant to clause (a),
(b), (c), (d), (e) or (f) of this Section 2.4A(ii) shall be made at a
prepayment price equal to the principal amount of the Bridge Loan so
prepaid plus accrued and unpaid interest thereon to the date of
prepayment.
(h) Notice. The Borrower shall notify the Agent of any
prepayment to be made pursuant to this Section 2.4A(ii) at least two
Business Days prior to such prepayment date (unless shorter notice is
satisfactory to the Required Lenders).
(iii) Borrower's Mandatory Prepayment Obligation; Application
of Prepayments. All prepayments shall include payment of accrued
interest on the principal amount so prepaid and shall be applied to
payment of interest before application to principal.
(iv) Mandatory Offer to Purchase Notes
(a) Upon the occurrence of a Change of Control (the date of
such occurrence, the "Change of Control Date"), the Borrower shall, if
the Lenders so request, offer to purchase (the "Change of Control
Offer") all of the Bridge Notes at a purchase price equal to 103.0% of
the aggregate principal amount thereof plus accrued and unpaid interest
thereon to the date of repurchase. Prior to the mailing of the notice
to the Agent provided for in paragraphs (b) and (c) below but in any
event within 30 days following any Change of Control, the Borrower
hereby covenants to (i) repay in full all Indebtedness under the Senior
Credit Facility or to offer to repay in full all such Indebtedness and
to repay the Indebtedness of each lender under the Senior Credit
Facility who has accepted such offer or (ii) obtain the requisite
consents under the Senior Credit Facility to permit the payment of the
Bridge Notes as provided for in paragraph (d) below. The Borrower shall
first comply with the covenant in the preceding sentence before it
shall be required to pay the Notes pursuant to this Section 2.4A(iv).
(b) The notice to the Agent shall contain all instructions and
materials necessary to enable the Lenders to tender Notes.
(c) Within 30 days following any Change of Control the
Borrower shall mail a notice to the Agent stating:
31
(1) that the Change of Control Offer is being made
pursuant to this Section 2.4(A) (iv) and that all Bridge Notes
validly tendered will be accepted for payment;
(2) the purchase price and the purchase date, which
shall be no earlier than 30 days nor later than 40 days from
the date such notice is mailed (the "Offer Payment Date");
(3) that any Bridge Note not tendered will continue
to accrue interest;
(4) that any Bridge Note accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest after the Offer Payment Date unless the Borrower
shall default in the payment of the repurchase price of the
Bridge Notes;
(5) that if a Lender elects to have a Bridge Note
purchased pursuant to the Change of Control Offer it will be
required to surrender the Bridge Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Borrower prior to 5:00 p.m. New York
time on the Offer Payment Date;
(6) that a Lender will be entitled to withdraw its
election if the Borrower receives, not later than 5:00 p.m.
New York time on the Business Day preceding the Offer Payment
Date, a telegram, telex, facsimile transmission or letter
setting forth the principal amount of Bridge Notes such Lender
delivered for purchase, and a statement that such Lender is
withdrawing its election to have such Note purchased; and
(7) that if Bridge Notes are purchased only in part a
new Bridge Note of the same type will be issued in principal
amount equal to the unpurchased portion of the Notes
surrendered.
(d) On or before the Offer Payment Date, the Borrower shall
(i) accept for payment Bridge Notes or portions thereof which are to be
purchased in accordance with the above, and (ii) deposit at the Payment
Office U.S. Legal Tender sufficient to pay the purchase price of all
Notes to be purchased. The Agent shall promptly mail to the Lenders
whose Bridge Notes are so accepted payment in an amount equal to the
purchase price unless such payment is prohibited pursuant to Section 8
or otherwise.
(e) The Borrower shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations are
applicable in connection with the purchase of Bridge Notes pursuant to
an offer hereunder. To the extent the provisions of any securities laws
or regulations conflict with the provisions under this Section, the
Borrower shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations
under this Section by virtue thereof.
32
B. Manner and Time of Payment. All payments of principal and interest
hereunder and under the Bridge Notes by the Borrower shall be made without
defense, set-off or counterclaim and in same-day funds and delivered to the
Agent, unless otherwise specified, not later than 12.00 Noon (New York time) on
the date due at the Payment Office for the account of the Lenders; funds
received by the Agent after that time shall be deemed to have been paid by the
Borrower on the next succeeding Business Day. The Borrower hereby authorizes the
Agent to charge its account with the Agent in order to cause timely payment to
be made of all principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
C. Notation of Payment. Each Lender agrees that before disposing of any
Note held by it, or any part thereof (other than by granting participations
therein), such Lender will make a notation thereon of all principal payments
previously made thereon and of the date to which interest thereon has been paid
and will notify the Borrower of the name and address of the transferee of that
Note; provided that the failure to make (or any error in the making of) such a
notation or to notify the Borrower of the name and address of such transferee
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under such Bridge Notes with respect to the Bridge Loan and payments of
principal or interest on any such Note.
2.5 Use of Proceeds
The proceeds of the Initial Bridge Loan shall be made available by the
Borrower to the Company which shall use such proceeds to make the Company Junior
Capital Contribution. The proceeds of the Final Bridge Loan shall be applied by
the Borrower, together with borrowings under the Senior Credit Facility, to
finance the Acquisition and pay the Transaction Costs.
SECTION 3 CONDITIONS
3.1 Conditions to Initial Bridge Loan and Final Bridge Loan
The obligations of the Lenders to make the Initial Bridge Loan and
Final Bridge Loan hereunder are subject to the satisfaction of, or waiver of,
immediately prior to or concurrent with the making of such Initial Bridge Loan
or Final Bridge Loan on the Initial Takedown Closing Date or the Final Takedown
Closing Date, as the case may be, the following conditions precedent:
(1) The Agent shall have received on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Initial Takedown Closing Date
or Final Takedown Closing Date, as applicable:
(a) resolutions of the Borrower's and each Guarantor's Board
of Directors approving and authorizing the execution, delivery and
performance of this Agreement, each of the other Loan Documents and any
other documents, instruments and certificates required to be executed
by the Borrower or such Guarantor in connection herewith and therewith
and approving and authorizing the consummation of the Transactions,
each
33
certified by one of its Officers as being in full force and effect
without modification or amendment; and
(b) executed copies of this Agreement and the Original Bridge
Notes substantially in the form of Exhibit I executed in accordance
with Section 2.1D drawn to the order of the Lenders and with
appropriate insertions; and
(c) an originally executed Notice of Borrowing substantially
in the form of Exhibit III, signed by the President or a Vice President
of the Borrower on behalf of the Borrower delivered to the Agent; and
(d) a notation of Guarantee, executed and delivered by each
Guarantor, dated the date of this Agreement, substantially in the form
of Exhibit VII, as applicable; and
(e) originally executed copies of one or more favorable
written opinions of (I) Rosenman & Colin LLP, special counsel for the
Borrower and the Guarantors, substantially in the form of Exhibit V and
addressed to the Lenders and (II) Cleary, Gottlieb, Steen & Hamilton,
special counsel for the Lenders, substantially in the form of Exhibit
VI and addressed to the Lenders; and
(f) a certificate, delivered by the Company and signed by the
President or a Vice President and the Chief Financial or Accounting
Officer of the Company and addressed to the Lenders in form and
substance reasonably satisfactory to the Agent, with appropriate
attachments, stating that, after giving effect to the consummation of
the Transactions, the fair saleable value of the assets of the Company
and its Subsidiaries will not be less than the probable liability on
their debts, that each of the Company and its Subsidiaries will be able
to pay its debts as they mature and that each will not have
unreasonably small capital to conduct its business, and the Agent shall
have received such opinions of value, other appropriate factual
information and expert advice supporting the conclusions reached in
such letter as the Agent may reasonably request, all in form and
substance reasonably satisfactory to the Agent.
(2) The Initial Transactions, in the case of the Initial Takedown
Closing Date, and the Subsequent Transactions in the case of the Final Takedown
Closing Date, and all other transactions contemplated to be consummated in
connection therewith shall have been consummated on terms reasonably
satisfactory to the Agent.
(3) All authorizations, consents and approvals necessary in connection
with the Initial Transactions in the case of the Initial Takedown Closing Date
and the Subsequent Transactions in the case of the Final Takedown Closing Date
shall have been obtained and remain in full force and effect and all applicable
waiting periods under Law shall have expired without any action being taken by
any Tribunal which restrains, prevents or imposes materially adverse conditions
upon the completion of the Transactions and evidence of the receipt of such
authorizations, consents and approvals satisfactory to the Agent shall have been
delivered to the Agent.
34
(4) The Company and its Subsidiaries shall have performed in all
material respects all agreements which this Agreement provides shall be
performed prior to the Initial Takedown Closing Date or Final Takedown Closing
Date, as the case may be, except as otherwise disclosed to and agreed to in
writing by the Agent.
(5) Each of the Company and the Borrower shall have delivered to the
Agent Officers' Certificates from the Company and the Borrower in form and
substance satisfactory to the Agent to the effect that (i) the representations
and warranties in Section 4 hereof are true, correct and complete in all
material respects on and as of the Initial Takedown Closing Date or Final
Takedown Closing Date, as the case may be, to the same extent as though made on
and as of that date, (ii) the Company or the Borrower, as the case may be, has
performed and complied with in all material respects all covenants and
conditions to be performed and observed by the Company or the Borrower, as the
case may be, and (iii) all conditions to the consummation of the Initial
Transactions have been satisfied substantially on the terms set forth therein
and have not been waived or amended without the Agent's prior written consent
which consent shall not be unreasonably withheld.
(6) There shall not be threatened, instituted or pending any action,
suit, proceeding or application before or by any Tribunal, or any other Person,
domestic or foreign (i) challenging the Transactions or seeking to restrain,
delay or prohibit the consummation thereof; (ii) seeking to prohibit or impose
material limitations on the Company's ownership or operation of all or any
portion of the Company's business or assets (including all or any portion of the
Acquired Assets) or to compel the Company to dispose of or hold separate all or
any portion of the Company's business or assets (including all or any portion of
the Acquired Assets) as a result of the Transactions; (iii) which, in any event,
might materially adversely affect the Transactions; or (iv) seeking to impose
any materially adverse conditions upon the Transactions.
(7) The Agent and its counsel shall be reasonably satisfied that the
consummation of the Transactions shall be in compliance with all Laws
(including, without limitation, all applicable U.S. and Canadian securities and
banking laws, rules and regulations).
(8) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by the Notice of Borrowing which
would constitute an Event of Default or Potential Event of Default.
(9) There shall be no bankruptcy, insolvency, liquidation or other
similar proceeding affecting, in any manner, all or a portion of the Acquired
Assets.
(10) The making of the Initial Bridge Loan or Final Bridge Loan in the
manner contemplated in this Agreement shall not violate the applicable
provisions of Regulation G, T, U or X of the Board of Governors of the Federal
Reserve Board or any other regulation of the Board.
(11) The Borrower shall have complied with all agreements and
obligations under the Commitment Letter.
35
(12) The Borrower shall have paid to First Union and its Affiliates all
fees payable pursuant to Section 2.3 hereof.
3.2 Additional Conditions to Initial Bridge Loan.
The obligation of the Lenders to make the Initial Bridge Loan is
subject to the satisfaction of, or waiver of, immediately prior to or concurrent
with the making of the Initial Bridge Loan on the Initial Takedown Closing Date,
the following additional conditions precedent:
(1) The Agent shall have received, on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Initial Takedown Closing Date:
(a) a certified copy of the Borrower's and each Guarantor's
charter, together with a certificate of status, compliance, good
standing or like certificate with respect to the Borrower and each
Guarantor issued by the appropriate government officials of the
jurisdiction of its incorporation and of each jurisdiction in which it
owns any material assets or carries on any material business; and
(b) a copy of the Borrower's and each Guarantor's bylaws,
certified by one of its Officers; and
(c) (i) executed or conformed copies of the Purchase
Agreement, (ii) an Officers' Certificate from the Company certifying
that the Purchase Agreement is in full force and effect on the Initial
Takedown Closing Date and (iii) an Officers' Certificate from the
Company to the effect that each party has performed or complied with
all agreements and conditions contained in the Purchase Agreement and
any agreements or documents related thereto to be performed or complied
with on or before the Initial Takedown Closing Date, and no party
thereto is in default in the performance or compliance with any of the
terms or provisions thereof; and
(d) (i) executed or conformed copies of the New Senior Credit
Facility and all documents and instruments related thereto, (ii) an
Officers' Certificate from the Borrower certifying that the New Senior
Credit Facility is in full force and effect on the Initial Takedown
Closing Date and no material term or condition thereof has been
amended, modified or waived from the form most recently delivered to
the Agent prior to the execution of this Agreement except with the
prior written consent of the Agent (which consent shall not be
unreasonably withheld or delayed) and (iii) Officers' Certificates from
the Company and the Borrower to the effect that the Company and the
Borrower have performed or complied with all agreements and conditions
contained in the New Senior Credit Facility and any agreements or
documents related thereto to be performed or complied with on or before
the Initial Takedown Closing Date, and neither the Company or the
Borrower is in default in the performance or compliance with any of the
terms or provisions thereof.
36
(e) an Officer's Certificate from the Borrower to the effect
that the Borrower has no reason to believe that all of the agreements
and conditions contained in each of the Tender Term Loan and the Tender
Revolving Credit Loan will not be satisfied and that the loans
contemplated to be made thereunder will not be made on the day next
succeeding the Initial Takedown Closing Date.
(2) (a) The Tender Offer shall have expired pursuant to the terms of
the Offer to Purchase and (b) DT Acquisition shall have provided notice to the
Depositary that it has taken up and accepted for payment all of the Remaining
Dominion Shares validly deposited and not withdrawn pursuant to the terms of the
Offer to Purchase.
(3) (a) All of the conditions to the Polymer Junior Capital
Contribution and the ZB Holdings Junior Capital Contribution shall have been
satisfied or waived in accordance with the documentation relating thereto and
(b) the funds contemplated by such documentation to be made available to DT
Acquisition in connection with the consummation of the Tender Offer shall have
been made available.
(4) all of the conditions to the New Senior Credit Facility referred to
in this Section 3.2(1) (d) above shall have been satisfied or waived in
accordance with the terms therein.
(5) There shall not have occurred, developed, or come into effect or
existence any event, action, state, condition or major financial occurrence of
national or international consequence or any law, regulation, action, government
regulation, inquiry or other occurrence of any nature whatsoever which adversely
affects, or may adversely affect, the financial markets in Canada or the United
States generally; provided, that, a decline measured from November 15, 1997 in
The Toronto Stock Exchange 35 Index of less than 20% which continues for more
than five trading days shall not be material.
3.3 Additional Conditions to Final Bridge Loan.
The obligation of the Lenders to make the Final Bridge Loan is subject
to the satisfaction of, or waiver of, immediately prior to or concurrent with
the making of the Final Bridge Loan on the Final Takedown Closing Date, the
following additional conditions precedent:
(1) The Agent shall have received, on behalf of the Lenders the
following items, each of which shall be in form and substance satisfactory to
the Agent and, unless otherwise noted, dated the Final Takedown Closing Date:
(a) bring-down certificates or similar certificates of status
or compliance with respect to the items furnished pursuant to Section
3.1 (1) (a), in each case covering the period from the Initial Takedown
Closing Date to the Final Takedown Closing Date; and
(b) executed or conformed copies of the Merger Agreement and a
copy of each legal opinion delivered in connection therewith, and all
documents and instruments relating thereto; and
37
(c) (i) executed or conformed copies of the Definitive
Purchase Agreement and a copy of each legal opinion delivered in
connection with the Definitive Purchase Agreement, and all documents
and instruments related thereto, (ii) an Officers' Certificate from the
Company certifying that the Definitive Purchase Agreement is in full
force and effect on the Final Takedown Closing Date and no material
term or condition thereof has been amended, modified or waived from the
form delivered to the Agent prior to the execution thereof except with
the prior written consent of the Agent (which consent shall not be
unreasonably withheld or delayed) and (iii) an Officers' Certificate
from the Company to the effect that each party to the Definitive
Purchase Agreement has performed or complied with all agreements and
conditions contained therein and any agreements or documents related
thereto to be performed or complied with on or before the Final
Takedown Closing Date, and no party is in default in the performance or
compliance with any of the terms or provisions thereof; and
(2) the Definitive Purchase Agreement shall be in form and substance
reasonably satisfactory to the Agent.
(3) the funds contemplated to be made available to the Borrower under
the New Senior Credit Facility in connection with the Acquisition shall have
been made available and the Acquisition shall have been consummated concurrently
with the consummation of the Subsequent Transactions.
(4) All existing senior bank indebtedness and publicly issued senior
indebtedness of the Apparel Fabric Business shall have been repaid in full on or
prior to the Final Takedown Closing Date other than Indebtedness set forth on
Schedule H.
SECTION 4 REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to make
the Bridge Loan, the Company and the Borrower represent and warrant to the
Lenders that the following statements are true and correct; it being understood
that representations and warranties made pursuant to this Section 4, insofar as
relating to the Acquired Assets and insofar as made on or before the Initial
Takedown Closing Date, are being made only to the best knowledge of the Company
and the Borrower based on publicly available sources of information.
4.1 Organization and Good Standing; Capitalization
(a) Each of the Company and the Subsidiaries is a corporation duly
organized and existing and in good standing under the laws of its jurisdiction
of incorporation. Each of the Company and its Subsidiaries has the corporate
power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted and is duly qualified
as a foreign corporation and in good standing in all jurisdictions in which it
is doing business, except where failure to be so qualified or in good standing,
singly or in the aggregate, has not had and will not have a Material Adverse
Effect.
38
(b) All of the Subsidiaries of the Company in existence on the date of
this Agreement are identified and their respective ownership structure and
jurisdiction of incorporation disclosed in Schedule B. The Capital Stock of each
of the Subsidiaries of the Company identified in Schedule B is duly authorized,
validly issued, fully paid and nonassessable and none of such capital stock
constitutes Margin Stock.
(c) All of the Voting Stock of the Borrower is beneficially owned by
the Company free and clear of all Liens other than Liens granted to secure the
Senior Credit Facility.
4.2 Authorization and Power
Each of the Company and its Subsidiaries has the corporate power and
requisite authority, and, to the extent a party thereto, has taken all corporate
action necessary, to consummate the Transactions and to execute, deliver and
perform its obligations under the Loan Documents, the Senior Credit Facility,
the Purchase Agreement and each other document and instrument to be executed,
delivered or performed by it in connection with the Transactions.
4.3 No Conflicts or Consents
(a) The execution, delivery and performance of the Loan Documents, the
Senior Credit Facility, the Purchase Agreement and each other document and
instrument to be executed, delivered or performed by it in connection with the
Transactions, the consummation of each of the transactions herein or therein
contemplated and, the compliance with each of the terms and provisions hereof or
thereof, do not and will not (i) violate any Law applicable to any of the
Company and its Subsidiaries, the charter or bylaws of any of them or any
judgment, order, writ or decree of any Tribunal binding on any of them, (ii)
conflict with, result in a breach of or constitute (with due notice or lapse of
time or both) a default under any Contractual Obligation of any of the Company
and its Subsidiaries which could reasonably be expected to result in a Material
Adverse Effect (iii) result in or require the creation or imposition of any Lien
upon any of the properties or assets of any of the Company and its Subsidiaries
(other than any Liens created under the Senior Credit Facility) or (iv) require
any approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any of the Company and its Subsidiaries except for
such approvals or consents which have been obtained and disclosed in writing to
the Agent or such approvals or consents the failure to obtain which could not
reasonably be expected to singly or in the aggregate result in a Material
Adverse Effect.
(b) No consent, approval, authorization or order of any Tribunal or
other Person is required in connection with the execution and delivery by the
Company or any of its Subsidiaries of the Loan Documents, the Senior Credit
Facility, the Purchase Agreement or any other document or instrument to be
delivered in connection with the Transactions or the consummation of the
transactions contemplated hereby or thereby, other than any such consent,
approval, authorization or order which has been obtained and remains in full
force and effect or which has been waived in writing by the Agent on behalf of
the Lenders or the failure of which to obtain would not, singly or in the
aggregate, have a Material Adverse Effect.
39
4.4 Enforceable Obligations
Each of the Loan Documents, the Purchase Agreement, the Senior Credit
Facility and each other document or instrument to be delivered in connection
therewith has been duly authorized; each of the Loan Documents, the Purchase
Agreement, the Senior Credit Facility and each other document or instrument to
be delivered in connection therewith to be executed and delivered on or prior to
the date hereof has been duly executed and delivered by the Borrower and each of
the Guarantors that are a party thereto; and each of the Loan Documents, the
Purchase Agreement, the Senior Credit Facility and each other document or
instrument to be delivered in connection therewith to be executed and delivered
on or prior to the date hereof is, and each of the Loan Documents, the Purchase
Agreement, the Senior Credit Facility and each other document or instrument to
be delivered in connection therewith to be executed and delivered after the
Initial Takedown Closing Date or Final Takedown Closing Date, as the case may
be, will be, upon such execution and delivery, the legal, valid and binding
obligations of the Borrower and each of the Guarantors (to the extent a party
thereto), enforceable in accordance with their respective terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
4.5 Properties: Liens
The Company and each of its Subsidiaries has, and after consummation of
the Transactions will have, good, sufficient and legal title to all their
respective properties and assets, and all properties held under lease by any of
them, are, and immediately after the consummation of the Transactions will be,
held under valid, subsisting and enforceable leases, and none of the Company or
its Subsidiaries and, to the knowledge of the Company, any other party thereto,
is in default under any lease, except in each case for such defects or defaults
that, singly or in the aggregate, would not have a Material Adverse Effect. All
such properties and assets owned or leased are so owned or leased free and clear
of Liens other than Permitted Liens.
4.6 Financial Condition
(a) The audited consolidated balance sheets of the Company and its
Subsidiaries at September 27, 1997 and September 28 1996 and the related
consolidated statements of income, shareholders equity and cash flows of the
Company and its Subsidiaries for the three-year period ended September 27, 1997,
certified by the independent certified public accountants of the Company, copies
of which have been delivered to the Agent, were prepared in accordance with
GAAP, have been prepared from, and are consistent with, the books and records of
the Company and its Subsidiaries, respectively, and fairly present in all
material respects the consolidated financial position of the Company and its
Subsidiaries, respectively, as at the respective dates thereof and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries, respectively, for the periods then ended. None of the Company or
any of its Subsidiaries had at September 27, 1997 any material contingent
liabilities, liabilities for Taxes or long-term leases, unusual forward or
long-term commitments or unrealized or unanticipated losses from any unfavorable
commitments which are not reflected or reserved against in the
40
foregoing statements or in the notes thereto which are of a type required by
GAAP to be reflected in financial statements or the notes thereto which are not
so reflected. No events which have had or could reasonably be expected to have a
Material Adverse Effect have occurred since September 27, 1997 except as
reflected therein.
(b) Upon giving effect to the Transactions:
(i) The fair saleable value of the assets of the Company and
each of its Subsidiaries, on a stand-alone basis, exceeds the amount
that will be required to be paid on or in respect of the existing debts
and other liabilities (including contingent liabilities) of such Person
as they mature.
(ii) The assets of each of the Company and each of its
Subsidiaries, on a stand-alone basis, do not constitute unreasonably
small capital for any such Person to carry out its business as now
conducted and as proposed to be conducted including the capital needs
of any such Person, taking into account the particular capital
requirements of the business conducted by such Person, and projected
capital requirements and capital availability thereof.
(iii) The Company does not intend to, and will not permit any
of its Subsidiaries to, incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of debt of each of such Person).
The cash flow of the Company and each of its Subsidiaries, after taking
into account all anticipated uses of the cash of each such Person, will
at all times be sufficient to pay all amounts on or in respect of debt
of each such company when such amounts are required to be paid.
(iv) The Company does not intend, and does not believe, that
final judgments against any of the Company or its Subsidiaries in
actions for money damages will be rendered at a time when, or in an
amount such that, any such Person will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account
the maximum reasonable amount of such judgments in any such actions and
the earliest reasonable time at which such judgments might be
rendered). The cash flow of the Company and each of its Subsidiaries,
on a stand-alone basis, after taking into account all other anticipated
uses of the cash of each such Person (including the payments on or in
respect of debt referred to in paragraph (iii) of this Section 4.6(b)),
will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.
4.7 Full Disclosure
The financial projections (including, without limitation, the pro forma
financial statements included therewith) heretofore furnished to the Agent by
the Company were prepared by or under the direction of an officer of the Company
and were prepared in good faith on the basis of information and assumptions that
the Company believed to be fair and reasonable as of the date of such
information, and which assumptions are believed to be fair and reasonable as of
the date hereof. All other factual information heretofore or contemporaneously
furnished in
41
writing by or on behalf of the Company or any of its Subsidiaries to the Agent
or Lenders for purposes of or in connection with the Loan Documents, the
Purchase Agreement, the Senior Credit Facility and all exhibits and appendices
thereto does not contain any untrue statement by such party or, to its
knowledge, any other party of a material fact or omit to state any material fact
necessary to keep the statements made by such party or, to its knowledge, any
other party contained herein or therein from being misleading in a material
respect. No fact is known, no condition exists nor has any event occurred which
has not been disclosed herein or in any other document, certificate or statement
furnished to the Agent or the Lenders for use in the transactions contemplated
hereby which, singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.8 No Default
No event has occurred and is continuing which constitutes a Potential
Event of Default or an Event of Default.
4.9 Compliance with Contracts, Etc.
None of the Company or any of its Subsidiaries is in violation of its
charter, by-laws or other organizational documents, and no Event of Default or
event that but for the giving of notice or the lapse of time, or both, would
constitute an Event of Default on the part of the Company or any of its
Subsidiaries exists under any material Contractual Obligation which would have a
Material Adverse Effect.
4.10 No Litigation
There is no Litigation pending or, to the best knowledge of the Company
after due investigation, threatened, by, against, or which may relate to or
affect (a) any benefit plan or any fiduciary or administrator thereof, (b) the
Transactions, or (c) the Company or any of its Subsidiaries, or the Acquired
Assets, which singly or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. There are no outstanding injunctions or restraining
orders prohibiting consummation of any of the Transactions or any other
transactions contemplated by the Loan Documents, the Purchase Agreement or the
Senior Credit Facility. Neither the Company nor any of its Subsidiaries is in
default with respect to any judgment, order, writ, injunction or decree of any
Tribunal, and there are no unsatisfied judgments against the Company or any of
its Subsidiaries or their respective businesses or properties. None of the
Company or any of its Subsidiaries has been advised that there is a reasonable
likelihood of an adverse determination of any Litigation which adverse
determination, should it occur, would have a Material Adverse Effect.
4.11 Use of Proceeds; Margin Stock, Etc.
The proceeds of the Bridge Loan will be used solely for the purposes
specified herein. None of such proceeds will be used in violation of Regulation
G, T, U or X. Neither the Company nor any of its Subsidiaries has taken or will
take any action which might cause any of
42
the Loan Documents to violate the applicable provisions of Regulation G, T, U or
X, or any other regulation of the Board of Governors of the Federal Reserve
System.
4.12 Taxes
All material Tax Returns, foreign and domestic, required to be filed by
the Company and each of its Subsidiaries in any jurisdiction have been filed,
and all material Taxes for which they are directly or indirectly liable or to
which any of their respective properties or assets are subject have been paid
prior to the time that such Taxes could give rise to a Lien thereon other than
Taxes being contested in good faith and for which adequate reserves have been
established in accordance with GAAP. There is no material proposed tax
assessment against the Company or any of its Subsidiaries, and, to the best
knowledge of the Company, there is no basis for such assessment, except for
Contested Claims.
4.13 ERISA
A. No ERISA Events have occurred or are reasonably expected to occur
which individually or in the aggregate resulted in or might reasonably be
expected to result in a liability of the Company or any of its Subsidiaries or
any of their respective ERISA Affiliates which would reasonably be expected to
have a Material Adverse Effect.
B. In accordance with the most recent actuarial valuations, the Amount
of Unfunded Benefit Liabilities individually or in the aggregate for all Pension
Plans (excluding for purposes of such computation any Pension Plans which have a
negative Amount of Unfunded Benefit Liabilities), is not an amount which would
reasonably be expected to have a Material Adverse Effect.
C. Neither the Company nor any of its Subsidiaries has incurred or is
reasonably expected to incur any liability with respect to any Foreign Plan or
Foreign Plans which individually or in the aggregate has or would reasonably be
expected to have a Material Adverse Effect.
4.14 Compliance with Law
The Company and each of its Subsidiaries is in compliance with all
Laws, except where the failure to comply, singly or in the aggregate, would not
have a Material Adverse Effect.
4.15 Government Regulation
Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Investment Company Act of 1940 (as any of the preceding acts have
been amended) or other Law which regulates the Incurrence by the Company or any
of its Subsidiaries of indebtedness, including, but not limited to, Laws
relating to common contract carriers or the sale of electricity, gas, steam,
water or other public utility services.
43
4.16 Intellectual Property
A. The Company and its Subsidiaries own or are licensed to use all
Intellectual Property necessary to permit the operation of their businesses as
currently conducted except where the failure to own or license the use of such
Intellectual Property does not, singly or in the aggregate, have a Material
Adverse Effect.
B. To the Company's knowledge, no material claim has been asserted by
any Person with respect to the use of any such Intellectual Property, or
challenging or questioning the validity or effectiveness of any such
Intellectual Property. To the Company's knowledge, the use of such Intellectual
Property by the Company or any of its Subsidiaries does not infringe on the
rights of any Person, subject to such claims and infringements as do not, singly
or in the aggregate, have a Material Adverse Effect. The consummation of the
Transactions will not in any material manner or to any material extent impair
the ownership of (or the license to use, as the case may be) of such
intellectual property by the Company or any of its Subsidiaries.
4.17 Environmental Matters
Except as set forth on Schedule F or in the Dominion Public Filings,
and after giving effect to the Transactions:
(i) the operations of each of the Company and its Subsidiaries
(including, without limitation, as the term is used throughout this
Section 4.17, all operations and conditions at or in the Facilities)
comply in all material respects with all Environmental Laws except for
any such noncompliance which would not reasonably be expected to have a
Material Adverse Effect;
(ii) each of the Company and its Subsidiaries has obtained all
Permits under Environmental Laws necessary to their respective
operations, and all such Permits are being maintained in good standing,
and each of the Company and its Subsidiaries is in compliance with all
material terms and conditions of such Permits except for any such
failure to obtain, maintain or comply which would not reasonably be
expected to have a Material Adverse Effect;
(iii) none of the Company or its Subsidiaries has received (a)
any notice or claim to the effect that it is or may be liable to any
Person under any Environmental Law, including without limitation, any
relating to any Hazardous Materials except as would not reasonably be
expected to have a Material Adverse Effect or (b) any letter or request
for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9604) or
comparable foreign or state laws regarding any matter which could
reasonably be expected to result in a Material Adverse Effect, and, to
the best of the Company's knowledge, none of the Company or its
Subsidiaries is involved in any investigation, response or corrective
action relating to or in connection with any Hazardous Materials at any
Facility or at any other location except for such of the foregoing
which would not reasonably be expected to have a Material Adverse
Effect;
44
(iv) none of the Company or its Subsidiaries is subject to any
judicial or administrative proceeding alleging the violation of or
liability under any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse Effect;
(v) none of the Company or its Subsidiaries or any of their
respective Facilities or operations are subject to any outstanding
written order or agreement with any governmental authority or private
party relating to (a) any actual or potential violation of or liability
under Environmental Laws or (b) any Environmental Claims except for
such of the foregoing which would reasonably be expected to have a
Material Adverse Effect;
(vi) none of the Company or its Subsidiaries has any
contingent liability in connection with any Release or threatened
Release of any Hazardous Materials by any of the Company or its
Subsidiaries except for such of the foregoing which would not
reasonably be expected to have a Material Adverse Effect;
(vii) to the best of the Company's knowledge, none of the
Company or its Subsidiaries or any predecessor of any of the Company or
its Subsidiaries has filed any notice under any Environmental Law
indicating past or present treatment, storage or disposal of hazardous
waste, as defined under 40 C.F.R.
Parts 260-270 or any state equivalent;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that would reasonably be expected to give rise to
an Environmental Claim having a Material Adverse Effect, and none of
the Company or its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials that would reasonably be expected to
give rise to an Environmental Claim having a Material Adverse Effect;
(ix) none of the Company or its Subsidiaries or, to the best
of the Company's knowledge, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that would reasonably
be expected to give rise to an Environmental Claim having a Material
Adverse Effect;
(x) to the best of the Company's knowledge, no underground
storage tanks or surface impoundments are on or at any Facility; and
(xi) no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility or other assets of the Company or any of its
Subsidiaries except for any such Lien which would not reasonably be
expected to have a Material Adverse Effect.
Notwithstanding anything in this Section 4.18 to the contrary, no event or
condition has occurred which may interfere with present compliance by the
Company or the Guarantors with any Environmental Law, or which may give rise to
any liability under any Environmental Law,
45
including, without limitation, any matter disclosed on Schedule F which,
individually or in the aggregate, has had a Material Adverse Effect.
4.18 Survival of Representations and Warranties
Subject to Section 12.10(B), all representations and warranties in the
Loan Documents shall survive delivery of the Bridge Notes and the making of the
Bridge Loan and shall continue until one year after repayment of the Bridge
Notes and the Obligations, and any investigation at any time made by or on
behalf of the Lenders shall not diminish the Lenders' right to rely thereon.
4.19 Permits
The Company and its Subsidiaries have, and immediately after the
consummation of the Transactions will have, such certificates, permits,
licenses, franchises, consents, approvals, authorizations and clearances
("Permits"), and are (and will be immediately after the consummation of the
Transactions) in compliance in all material respects with all Laws as are
necessary to own, lease or operate their respective properties and to conduct
their businesses in the manner as presently conducted and to be conducted
immediately after the consummation of the Transactions except where the failure
to have such Permits or to comply with such Laws would not, singly or in the
aggregate, have a Material Adverse Effect, and all such Permits are valid and in
full force and effect and will be valid and in full force and effect immediately
upon consummation of the Transactions. The Company and its Subsidiaries are, and
immediately after the consummation of the Transactions will be, in compliance in
all material respects with their respective obligations under such Permits and
no event occurred that allows, or after notice or lapse of time would allow,
revocation or termination of such Permits, except for any such revocation or
termination as would not, singly or in the aggregate, have a Material Adverse
Effect.
4.20 Insurance
in connection with any of the Pension Plans or any Multiemployer Plans
which have resulted in or could be reasonably expec-insurance) in such amounts
and covering such risks as is generally maintained by companies of established
repute engaged in the same or similar businesses, and all such insurance is (and
will be immediately after the consummation of the Transactions) in full force
and effect, except where the failure to carry such insurance or be entitled to
the benefits of such insurance does not, singly or in the aggregate, have a
Material Adverse Effect.
4.21 Labor Matters
No labor disturbance by the employees of the Company and its
Subsidiaries exists or, to the best knowledge of the Company, is threatened and
the Company is not aware of any existing or imminent labor disturbance by the
employees of the Company's or its Subsidiaries' principal suppliers,
manufacturers or customers that could, singly or in the aggregate, have a
Material Adverse Effect.
46
4.22 Guarantees
Each Guarantor shall, on the date it executes and delivers a Guarantee
hereunder, have the full corporate power, authority and capacity to execute and
deliver such Guarantee and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute such Guarantee as a valid and legally binding obligation of such
Guarantor enforceable in accordance with its terms shall have been done and
performed and shall have occurred in due compliance with all Laws; on the date
of such execution and delivery, the execution, delivery and performance of such
Guarantee by such Guarantor will not (i) violate any Law or the charter or
bylaws of such Guarantor, or (ii) result in a breach of, a default under
(including, without limitation, any event which with notice or lapse of time, or
both, would constitute a breach of or a default under), or the creation of any
Lien on the properties or assets of such Guarantor, the Company or any other
Subsidiary of the Company under any Contract to which such Guarantor or the
Company or any other Subsidiary of the Company is a party or by which the
properties or assets of such Guarantor, the Company or any other Subsidiary of
the Company may be bound or affected; on the date of such execution and
delivery, each Guarantee executed and delivered by a Guarantor shall constitute
legal, valid, binding and unconditional obligations of the Guarantor executing
and delivering it to the Lenders hereunder, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance reorganization or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law); and the foregoing
representations and warranties of the Company shall be deemed for all purposes
to have been made on each date when a Guarantee is delivered hereunder with
respect solely to that Guarantee and the Guarantor so issuing such Guarantee.
4.23 Senior Subordinated Indenture; Etc.
Each of the Company and the Guarantors shall (to the extent such
documents are executed), on the date it executes and delivers the Senior
Subordinated Indenture and the Exchange Notes (or the guarantees related
thereto, as the case may be), have the full corporate power, authority and
capacity to do so and to perform all of its obligations to be performed
thereunder; all corporate and other acts, conditions and things required to be
done and performed or to have occurred prior to such execution and delivery to
constitute them as valid and legally binding obligations of the Company
enforceable against the Company and the Guarantors in accordance with their
respective terms except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization or similar laws affecting the enforcement of creditors' rights
generally or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), shall have been
done and performed and shall have occurred in due compliance with all applicable
Laws; on the date, if any, of such execution and delivery by the Company and the
Guarantors, the Senior Subordinated Indenture and the Exchange Notes (and the
guarantees) shall constitute legal, valid, binding and unconditional obligations
of the Company and the Guarantors, as the case may be, enforceable against the
Company and the Guarantors, as the case may be, in accordance with their
respective terms, except to the extent
47
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization or similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
4.24 Broker's or Finder's Fees
No broker's or finder's fees or commissions will be payable by the
Company or any of its Subsidiaries with respect to any transaction contemplated
by any of the Loan Documents, the Purchase Agreement or the Senior Credit
Facility and no similar fees or commissions will be payable by the Company or
any of its Subsidiaries for any other services rendered to the Company or any of
its Subsidiaries in connection with the transactions contemplated hereby and
thereby, except for fees or commissions payable to Chase Securities, Inc. and
CIBC Wood Gundy Securities, Inc., which fees and commissions will not exceed
$10,000,000 in the aggregate. The Company represents, warrants, covenants and
agrees that the Company will indemnify the Lenders and the Agent against, and
hold each of them completely harmless from and against, any and all claims,
demands or liabilities for broker's or finder's fees or similar fees or
commissions asserted to have been incurred in connection with any of the Loan
Documents, the Purchase Agreement or the Senior Credit Facility or any of the
transactions contemplated thereunder.
SECTION 5 AFFIRMATIVE COVENANTS
The Company covenants and agrees that, until the Bridge Loan and the
Bridge Notes and all other amounts due under this Agreement have been
indefeasibly paid in full it shall, and shall cause each of its Subsidiaries to,
perform all covenants in this Section 5 required to be performed by it:
5.1 Financial Statements and Other Reports
The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. The Company will deliver to each Lender and
the Agent:
(i) as soon as available and in any event within 45 days after
the end of each of the first three fiscal quarters of each fiscal year,
(1) the consolidated balance sheets of the Company and its Subsidiaries
as at the end of such fiscal quarter, (2) the related consolidated
statements of income, stockholders' equity and cash flows for such
fiscal quarter and for the period from the beginning of the then
current fiscal year to the end of such fiscal quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding periods of the previous fiscal year and the corresponding
figures from the consolidated plan and financial forecast for the
current fiscal year delivered pursuant to Section 5.1(x), all in
reasonable detail and certified by the chief financial officer or the
controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries at
the dates
48
indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustments, and (3) the company's quarterly report on
Form 10-Q for such quarterly period, and (4) only if the Company does
not file quarterly reports on Form 10-Q with the Commission, a
narrative report describing the operations of the Company and its
Subsidiaries (in the form of management's discussion and analysis of
such operations which would comply with the disclosure requirements of
the Exchange Act and rules and regulations promulgated thereunder with
respect to management's discussion and analysis set forth in quarterly
reports on Form 10-Q) prepared for such fiscal quarter and for the
period from the beginning of the then current fiscal year to the end of
such fiscal quarter;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year, (1) the consolidated balance sheets
of the Company and its Subsidiaries as at the end of such fiscal year,
(2) the related consolidated statements of income, stockholders' equity
and cash flows for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the previous fiscal year
and the corresponding figures from the consolidated plan and financial
forecast for the current fiscal year delivered pursuant to section
5.l(ix) for the fiscal year covered by such financial statements, all
in reasonable detail and certified by the chief financial officer or
the controller of the Company that they fairly present in all material
respects the financial condition of the Company and its Subsidiaries,
at the dates indicated and the results of their operations and their
cash flows for the periods indicated, (3) the Company's annual report
on Form 10-K for such year, (4) only if the Company does not file
annual reports on Form 10-K with the Commission, a narrative report
describing the operations of the Company and its Subsidiaries (in the
form of management's discussion and analysis of such operations which
would comply with the disclosure requirements of the Exchange Act and
rules and regulations promulgated thereunder with respect to
management's discussion and analysis set forth in annual reports on
Form 10-K) prepared for such fiscal year, and (5) in the case of such
consolidated financial statements, a report thereon of independent
certified public accountants of recognized national standing, which
report shall be unqualified as to scope of audit, shall express no
doubts about the ability of the Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries as
at the dates indicated and the results of their operations and their
cash flows for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such accountants
in connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards;
(iii) as soon as available but in any event no more than
fifteen Business Days following the Final Takedown Closing Date and in
no event later than February 15, 1998, the audited annual financial
statements of the Apparel Fabric Business for the fiscal year ended
June 30, 1997;
49
(iv) together with each delivery of financial statements
pursuant to Sections 5.1(i) and (ii) above, (a) an Officers'
Certificate of the Company stating that the signers have reviewed the
terms of this Agreement and the Bridge Notes and have made, or caused
to be made under their supervision, a review in reasonable detail of
the transactions and condition of the Company and its Subsidiaries
during the accounting period covered by such financial statements and
that such review has not disclosed the existence during or at the end
of such accounting period, and that the signers do not have knowledge
of the existence as of the date of the Officers' Certificate, of any
condition or event which constitutes an Event of Default or Potential
Event of Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect
thereto; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance (as determined in accordance with GAAP) during and at
the end of such accounting periods with the restrictions contained in
Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.9 and 6.14;
(v) together with each delivery of consolidated financial
statements pursuant to Section (ii) above, a written statement by the
independent certified public accountants giving the report thereon (a)
stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Potential
Event of Default that relates to accounting matters has come to their
attention and, if any such condition or event has come to their
attention, specifying the nature and period of existence thereof;
provided that such accountants shall not be liable by reason of any
failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their
audit examination, and (b) stating that based on their audit
examination nothing has come to their attention that causes them to
believe that the information contained in the certificates delivered
therewith is not correct;
(vi) promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all reports in final form
(other than reports of a routine or ministerial nature which are not
material) submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit of
the financial statements of the Company and its Subsidiaries made by
such accountants, including, without limitation, any comment letter
submitted by such accountants to management in connection with their
annual audit;
(vii) promptly upon the sending or filing thereof, copies of
(a) all financial statements, reports, notices and proxy statements
sent or made available generally by the Company to their public
security holders or by any Subsidiary of the Company to its public
security holders other than the Company or another Subsidiary of the
Company, (b) all regular and periodic reports and all registration
statements (other than on Form S-8 or a similar form) and prospectuses,
if any, filed by the Company or any of its Subsidiaries with any
securities exchange or with the Securities and Exchange Commission or
any governmental authority (other than reports of a routine or
ministerial nature which are not material), and (c) all press releases
and other statements made
50
available generally by the Company or any of its Subsidiaries to the
public concerning material developments in the business of the Company
or any of its Subsidiaries;
(viii) promptly upon any executive officer of the Company
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that
any Lender or Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default
under this Agreement, (b) that any Person has given any notice to the
Company or any Subsidiary of the Company or taken any other action with
respect to a claimed default or event or condition which might result
in an Event of Default referred to in Section 7.2, (c) of any condition
or event which would be required to be disclosed in a current report
filed with the Commission on Form 8-K whether or not the Company is
required to file such reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or evidences, either
in any case or in the aggregate, a Material Adverse Effect, an
Officers' Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed default,
Event of Default, Potential Event of Default, event or condition, and
what action the Company has taken, is taking and proposes to take with
respect thereto;
(ix) promptly upon any executive officer of the Company
obtaining knowledge of (X) the institution of, or non-frivolous threat
of, any action, suit, proceeding (whether administrative, judicial or
otherwise), Environmental Claim, governmental investigation or
arbitration against or affecting the Company or any of its Subsidiaries
or any property of the Company or any of its Subsidiaries not
previously disclosed in writing by the Company to Lenders or (Y) any
material development in any Proceeding that, in any case:
(1) if adversely determined, has a reasonable
possibility of giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result
of, the Transactions;
written notice thereof together with such other information as may be
reasonably available to the Company or any of its Subsidiaries to
enable Lenders and their counsel to evaluate such matters;
(x) as soon as practicable but in any event no later than 45
days following the first day of each fiscal year a forecast for each of
the next succeeding twelve months of the consolidated balance sheet and
the consolidated statements of income, cash flow and cash position of
the Company and its Subsidiaries, together with an outline of the major
assumptions upon which the forecast is based; provided, however, that
for fiscal 1998 such forecast may be for the four fiscal quarters.
Together with each delivery of financial statements pursuant to
Sections 5.1(i) and (ii) above, the Company shall deliver
51
a comparison of the current year to date financial results against the
budget required to be submitted pursuant to this Section;
(xi) in writing, promptly upon an executive officer of the
Company obtaining knowledge that the Company or any of its Subsidiaries
has received notice or otherwise learned of any Environmental Claim or
other claim, demand, action, event, condition, report or investigation
indicating any potential or actual liability arising in connection with
(x) the non-compliance with or violation of the requirements of any
Environmental Law which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (y) the
release, threatened release or presence of any Hazardous Material in
the environment which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or which
the Company or any of its Subsidiaries would have a duty to report to a
tribunal under an Environmental Law, or (z) the existence of any
Environmental Lien on any properties or assets of the Company or any of
its Subsidiaries;
(xii) promptly after the availability thereof, copies of all
material amendments to the certificate of incorporation or by-laws of
the Company or any of its Subsidiaries; and
(xiii) promptly upon any Person becoming a Subsidiary of the
Company, a written notice setting forth with respect to such person (a)
the date on which such person became a Subsidiary of the Company and
(b) all of the data required to be forth in Schedule B with respect to
all Subsidiaries of the Company; and
(xiv) with reasonable promptness such other information and
data with respect to the Company or any of its Subsidiaries or any of
their respective property, business or assets as from time to time may
be reasonably requested by any Lender; provided that no information or
data shall be required to be delivered hereunder or under any other
provision of this Agreement if it would violate any applicable
attorney-client or accountant-client privilege.
5.2 Corporate Existence, Etc.
The Company will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises to its business and
those of each of its Subsidiaries, except as permitted by Section 6.7 or where
the failure to so preserve or keep will not, singly or in the aggregate, have a
Material Adverse Effect.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. The Company will, and will cause each of its Subsidiaries to, pay
all material Taxes, assessments and other governmental charges imposed upon it
or any of its material properties or assets or in respect of any of its
franchises, business, income or property before any material penalty accrues
thereon, and all claims (including, without limitation, claims for labor,
services, materials and supplies) for sums which have become due and payable and
which by
52
law have or may become a Lien upon any of its properties or assets prior to the
time when any material penalty or fine shall be incurred with respect thereto;
provided that no such charge or claim need be paid if the validity or amount of
such charge or claim is being diligently contested in good faith and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor.
B. The Company will not, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income Tax Return with any
Person (other than the Company or any of its Subsidiaries so long as the filing
of such consolidated income Tax Return is permitted by applicable law)
5.4 Maintenance of Properties; Insurance
The Company will maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of the Company and its Subsidiaries
and from time to time promptly will make or cause to be made all necessary
repairs, renewals and replacements thereof; provided that nothing in this
Section 5.4 shall prevent the Company or any of its Subsidiaries from
discontinuing the use, operation or maintenance of any such properties, or
disposing of any of them, if such action is in the ordinary course of business
or, in the reasonable good faith judgment of the Company, necessary or desirable
in the conduct of its business or otherwise permitted by this Agreement. The
Company will maintain or cause to be maintained, with financially sound and
reputable insurers or with self insurance programs, in each case to the extent
consistent with prudent business practices and customary in its industry,
insurance with respect to its properties and business and the properties and
businesses of its Subsidiaries against loss or damage of the kinds (including,
in any event, business interruption insurance) and in the amounts customarily
carried or maintained under similar circumstances by corporations of established
reputation engaged in similar businesses and owning similar properties in the
same general respective areas in which the Company and its Subsidiaries operate.
5.5 Inspection
The Company shall permit any authorized representatives designated by
the Agent to visit and inspect any of the properties of the Company or its
Subsidiaries, including, without limitation, its and their financial and
accounting records, and to receive copies and extracts therefrom, and to discuss
its and their affairs, finances and accounts with its and their officers and
independent public accountants (provided that representatives of the Company or
any of its Subsidiaries may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested.
5.6 Equal Security for Bridge Loan
If the Company or any of its Subsidiaries shall create, assume or
suffer to exist any Lien upon any of their respective property or assets,
whether now owned or hereafter acquired, other than Liens permitted by the
provisions of Section 6.2, the Company shall make or cause to be
53
made effective provision whereby the Obligations under this Agreement will be
secured by such Lien equally and ratably with any and all other Indebtedness
thereby secured as long as any such Indebtedness shall be secured; provided that
this covenant shall not be construed as or deemed to be a consent by the Agent
to any violation of the provisions of Section 6.2; and provided, further, that
the Company shall under no circumstances be required to make or cause to be made
effective provision whereby the Obligations under this Agreement will be
secured, directly or indirectly, by Margin Stock.
5.7 Compliance with Laws, Etc.
The Company shall and shall cause each of its Subsidiaries to comply
with the requirements of all Laws, to the extent noncompliance, singly or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
5.8 Maintenance of Accurate Records, Etc.
The Company shall, and shall cause each of its Subsidiaries to, keep
true books and records and accounts in which full and correct entries will be
made of all of its and their respective business transactions, and will reflect,
and cause each of its Subsidiaries to reflect, in its or their respective
financial statements adequate accruals and appropriations to reserves all in
accordance with GAAP and consistent with prior business practices.
5.9 Exchange of Bridge Notes
The Company will, at any time after the first anniversary of the
Initial Takedown Closing Date, on the fifth Business Day following the written
request (the "Exchange Request") of the holders of at least 10% of the aggregate
principal amount of Bridge Notes then outstanding:
(i) Execute and deliver, cause each Guarantor to execute and
deliver, and cause a bank or trust company acting as trustee thereunder
to execute and deliver, the Senior Subordinated Indenture containing
covenants, subordination provisions and other terms consistent with the
Bridge Notes, if such Senior Subordinated Indenture has not previously
been executed and delivered;
(ii) Execute and deliver to such holder or beneficial owner in
accordance with the Senior Subordinated Indenture a note in the form
attached to the Senior Subordinated Indenture (the "Exchange Notes") in
exchange for such Bridge Note dated the date of the issuance of such
Exchange Note, payable to the order of such holder or owner, as the
case may be, in the same principal amount as such Bridge Note (or
portion thereof) being exchanged, and cause each Guarantor to endorse
its guarantee thereon; and
(iii) Execute and deliver, and cause each Guarantor to execute
and deliver, to such holder or owner, as the case may be, a
Registration Rights Agreement containing terms as are generally set
forth in Exhibit IV hereto, if such Registration
54
Rights Agreement has not previously been executed and delivered or, if
such Registration Rights Agreement has previously been executed and
delivered and such holder or owner is not already a party thereto,
permit such holder or owner to become a party thereto.
The Exchange Request shall specify the principal amount of the Bridge
Notes to be exchanged pursuant to this Section 5.9 which shall be at least
$5,000,000 and integral multiples of $10,000 in excess thereof. Bridge Notes
delivered to the Company under this Section 5.9 in exchange for Exchange Notes
shall be canceled by the Company and the corresponding amount or the Bridge Loan
deemed repaid and the Exchange Notes shall be governed by and construed in
accordance with the terms of the Senior Subordinated Indenture.
The bank or trust company acting as trustee under the Senior
Subordinated Indenture shall at all times be a corporation organized and doing
business under the laws of the United States of America or the State of New
York, in good standing and having its principal offices in the Borough of
Manhattan, in The City of New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
Federal or State authority and which has a combined capital and surplus of not
less than $50,000,000.
5.10 ERISA Compliance
Each of the Company and its Subsidiaries will notify the Lenders
promptly upon becoming aware of any fact arising in connection with any of the
Pension Plans or any Multiemployer Plans which have resulted in or could be
reasonably expected to constitute or result in an ERISA Event, together with a
statement as to the action, if any, proposed to be taken with respect thereto.
5.11 Payments in U.S. Dollars
All payments of any Obligations to be made hereunder or under the
Bridge Notes by the Borrower or any other obligor with respect thereto shall be
made solely in U.S. Dollars or such other currency as is then legal tender for
public and private debts in the United States of America.
5.12 Register
The Borrower hereby designates the Agent to serve as the Borrower's
agent, solely for purposes of this Section 5.12, to maintain a register (the
"Register") on which it will record the Bridge Loan made by each of the Lenders
and each repayment in respect of the principal amount of the Bridge Loan of each
Lender. Failure to make any such recordation, or any error in such recordation
shall not affect the Borrower's obligations in respect of such Bridge Loan. With
respect to any Lender, the transfer of the Bridge Loan Commitments of such
Lender and the rights to the principal of, and interest on, any Loan made
pursuant to such Bridge Loan Commitments shall not be effective until such
transfer is recorded on the Register maintained by the Agent with respect to
ownership of such Bridge Loan Commitments and Bridge Loan and prior to such
recordation all amounts owing to the transferor with respect to such Bridge Loan
Commitments and Bridge Loan shall remain owing to the transferor. The
registration of assignment or transfer of all or part of any Bridge Loan
Commitments and Bridge Loan shall be
55
recorded by the Agent on the Register only upon the receipt by the Agent of a
properly executed and delivered assignment and assumption agreement pursuant to
Section 12.2A. Coincident with the delivery of such an assignment and assumption
agreement to the Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Note evidencing such Loan, and thereupon
one or more new Bridge Notes of the same type and in the same aggregate
principal amount shall be issued to the assigning or transferor Lender and/or
the new Lender
5.13 Lenders Meeting
The Company will participate in a meeting with the Lenders once during
each fiscal year during which any Obligations are outstanding hereunder to be
held at a location and a time selected by the Company and reasonably
satisfactory to the Lenders.
5.14 Additional Guarantors
The Company will cause any Person which becomes a Wholly-Owned
Subsidiary of the Company that is organized under the laws of the United States
or any state or commonwealth thereof or under the laws of the District of
Columbia (whether by creation, acquisition or otherwise) to execute and deliver
a guarantee, in form and substance satisfactory to the Agent (and with such
documentation relating thereto as the Agent shall require, including, without
limitation, a supplement or amendment to this Agreement and opinions of counsel
as to the enforceability of such guarantee) pursuant to which such Wholly-Owned
Subsidiary shall become a Guarantor under the Bridge Notes and this Agreement in
accordance with Section 10 with the same effect and to the same extent as if
such Person had been named herein as a Subsidiary Guarantor.
5.15 Marketing Take-Out Securities
If requested by FUCMC, the Company will make appropriate officers of
the Company and its Subsidiaries available to FUCMC for meetings with
prospective purchasers of the Take-Out Securities and preparing and presenting
to potential investors road show material in a manner consistent with other new
issuances of high yield debt securities.
5.16 Environmental Matters
(i) The Company shall and shall cause each of its Subsidiaries
(including, without limitation, all operations and conditions at or in
the Facilities) to comply with all applicable Environmental Laws and to
maintain and comply with the terms of all Permits under Environmental
Laws necessary to their respective operations.
(ii) The Company shall and shall cause each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) promptly to conduct and complete
all notifications, investigations, studies, sampling and testing, and
all remedial, cleanup, removal and other actions, required under
applicable Environmental Laws.
56
(iii) The Company shall and shall cause each of its
Subsidiaries (including, without limitation, all operations and
conditions at or in the Facilities) to limit the presence of Hazardous
Materials to those Hazardous Materials that are necessary to the normal
operation of a textiles business.
SECTION 6 NEGATIVE COVENANTS
The Company covenants and agrees that until the satisfaction in full of
the Bridge Loan and the Bridge Notes and all other Obligations due under this
Agreement it will fully and timely perform all covenants in this Section 6.
6.1 Indebtedness
The Company shall not, and shall not cause or permit any of the
Subsidiaries, directly or indirectly, to incur, or remain or become directly or
indirectly liable with respect to, any Indebtedness, except for the following
("Permitted Indebtedness"):
(i) Indebtedness under the Bridge Notes, the Exchange Notes
and the Guarantees;
(ii) Indebtedness (A) of up to $218,000,000 incurred pursuant
to the Existing Senior Credit Facility or (B) upon termination of, and
repayment in full of all amounts due under the Existing Senior Credit
Facility, Indebtedness of up to $470,000,000 in the aggregate at any
one time outstanding under the New Senior Credit Facility, in each
case, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction)
thereunder;
(iii) other Indebtedness of the Company and its Subsidiaries
described in Schedule H whether or not outstanding on the Initial
Takedown Closing Date reduced by the amount of any scheduled
amortization payments or mandatory prepayments when actually paid or
permanent reductions thereon; provided, that the aggregate amount of
Indebtedness outstanding at any time under this clause (iii) shall not
exceed the aggregate amount of Indebtedness described in Schedule H.
(iv) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any of its Subsidiaries and Interest
Swap Obligations of any Subsidiary of the Company covering Indebtedness
of such Subsidiary or any Subsidiary of such Subsidiary; provided,
however, that such Interest Swap Obligations are entered into to
protect the Company and its Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with this Agreement and
the Senior Credit Facility to the extent the notional principal amount
of such Interest Swap Obligation does not exceed the principal amount
of the Indebtedness to which such Interest Swap Obligation relates;
(v) Indebtedness under the First Union Currency Agreement and
Indebtedness of the Company and its Subsidiaries under other Currency
Agreements; provided that in
57
the case of such other Currency Agreements which relate to
Indebtedness, such Currency Agreements do not increase the Indebtedness
of the Company and its Subsidiaries outstanding other than as a result
of fluctuations in foreign currency exchange rates or by reason of
fees, indemnities and compensation payable thereunder;
(vi) Indebtedness of a Subsidiary of the Company to the
Company or to a Subsidiary of the Company for so long as such
Indebtedness is held by the Company or a Subsidiary of the Company, in
each case subject to no Lien held by a Person other than the Company or
a Subsidiary of the Company; provided that if as of any date any Person
other than the Company or a Subsidiary of the Company owns or holds any
such Indebtedness or holds a Lien in respect of such Indebtedness, such
date shall be deemed the incurrence of Indebtedness not constituting
Permitted Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly-Owned Subsidiary
of the Company for so long as such Indebtedness is held by a
Wholly-Owned Subsidiary of the Company, subject to no Lien; provided
that (a) any Indebtedness of the Company to any Wholly-Owned Subsidiary
of the Company is unsecured and subordinated, pursuant to a written
agreement, to the Company's obligations under this Agreement and the
Bridge Notes and (b) if as of any date any Person other than a
Wholly-Owned Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of day-light overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is extinguished within two
business days of incurrence;
(ix) Indebtedness of the Company or any of its Subsidiaries
represented by letters of credit for the account of the Company or such
Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of
business; and
(x) Permitted Refinancing Indebtedness;
(xi) Additional Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount not to exceed $10,000,000
at any one time outstanding for Capital Lease Obligations or for
purposes of financing the purchase price or construction cost of
equipment, fixtures or similar property; and
(xii) At any time after the first anniversary of the Initial
Takedown Closing Date, if no Potential Event of Default with respect to
payment of principal of, or interest on, the Bridge Notes or Event of
Default shall have occurred and be continuing at the
58
time of or as a consequence of the incurrence of any such Indebtedness,
additional Indebtedness of the Company and its Subsidiaries if
immediately before and immediately after giving effect to the
incurrence of such Indebtedness the Consolidated Fixed Charge Coverage
Ratio of the Company would be greater than 2.0 to 1.0.
6.2 Liens
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of the
Company or of any of its Subsidiaries, whether now owned or hereafter acquired,
or assign or otherwise convey any right to receive any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute, other than the following
(collectively, the "Permitted Liens"):
(i) Liens for taxes, assessments or governmental charges or
claims either (a) not delinquent or (b) contested in good faith by
appropriate proceedings and as to which the Company or the Subsidiaries
shall have set aside on its books such reserves as may be required
pursuant to GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for
sums not yet delinquent or being contested in good faith, if such
reserve or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof;
(iii) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so
long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within
which such proceedings may be initiated shall not have expired;
(v) easements, rights-of-way zoning restrictions and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of the
business of the Company or any of the Subsidiaries;
59
(vi) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(vii) purchase money Liens to finance property or assets of
the Company or a Subsidiary acquired in the ordinary course of
business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and
shall not be secured by any property or assets of the Company or any
Subsidiary other than the property and assets so acquired and (B) the
Lien securing such Indebtedness shall be created within 90 days of such
acquisition;
(viii) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Person's obligations in
respect of bankers' acceptances issued or created for the account of
such Person to facilitate the purchase, shipment or storage of such
inventory or other goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(x) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or a Subsidiary, including rights of offset
and set-off;
(xi) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is incurred under this
Agreement or the Senior Credit Facility;
(xii) Liens securing Indebtedness under Currency Agreements;
(xiii) Liens granted to secure the Senior Credit Facility; and
(xiv) Liens whether or not existing on the Initial Takedown
Closing Date as set forth on Schedule A or Liens securing Indebtedness
described in Schedule H; provided, that each Lien described in Schedule
H does not extend to any property or assets other than the property and
assets of the Subsidiary that is the obligor with respect to the
Indebtedness secured by such Lien and Liens to secure any Permitted
Refinancing Indebtedness secured by a Lien set forth on Schedule A;
provided that such new Lien shall not extend to any property or assets
other than the property or assets set forth on Schedule A as securing
the Indebtedness refinanced or replaced by such Permitted Refinancing
Indebtedness.
6.3 Restricted Payments
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly (i) declare or pay any dividend (other
than dividends payable with respect to Permitted Preferred Stock), or make any
distribution, on any Capital Stock of the Company or its Subsidiaries (other
than dividends or distributions payable solely in Qualified Capital Stock
60
of the Company or dividends or distributions payable to the Company or any
Wholly-Owned Subsidiary of the Company), (ii) purchase, redeem or otherwise
acquire or retire for value any of the Capital Stock of the Company or any of
its Subsidiaries, or any warrants, rights or options to acquire shares of any
class of such Capital Stock or (iii) make any principal payment on, purchase,
defease, redeem, prepay, or otherwise acquire or retire for value, other than
any scheduled final maturity scheduled repayment or scheduled sinking fund
payment, any Subordinated Indebtedness or pari passu Indebtedness of the Company
or of a Subsidiary (any such dividend, distribution, purchase, redemption,
acquisition, retirement, defeasance or prepayment set forth in clauses (i), (ii)
and (iii) above a "Restricted Payment").
6.4 Investments
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, make or own any Investment in any
Person, other than the following (collectively, "Permitted Investments"):
(i) Investments by the Company or any Subsidiary of the
Company in any Person that is or will become immediately after such
Investment a Wholly-Owned Subsidiary of the Company or that will merge
or consolidate into the Company or a Wholly-Owned Subsidiary of the
Company;
(ii) Investments in the Company by any Subsidiary of the
Company; provided that any Indebtedness evidencing such Investment is
unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Bridge Notes;
(iii) Investments in cash and Cash Equivalents;
(iv) loans and advances to employees and officers of the
Company and its Subsidiaries in the ordinary course of business for
bona fide business purposes not in excess of $2,000,000 at any one time
outstanding;
(v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of the Company's or its Subsidiaries'
businesses and otherwise in compliance with this Agreement;
(vi) Investments in Wholly-Owned Subsidiaries;
(vii) Investments in securities of trade creditors or
customers received pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors
or customers;
(viii) Investments made by the Company or its Subsidiaries as
a result of consideration received in connection with an Asset Sale
made in compliance with Section 6.14;
(ix) The Company Junior Capital Contribution;
61
(x) The Acquisition;
(xi) Investments not to exceed $3,000,000 at any one time
outstanding; provided such Investments are made after the Initial
Takedown Closing Date.
6.5 Contingent Obligations
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create or become or remain liable with
respect to any Contingent Obligation, except:
(i) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations outstanding on the
Closing Date described in Schedule H and in respect of any Interest
Rate Agreements entered into with any lender under the Senior Credit
Facility or any of their respective Affiliates and any guarantees
thereof;
(ii) the Subsidiaries may become and remain liable with
respect to Contingent Obligations under the Guarantees;
(iii) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations in respect of customary
indemnification and purchase price adjustment obligations incurred in
connection with the Acquisition, additional acquisitions of assets or
stock, Asset Sales or other sales of assets; provided that the maximum
assumable liability in respect of all such obligations shall at no time
exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sales and other sales;
(iv) the Company and the Subsidiaries may become and remain
liable with respect to Contingent Obligations under guarantees made
under the Senior Credit Facility; and
(v) the Company and its Subsidiaries may become and remain
liable with respect to guarantees of Indebtedness or Contingent
Obligations of a Subsidiary of the Company and a Subsidiary of the
Company may become and remain liable with respect to guarantees of
Indebtedness or Contingent Obligations of the Company or a Subsidiary
of the Company.
6.6 Layering of Indebtedness
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, incur any Indebtedness that is by its terms (or by the terms of any
agreement governing such Indebtedness) subordinated in right of payment to any
other Indebtedness of the Company or of such Subsidiary unless such Indebtedness
is also by its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinate to the Bridge Notes and the Guarantees
to the same extent and in the same manner as the Bridge Notes and the Guarantees
are subordinated to the Senior Credit Facility, except for Indebtedness ranking
pari passu with
62
the Bridge Loan which is subordinate to the Senior Credit Facility to the same
extent and in the same manner as the Bridge Loan and the Guarantees.
6.7 Restriction on Fundamental Changes
Subject to Section 5.2 and other than the sale of 100% of a Subsidiary
of the Company in accordance with Section 2.4A(ii) (a) and Section 6.15, the
Company shall not, and shall not cause or permit any of the Subsidiaries to,
directly or indirectly, enter into any transaction, or series of related
transactions, of merger, amalgamation, consolidation or combination, or
consolidate, or liquidate, windup or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, lease, sublease, transfer or otherwise dispose
of, in one transaction or in a series of transactions, all or substantially all
of its business, property or assets, whether now owned or hereafter acquired,
except that any Subsidiary of the Company may be merged, amalgamated,
consolidated or combined with or into the Borrower or any Guarantor or be
liquidated, wound up or dissolved, or all or substantially all of its business,
property or assets may be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or in a series of transactions, to the Borrower
or to any Guarantor; provided that (A) no Potential Event of Default or Event of
Default shall have occurred and be continuing or would result therefrom, (B) in
the case of such a merger, amalgamation, consolidation or combination of the
Company or the Borrower and a Subsidiary of the Company, the Company or the
Borrower shall be the continuing or surviving corporation, and (C) the surviving
entity (I) continues to be bound as such under this Agreement or the Guarantee
of such Guarantor, as the case may be, and (II) executes and delivers to the
Agent immediately upon consummation of such transaction a written confirmation
or acknowledgment to such effect, in form and substance satisfactory to the
Agent, together with evidence of appropriate corporate power, authority and
action and a written legal opinion in form and substance satisfactory to the
Agent to the effect that this Agreement and such Guarantee continue to be a
legal, valid and binding obligation of such entity, enforceable against such
entity in accordance with its terms (subject to customary exceptions in respect
of bankruptcy, insolvency and other equitable remedies) and with respect to such
other matters as the Agent may reasonably request.
6.8 Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, create or otherwise cause or permit or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Subsidiary of the Company to (a) pay dividends or make any other
distributions on its Capital Stock or any other interest or participation in, or
measured by, such Subsidiary's profits; (b) make loans or advances or pay any
Indebtedness or other obligation owed to the Company or to any Subsidiary of the
Company; or (c) transfer any of its property or assets to the Company or to any
Subsidiary of the Company (any such restriction or encumbrance a "Payment
Restriction"), except for such encumbrances or restrictions existing under or by
reason of: (1) any restrictions contained in (i) the Loan Documents, the Senior
Subordinated Indenture and any instrument governing the Take-Out Securities or
Exchange Notes to the extent Incurred in accordance with this Agreement; (ii)
the Senior Credit Facility as in effect on the Initial Takedown Closing Date or
the Final Takedown Closing Date, as the case may be; (iii) the Indebtedness
pertaining to a Subsidiary of the Company that is not a Subsidiary of the
Company on the Initial Takedown Closing Date in existence at the time such
Subsidiary becomes a Subsidiary of the Company; provided that any such
Indebtedness was not incurred as a result of, in connection with or in
anticipation of the transaction pursuant to which such entity becomes a
Subsidiary of the
63
Company and it does not apply to any Person, or the properties of assets of any
Person, other than the Subsidiary acquired and such Indebtedness is otherwise
permitted to be incurred pursuant to Section 6.1; or (iv) secured Indebtedness
otherwise permitted to be incurred pursuant to Sections 6.1 and 6.2 that limits
the right of the debtor to dispose of the assets securing such Indebtedness; (2)
customary non-assignment provisions of any lease governing a leasehold interest
of any Subsidiary of the Company; (3) customary net worth provisions contained
in leases and other agreements entered into by a Subsidiary in the ordinary
course of business; (4) customary restrictions with respect to a Subsidiary
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary;
(5) applicable law; and (6) any instrument that Refinances any Indebtedness
effecting any such encumbrance or restriction pursuant to clause (1) above;
provided that the provisions relating to any such encumbrance or restriction in
any such instrument are not materially less favorable to the Company or its
Subsidiaries or the Lenders than those contained in the agreements referred to
in clause (1).
6.9 Transactions with Shareholders and Affiliates
The Company will not, and will not permit or cause any of the
Subsidiaries to, enter into any transaction (including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service)
with any officer, director, stockholder or other Affiliate of the Company or any
Subsidiary, except (a) as permitted by Section 6.4(iv) or (b) in the ordinary
course of its business and upon fair and reasonable terms that are no less
favorable to it than would obtain in a comparable arm's length transaction with
a Person other than an Affiliate of the Company or such Subsidiary.
6.10 Subsidiary Stock; Company Restrictions
(a) Except for any sale of 100% of the Capital Stock or other equity
securities of any of the Company's Subsidiaries in compliance with the
provisions of Section 6.7, the Company will not and will not permit any of the
Subsidiaries to directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of Capital Stock or other equity securities of
any of the Subsidiaries, except (i) to qualify directors if required by
applicable law, (ii) to the Company or to a Wholly-Owned Subsidiary of the
Company, (iii) Asset Sales made in compliance with this Agreement and (iv) Liens
in favor of the lenders under the Senior Credit Facility.
(b) The Company will not (i) hold any assets other than the Capital
Stock of the Borrower, (ii) have any liabilities other than (A) the liabilities
under the Loan Documents and the Senior Credit Facility, (B) tax liabilities in
the ordinary course of business, (C) loans and advances permitted under this
Agreement, (D) corporate, administrative and operating expenses in the ordinary
course of business and (iii) engage in any business other than (A) owning the
Capital Stock of the Borrower and activities incidental or related thereto and
(B) acting as a Guarantor hereunder and under the Senior Credit Facility.
64
6.11 Business Activities
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, materially alter the nature of the
consolidated business of the Company and its Subsidiaries from that in existence
immediately after giving effect to the Transactions.
6.12 Amendment or Waivers of Certain Documents
The Company shall not, and shall not cause or permit any of the
Subsidiaries to, directly or indirectly, enter into any amendment, modification
supplement or waiver with respect to the Senior Credit Facility as in effect on
the date hereof or, with respect to the New Senior Credit Facility, as set forth
in the form of the documents delivered to the Agent prior to the date hereof,
that would modify any of the provisions thereof or any of the definitions
relating thereof in a manner adverse to the Lenders.
6.13 Amendment to Charter Documents
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, amend its certificate of incorporation or bylaws in any respect
which could be materially adverse to the interests of the Lenders.
6.14 Asset Sales
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, consummate any Asset Sale unless (1)
the Company or such Subsidiary, as the case may be, receives consideration
therefor at the time thereof at least equal to the fair market value at the time
of such Asset Sale of the property, assets or stock that is the subject of such
Asset Sale, (2) at least 75% of the consideration received therefor by the
Company or such Subsidiary is in the form of cash or Cash Equivalents and (3)
all of the Net Cash Proceeds in respect thereof are applied by the Company or a
Subsidiary of the Company in accordance with Section 2.4A(ii)(a).
Nothing in this covenant shall be deemed to prevent the exercise of
remedies by secured creditors of the Company or any Subsidiary of the Company.
6.15 Transfer of Assets to Subsidiaries
The Company shall not, and shall not cause or permit any of its
Subsidiaries to, directly or indirectly, transfer (other than in the ordinary
course of business and other than pursuant to a Permitted Investment) any assets
or property to any Subsidiary of the Company that is not a Guarantor unless such
Subsidiary pays fair market value therefor to the Company or to any other
Guarantor and except as provided in Sections 6.3, 6.4, 6.5, 6.7 and 6.9. For
purposes of this Section 6.15, the fair market value paid by such Subsidiary
shall not consist in whole or in part of any securities or debt instruments of
such Subsidiary or of any Affiliate of such Subsidiary.
65
6.16 Sale and Leaseback Transactions
The Company will not, nor will it permit any Subsidiary to, directly or
indirectly, become or remain liable as lessee or as guarantor or other surety
with respect to any lease, whether an operating lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter
acquired, (a) which the Company or any Subsidiary has sold or transferred or is
to sell or transfer to a Person which is not the Company or any Subsidiary or
(b) which the Company or any Subsidiary intends to use for substantially the
same purpose as any other property which has been sold or is to be sold or
transferred by the Company or any Subsidiary to another Person which is not the
Company or any Subsidiary in connection with such lease; provided, however, that
this Section 6.16 will not apply to or prohibit the consummation of the
Darlington Sale and Leaseback Transaction.
SECTION 7 EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
7.1 Failure to Make Payments When Due
Failure to pay any installment of principal of the Bridge Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise (whether or not such payment is prohibited by Section 8); or failure
to pay any interest on the Bridge Loan or any other amount due under this
Agreement within five days or more after the date due (whether or not such
payment is prohibited by Section 8); or
7.2 Default in Other Agreements
Failure of the Company any of its Subsidiaries to pay at final maturity
principal on one or more issues of Indebtedness or Contingent Obligations of the
Company or of any of its Subsidiaries (other than Indebtedness referred to in
Section 7.1) or (B) breach or default by the Company or any of its Subsidiaries
with respect to any other term of any one or more issues of Indebtedness or
Contingent Obligations of the Company or of any of its Subsidiaries or any
agreement or instrument evidencing or securing such Indebtedness or Contingent
Obligations and such breach or default results in the acceleration of that
Indebtedness or Contingent Obligation prior to its stated maturity and, in any
case of (A) or (B), the principal amount of such Indebtedness or Contingent
Obligation and all other such Indebtedness or Contingent Obligations of the
Company and its Subsidiaries in respect of which there is such a failure to pay
principal or which has been so accelerated equals $5,000,000 or more; or
7.3 Breach of Certain Covenants
Failure of the Company or any Subsidiary to perform or comply with any
covenant, term or condition contained in Section 2.4A(ii), 2.4A(iv) or 5.2; or
66
7.4 Breach of Warranty
Any representation, warranty or certification made by the Company or
any Subsidiary in any Loan Document or in any statement or certificate at any
time given by the Company or any Subsidiary in writing pursuant hereto or
thereto or in connection herewith or therewith shall be false or incorrect in
any material respect on the date as of which made or deemed made; or
7.5 Other Defaults Under Agreement or Loan Documents
The Company or any Subsidiary shall default in the performance of or
compliance with any covenant, term or condition contained in this Agreement or
the other Loan Documents (other than those covered by Section 7.1, 7.3, 7.4,
7.10, or 7.11) and such default shall not have been remedied or waived in
accordance with this Agreement within 30 days after the date of written notice
from the holder or holders of not less than 25% in aggregate principal amount of
the Bridge Loan then outstanding of such default; or
7.6 Involuntary Bankruptcy; Appointment of Custodian, Etc.
A court of competent jurisdiction enters a Bankruptcy Order under any
Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary in an involuntary case or proceeding, or
(B) appoints a Custodian of the Company or any Material
Subsidiary for all or substantially all of its properties, or
(C) orders the liquidation of the Company or any Material
Subsidiary,
and in each case the order or decree remains unstayed and in
effect for 60 days.
7.7 Voluntary Bankruptcy; Appointment of Custodian, Etc.
The Company or any Material Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding, or
(B) consents to the entry of a Bankruptcy Order for relief
against it in an involuntary case or proceeding, or
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property, or
(D) makes a general assignment for the benefit of its
creditors or files a proposal or scheme of arrangement involving the
rescheduling or composition of its indebtedness, or
67
(E) consents to the filing of a petition in bankruptcy against
it, or
(F) shall generally not pay its debts when such debts become
due or shall admit in writing its inability to pay its debts generally.
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or similar process
involving in any individual case or in the aggregate at any time an amount in
excess of $5,000,000 (to the extent not covered by third-party insurance as to
which the insurance company has acknowledged coverage) shall be entered or filed
against the Company or any Subsidiary or any of their respective properties or
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days or in any event later than five days prior to the date of any
proposed sale thereunder; or
7.9 Dissolution
Any order, judgment or decree shall be entered against the Company or
any Material Subsidiary decreeing the dissolution or split-up of the Company or
that Material Subsidiary and such order shall remain undischarged or unstayed
for a period in excess of 30 days; or
7.10 Guarantee
(i) Any Guarantee or any provision thereof shall cease to be in full
force and effect (other than in accordance with its express terms), or (ii) any
Guarantor or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under its Guarantee, or (iii) any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed, after giving
effect to any applicable grace periods, pursuant to its Guarantee; or
7.11 ERISA
Any ERISA Event shall have occurred with respect to any Pension Plan or
Multiemployer Plan of the Company, its Subsidiaries or their respective ERISA
Affiliates; the Amount of Unfunded Benefit Liabilities, which, when added to the
aggregate Amount of Unfunded Benefit Liabilities with respect to all other
Pension Plans, exceeds the aggregate Amount of Unfunded Benefit Liabilities that
existed on the Closing Date; or any event shall have occurred with respect to
any Foreign Plan which results in a liability to the Company or any of its
Subsidiaries; and there shall result from any such event, events or underfunding
described above the imposition of a Lien or a liability or a material risk of
incurring a liability which Lien or liability in the opinion of the Agent or the
Required Lenders has had or could reasonably be expected to have a Material
Adverse Effect; or
7.12 Foreclosure
The agent under the Senior Credit Facility or any other party entitled
to act thereunder commences judicial proceedings to foreclose on the collateral
securing the Senior Credit Facility
68
or exercises any right under applicable law or any instrument evidencing a
security interest or other encumbrance in respect of such collateral to take
ownership or effect the transfer of such collateral in lieu of foreclosure.
7.13 Failure to Purchase Remaining Dominion Shares
Prior to the close of business on the second Business Day next
succeeding the Initial Takedown Closing Date, DT Acquisition (i) shall have
failed to provide the Depositary with sufficient funds to pay for all of the
Remaining Dominion Shares validly deposited with the Depositary prior to the
close of business on December 18, 1997 and (ii) shall not have prepaid the
Bridge Loan in full pursuant to Section 2.4A.
THEN (i) upon the occurrence of any Event of Default described in the
foregoing Sections 7.6 or 7.7, all of the unpaid principal amount of and accrued
interest on the Bridge Loan and all other outstanding Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by the Company, and the commitments of the Lenders hereunder shall,
thereupon terminate, (ii) upon the occurrence of any other Event of Default, the
Agent shall upon written notice of the holder or holders of a majority in
aggregate principal amount of the Bridge Loan then outstanding, by written
notice to the Company, the Borrower and the agent under the Senior Credit
Facility, declare all of the unpaid principal amount of and accrued interest on
the Bridge Loan and all other outstanding obligations to be, and the same shall
forthwith become, due and payable, and the obligations of the Lenders hereunder
shall thereupon terminate; provided that if any declaration of acceleration
under this Agreement occurs solely because an Event of Default set forth in
Section 7.2 has occurred and is continuing, such declaration of acceleration
shall be automatically annulled if the holders of the Indebtedness which is the
subject of such Event of Default have rescinded their declaration of
acceleration in respect of such Indebtedness within thirty days of such
acceleration of such Indebtedness and the Agent has received written notice
thereof within such time and if no other Event of Default has occurred during
such thirty-day period which has not been cured or waived in accordance with
this Agreement. Nevertheless, if at any time after acceleration of the maturity
of the Bridge Loan, the Borrower shall pay all arrears of interest and all
payments on account of the principal thereof which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement
or the Bridge Notes) and all Events of Default and Potential Events of Default
(other than non-payment of principal of and accrued interest on the Bridge Notes
due and payable solely by virtue of acceleration) shall be remedied or waived
pursuant to Section 12.6, then the Agent shall, upon written notice of the
holders of a majority in aggregate principal amount of the Bridge Loan then
outstanding, by written notice to the Company rescind and annul the acceleration
and its consequences; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right consequent thereon,
and (iii) upon the occurrence of any Event of Default (other than any Event of
Default set forth in Section 7.6 or 7.7) and for so long as it shall be
continuing, the Agent shall have, in addition to the rights and remedies set
forth herein or otherwise available to it, the right to appoint one
representative to serve as a Director on the Borrower's Board of Directors.
69
SECTION 8 SUBORDINATION
8.1 Obligations Subordinated to Senior Indebtedness of the Borrower
The Lenders covenant and agree that payments in respect of the
Obligations by the Borrower shall be subordinated in accordance with the
provisions of this Section 8 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Senior Indebtedness of the
Company, whether now outstanding or hereafter created (including any interest
accruing subsequent to an event specified in Section 7.6 or 7.7 whether or not
such interest is an allowed claim against the Borrower), that the subordination
is for the benefit of the holders of Senior Indebtedness of the Borrower, and
that each holder of Senior Indebtedness of the Borrower whether now outstanding
or hereafter created, incurred, assumed or guaranteed shall be deemed to have
acquired Senior Indebtedness of the Borrower in reliance upon the covenants and
provisions contained in this Agreement.
8.2 Priority and Payment Over of Proceeds in Certain Events
(a) Subordination on Dissolution, Liquidation or Reorganization of the
Borrower. Upon any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities, upon
any dissolution or winding up or total or partial liquidation or reorganization
of the Borrower, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness of the Borrower
(including any interest accruing subsequent to an event specified in Section 7.6
or 7.7 whether or not such interest is an allowed claim enforceable against the
Borrower) shall first be paid in full in cash or Cash Equivalents, before the
Lenders shall be entitled to receive any payment by the Borrower in respect of
any Obligations and upon any such dissolution or winding up or liquidation or
reorganization, any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities, to
which the Lenders would be entitled except for the provisions of this Section 8
shall be made by the Borrower or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
directly to the holders of the Senior Indebtedness of the Borrower or their
representatives to the extent necessary to pay all of the Senior Indebtedness of
the Borrower to the holders of such Senior Indebtedness of the Borrower.
(b) Subordination on Default on Senior Indebtedness. Upon the maturity
of any Senior Indebtedness of the Borrower by lapse of time, acceleration or
otherwise, all Senior Indebtedness of the Borrower then due and payable shall
first be paid in full in cash or Cash Equivalents, before any payment is made by
the Borrower or any Person acting on behalf of the Borrower with respect to the
Obligations. No direct or indirect payment by the Borrower or any Person acting
on behalf of the Borrower of any Obligations whether pursuant to the terms of
the Bridge Loan or upon acceleration or otherwise shall be made, if at the time
of such payment, there exists a Default (as defined in the document governing
any Senior Indebtedness of the Borrower) in the payment of all or any portion of
any principal, interest, fees, letter of credit reimbursement obligations or
other amounts payable in respect of any Senior Indebtedness of the Borrower and
such default shall not have been cured or waived or the benefits of this
sentence waived by or on behalf of the holders of such Senior Indebtedness. In
addition, during the
70
continuation of any other event of default with respect to the Senior
Indebtedness of the Borrower pursuant to which the maturity thereof may be
accelerated, upon the (i) receipt by the Agent of written notice from the agent
or representative of the holders of such Senior Indebtedness of such Default or
(ii) if such Non-Payment Default results from the acceleration of the Bridge
Loan, the date of the acceleration of the Bridge Loan, no such payment may be
made by the Borrower upon or in respect of the Obligations, for a period
("Payment Blockage Period") commencing on the date of receipt of such notice or
the date of such acceleration and ending 179 days after receipt of such notice
(unless such Payment Blockage Period shall be terminated by written notice to
the Agent from such agent or representative) or the date of such acceleration.
Notwithstanding anything herein to the contrary, (x) in no event will a Payment
Blockage Period or successive Payment Blockage Periods with respect to the same
payment on the Obligations extend beyond 179 days from the date the payment on
the Obligations was due and (y) there must be 180 consecutive days in any
365-day period during which no Payment Blockage Period is in effect. For all
purposes of this Section 8.2(b), no event of default which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to the Senior Indebtedness of the Borrower initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a second
Payment Blockage Period by the holders or by the agent or other representative
of such Senior Indebtedness whether or not within a period of 365 consecutive
days, unless such event of default shall have been cured or waived for a period
of not less than 90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Obligation (other than as permitted by Sections (a) and (b) of this
Section 8.2) at a time when such payment is prohibited by this Section 8.2, then
and in such event such payment or distribution shall be received and held in
trust for the holders of the Senior Indebtedness of the Borrower and shall be
paid over or delivered to the holders of the Senior Indebtedness of the Borrower
remaining unpaid to the extent necessary to pay in full in cash or Cash
Equivalents all Senior Indebtedness of the Borrower in accordance with their
terms after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness of the Borrower.
If payment in respect of the Obligations is accelerated because of an
Event of Default, the Borrower shall promptly notify the agent or other
representatives for Senior Indebtedness of the Borrower of such acceleration.
Upon any payment or distribution of assets or securities referred to in
this Section 8, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lenders for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness of the Borrower, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Section 8.
71
The Borrower shall promptly give written notice to each of the Lenders
of any default or event of default under any Senior Indebtedness of the Borrower
or under any agreement pursuant to which Senior Indebtedness of the Borrower may
have been issued, and, in the event of any such event of default, shall provide
to the Agent the names and address of the trustees or other representatives of
holders of such Senior Indebtedness of the Borrower.
With respect to the holders and owners of Senior Indebtedness of the
Borrower, each Lender undertakes to perform only such obligations on the part of
such Lender as are specifically set forth in this Section 8, and no implied
covenants or obligations with respect to the holders or owners of Senior
Indebtedness of the Borrower shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Senior Indebtedness of the Borrower or to any agent under
the Senior Credit Facility or any other representative of the holders of the
Senior Indebtedness of the Borrower.
8.3 Payments May Be Paid Prior to Dissolution
Nothing contained in this Section 8 or elsewhere in this Agreement
shall prevent or delay (i) the Borrower, except under the conditions described
in Section 8.2, from making payments at any time for the purpose of making
payments in respect of its Obligations, or from depositing with the Agent any
moneys for such payments, or (ii) subject to Section 8.2, the application by the
Agent of any moneys deposited with it for the purpose of making payments in
respect of Obligations.
8.4 Rights of Holders of Senior Indebtedness of the Borrower Not To Be
Impaired
No right of any present or future holder of any Senior Indebtedness of
the Borrower to enforce subordination as provided in this Section 8 shall at any
time in any way be prejudiced or impaired by any act or failure to act by any
such holder, or by any noncompliance by the Borrower with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Senior Indebtedness of the
Borrower may, at any time and from time to time without impairing or releasing
the subordination provided in this Section 8 or the obligations of the Lenders
hereunder to the holders of Senior Indebtedness of the Borrower, do any one or
more of the following. (i) change the manner, place, terms or time of payment
of, or renew or alter, Senior Indebtedness of the Borrower or otherwise amend or
supplement in any manner Senior Indebtedness of the Borrower or any instrument
evidencing the same or any agreement under which any Senior Indebtedness of the
Borrower is outstanding; (ii) sell, exchange, release, or otherwise deal with
any property pledged, mortgaged, or otherwise securing Senior Indebtedness of
the Borrower or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness of the Borrower; and (iv) exercise or refrain
from exercising any rights against the Borrower and any other Person. Each
Lender by purchasing or accepting a Note waives any and all notice of the
creation, modification, renewal, extension or accrual of any Senior Indebtedness
of the Borrower and notice of or proof of reliance by any holder or owner of
Senior Indebtedness of the Borrower upon this Section 8 and the Senior
Indebtedness of the Borrower shall conclusively be deemed to have been created,
72
contracted or incurred in reliance upon this Section 8, and all dealings between
the Borrower and the holders and owners of the Senior Indebtedness of the
Borrower shall be deemed to have been consummated in reliance upon this Section
8.
The provisions of this Section 8 are intended to be for the benefit of,
and shall be enforceable directly by, the holders of the Senior Indebtedness of
the Borrower.
8.5 Subrogation
Upon the payment in full in accordance with the terms of Section 8.2 of
all amounts payable under or in respect of the Senior Indebtedness of the
Borrower, the Lenders shall be subrogated to the rights of the holders of such
Senior Indebtedness of the Borrower to receive payments or distributions of
assets of the Borrower made on such Senior Indebtedness of the Borrower until
the Obligations shall be paid in full in cash or Cash Equivalents; and for
purposes of such subrogation no payments or distributions to holders of such
Senior Indebtedness of the Borrower of any cash, property or securities to which
the Lenders would be entitled except for the provisions of this Section 8, and
no payment over pursuant to the provisions of this Section 8 to holders of such
Senior Indebtedness of the Borrower by the Lenders, shall, as between the
Borrower, its creditors other than holders of such Senior Indebtedness of the
Borrower and the Lenders, be deemed to be a payment by the Borrower to or on
account of such Senior Indebtedness of the Borrower, it being understood that
the provisions of this Section 8 are solely for the purpose of defining the
relative rights of the holders of such Senior Indebtedness of the Borrower, on
the one hand, and the Lenders, on the other hand. A release of any claim by any
holder of Senior Indebtedness of the Borrower shall not limit the Lenders'
rights of subrogation under this Section 8.5.
If any payment or distribution to which the Lenders would otherwise
have been entitled but for the provisions of this Section 8 shall have been
applied, pursuant to the provisions of this Section 8, to the payment of all
amounts payable under the Senior Indebtedness of the Borrower, then and in such
case, the Lenders shall be entitled to receive from the holders of such Senior
Indebtedness of the Borrower at the time outstanding the full amount of any such
payments or distributions received by such holders of Senior Indebtedness of the
Borrower in excess of the amount sufficient to pay all Senior Indebtedness of
the Borrower payable under or in respect of the Senior Indebtedness of the
Borrower in full in cash or Cash Equivalents in accordance with the terms of
Section 8.2.
8.6 Obligations of the Borrower Unconditional
Nothing contained in this Section 8 or elsewhere in this Agreement is
intended to or shall impair as between the Borrower and the Lenders the
obligations of the Borrower, which are absolute and unconditional, to pay to the
Lenders the Obligations as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Lenders and creditors of the Borrower other than the holders of
the Senior Indebtedness of the Borrower, nor shall anything herein or therein
prevent the Lenders from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 8 of the holders of such Senior
73
Indebtedness of the Borrower in respect of cash, property or securities of the
Borrower received upon the exercise of any such remedy.
The failure to make a payment in respect of Obligations by reason of
any provision of this Section 8 shall not prevent the occurrence of an Event of
Default under Section 7.
8.7 Lenders Authorize Agent to Effectuate Subordination
Each Lender hereby authorizes and expressly directs the Agent on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 8 and appoints the Agent its attorney in
fact for such purpose, including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of the
Borrower, the immediate filing of a claim for the unpaid balance of the
Obligations in the form required in said proceedings and causing said claim to
be approved. If the Agent does not file proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
of the Borrower are hereby authorized to have the right to file and are hereby
authorized to file an appropriate claim for and on behalf of the Lenders. In the
event of any such proceeding, until the Senior Indebtedness of the Borrower is
paid in full in cash or Cash Equivalents, without the consent of the holders of
a majority in principal amount outstanding of Senior Indebtedness of the
Borrower, no Lender shall waive, settle or compromise any such claim or claims
relating to the Obligations that such Lender now or hereafter may have against
the Borrower.
SECTION 9 THE AGENT
9.1 Appointment
Each Lender hereby irrevocably designates and appoints First Union as
Agent of such Lender to act as specified herein and in the other Loan Documents,
and each Lender hereby irrevocably authorizes First Union as the Agent to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent agrees to act as such upon the express conditions contained
in this Section 9. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein or in the
other Loan Documents, or any fiduciary relationship with any Lender, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or otherwise exist against the
Agent. The provisions of this Section 9 are solely for the benefit of the Agent
and the Lenders, and neither the Company nor any of its Subsidiaries shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of
74
the Lenders and the Agent does not assume and shall not be deemed to have
assumed any obligation or relationship of agent or trust with or for the Company
or any of its Subsidiaries.
9.2 Delegation of Duties
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by it with reasonable care except to the
extent otherwise required by Section 9.3.
9.3 Exculpatory Provisions
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or the other Loan Documents (except for its or
such Person's own gross negligence or willful misconduct) or (ii) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Company, any of its Subsidiaries or any of their
respective officers contained in this Agreement, any other Loan Documents, or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or any
other Loan Document or for any failure of the Company, any of its Subsidiaries
or any of their respective officers to perform its or their obligations
hereunder or thereunder. The Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or the other Loan
Documents, or to inspect the properties, books or records of the Company or any
of its Subsidiaries. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made herein or therein or
made in any written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection herewith
or therewith furnished or made by the Agent to the Lenders or by or on behalf of
the Company or any of its Subsidiaries to the Agent or any Lender or be required
to ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Bridge Loan or of the existence or possible
existence of any Potential Event of Default or Event of Default.
9.4 Reliance by Agent
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons, and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company or any of its Subsidiaries), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this
75
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. As between the Agent and the Lenders, the Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
9.5 Notice of Default
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Potential Event of Default or Event of Default hereunder
unless the Agent has actually received notice from a Lender or the Company
referring to this Agreement, describing such Potential Event of Default or Event
of Default and stating that such notice is a "notice of default." In the event
that the Agent receives such a notice, the Agent shall give prompt notice
thereof to the Lenders. The Agent shall take such action with respect to such
Potential Event of Default or Event of Default as shall be reasonably directed
by the Required Lenders; provided that, as between the Agent and the Lenders
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Potential Event of Default or Event of Default as
it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agent and Other Lenders
Each Lender expressly acknowledges that neither the Agent nor any of
its respective officers, directors, employees, agents, attorneys-in-fact or
affiliates have made any representations or warranties to it and that no act by
the Agent hereinafter taken, including any review of the affairs of the Company
or any of its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries and made its own decision to make its Bridge Loan
hereunder and enter into this Agreement. Each Lender also represents that it
will, independently and without reliance upon the Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of the
Company and its Subsidiaries. The Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of the Company or any of its
Subsidiaries which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
76
9.7 Indemnification
The Lenders agree to indemnify the Agent in its capacity as such
ratably according to their respective "percentages" as used in determining the
Required Lenders at such time, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
reasonable expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment in full
of the Obligations) be imposed on, incurred by or asserted against the Agent in
its capacity as such in any way relating to or arising out of this Agreement or
any other Loan Document, or any documents contemplated by or referred to herein
or the transactions contemplated hereby or any action taken or omitted to be
taken by the Agent under or in connection with any of the foregoing, but only to
the extent that any of the foregoing is not paid by the Company or any of its
Subsidiaries; provided that no Lender shall be liable to the Agent for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of the
Agent be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 9.7 shall
survive the payment in full of all Obligations.
9.8 Agent in Its Individual Capacity
The Agent and its affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Company and its
Subsidiaries as though the Agent were not the Agent hereunder. With respect to
the Bridge Loan made by it and all Obligations owing to it, the Agent shall have
the same rights and powers under this Agreement as any Lender and may exercise
the same as though it were not the Agent and the terms "Lender" and "Lenders"
shall include the Agent in its individual capacity.
9.9 Resignation of the Agent; Successor Agent
The Agent may resign as the Agent upon 20 days' notice to the Lenders
and the Company. Upon the resignation of the Agent, the Required Lenders shall
appoint from among the Lenders a successor Agent which is a bank or a trust
company for the Lenders subject to prior approval by the Company (such approval
not to be unreasonably withheld or delayed), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall include such successor agent effective upon its appointment, and
the resigning Agent's rights, powers and duties as the Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. After the resignation of the
Agent hereunder, the provisions of this Section 9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this
Agreement.
77
SECTION 10 GUARANTEE
10.1 Unconditional Guarantee
Each Guarantor hereby unconditionally, jointly and severally,
guarantees (such guarantee to be referred to herein as the "Guarantee"), subject
to Section 11, to each of the Lenders and to the Agent and their respective
successors and assigns that (i) the principal of and interest on the Bridge Loan
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Bridge Loan and all other obligations of the Company to the Lenders or the Agent
hereunder or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and (ii) in case of any extension
of time of payment or renewal of any of the Bridge Loan or of any such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any applicable
grace period, whether at stated maturity, by acceleration or otherwise, subject,
however, in the case of clauses (i) and (ii) above, to the limitations set forth
in Section 10.5. Each Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Bridge Loan or this Agreement, the absence of any action
to enforce the same, any waiver or consent by any of the Lenders with respect to
any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Bridge Loan,
this Agreement and in this Guarantee. If any Lender or the Agent is required by
any court or otherwise to return to the Company, any Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Guarantor, any amount paid by the Company or any Guarantor to
the Agent or such Lender, this Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect. Each Guarantor further agrees
that, as between each Guarantor, on the one hand, and the Lenders and the Agent,
on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Section 7 for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Section 7, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Guarantee.
10.2 Subordination of Guarantee
The obligations of each Guarantor to the Lenders and to the Agent
pursuant to the Guarantee of such Guarantor and this Agreement are expressly
subordinate and subject in right of payment to the prior payment in full of all
Guarantor Senior Indebtedness of such Guarantor, to the extent and in the manner
provided in Section 11.
78
10.3 Severability
In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.4 Limitation of Guarantor's Liability
Each Guarantor and by its acceptance hereof each of the Lenders hereby
confirms that it is the intention of all such parties that the guarantee by such
Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or
conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar Federal or state law. To
effectuate the foregoing intention, the Lenders and such Guarantor hereby
irrevocably agree that the obligations of such Guarantor under the Guarantee
shall be limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Guarantor (including, but not limited
to, the Guarantor Senior Indebtedness of such Guarantor) and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under its Guarantee or
pursuant to Section 10.6, result in the obligations of such Guarantor under the
Guarantee not constituting such fraudulent transfer or conveyance.
10.5 Guarantors May Consolidate, etc., on Certain Terms
(a) Nothing contained in this Agreement or in the Bridge Loan shall
prevent any consolidation or merger of a Guarantor with or into the Borrower or
another Guarantor or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety, to the Borrower or
another Guarantor. Upon any such consolidation, merger, sale or conveyance, the
Guarantee given by such Guarantor shall no longer have any force or effect.
(b) Except as set forth in Section 6.7, nothing contained in this
Agreement or in the Bridge Loan shall prevent any consolidation or merger of a
Guarantor with or into a corporation or corporations other than the Borrower or
another Guarantor (whether or not affiliated with the Guarantor); provided that,
subject to Section 10.5(a), (i) immediately after such transaction, and giving
effect thereto, no potential Event of Default or Event of Default shall have
occurred as a result of such transaction and be continuing, and (ii) upon any
such consolidation, merger, sale or conveyance, the Guarantee of such Guarantor
set forth in this Section 10, and the due and punctual performance and
observance of all of the covenants and conditions of this Agreement to be
performed by such Guarantor, shall be expressly assumed (in the event that the
Guarantor is not the surviving corporation in the merger), by supplemental
indenture satisfactory in form to the Agent, executed and delivered to the
Agent, by the corporation formed by such consolidation, or into which the
Guarantor shall have merged, or by the corporation that shall have acquired such
property. In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental indenture
executed and delivered to the Agent and satisfactory in form and substance to
the Agent of the due and punctual performance of all of the covenants and
conditions of this Agreement to be performed
79
by the Guarantor, such successor corporation shall succeed to and be substituted
for the Guarantor with the same effect as if it had been named herein as a
Guarantor.
10.6 Contribution
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under its
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount based on the Adjusted Net Assets of each
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Borrower's
obligations with respect to the Obligations. "Adjusted Net Assets" of such
Guarantor at any date shall mean the lesser of (x) the amount by which the fair
value of the property of such Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving to all other
fixed and contingent liabilities incurred or assumed on such date (other than
liabilities of such Guarantor under Subordinated Indebtedness)), but excluding
liabilities under the Guarantee, of such Guarantor at such date and (y) the
amount by which the present fair salable value of the assets of such Guarantor
at such date exceeds the amount that will be required to pay the probable
liabilities of such Guarantor on its debts including, without limitation,
Guarantor Senior Indebtedness (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date and after giving effect
to any collection from any Subsidiary of such Guarantor in respect of the
obligations of such Subsidiary under the Guarantee), excluding debt in respect
of the Guarantee of such Guarantor, as they become absolute and matured.
10.7 Waiver of Subrogation
Each Guarantor hereby irrevocably waives any claim or other rights
which it may now or hereafter acquire against the Borrower that arise from the
existence, payment, performance or enforcement of such Guarantor's obligations
under its Guarantee and this Agreement, including, without limitation, any right
of subrogation, reimbursement, exoneration, indemnification, and any right to
participate in any claim or remedy of any Lender against the Borrower, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Borrower, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Guarantor in violation of the
preceding sentence and the Bridge Loan shall not have been paid in full, such
amount shall be deemed to have been paid to such Guarantor for the benefit of,
and held in trust for the benefit of, the Lenders, and shall, subject to the
provisions of Section 8, Section 10.2 and Section 11, forthwith be paid to the
Agent for the benefit of such Lenders to be credited and applied upon the Bridge
Loan, whether matured or unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Agreement and that
the waiver set forth in this Section 10.7 is knowingly made in contemplation of
such benefits.
80
10.8 Evidence Guarantee
To evidence their guarantees to the Lenders set forth in this Section
10, each of the Guarantors hereby agrees to execute the notation of Guarantee in
substantially the form included in Exhibit VII. Each such notation of Guarantee
shall be signed on behalf of each Guarantor by two Officers, or an Officer and
an assistant Secretary or one Officer shall sign and one Officer or an assistant
Secretary (each of who shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to such notation of Guarantee.
10.9 Waiver of Stay, Extension or Usury Laws
Each Guarantor covenants that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law that would prohibit or
forgive such Guarantor from performing its Guarantee as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Agreement; and each Guarantor hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Agent, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 11 SUBORDINATION OF GUARANTEE OBLIGATIONS
11.1 Guarantee Obligations Subordinated to Guarantor Senior
Indebtedness
The Lenders covenant and agree that payments in respect of the
obligations by a Guarantor in respect of its Guarantee (collectively, as to any
Guarantor, its "Guarantee Obligations") shall be subordinated in accordance with
the provisions of this Section 11 to the prior payment in full, in cash or Cash
Equivalents, of all amounts payable in respect of Guarantor Senior Indebtedness
of such Guarantor whether now outstanding or hereafter created (including any
interest accruing subsequent to an event specified in Section 7.6 or 7.7 whether
or not such interest is an allowed claim against such Guarantor), that the
subordination is for the benefit of the holders of Guarantor Senior
Indebtedness, and that each holder of Guarantor Senior Indebtedness whether now
outstanding or hereafter created, incurred, assumed or guaranteed shall be
deemed to have acquired Guarantor Senior Indebtedness in reliance upon the
covenants and provisions contained in this Agreement.
11.2 Priority and Payment Over of Proceeds in Certain Events
(a) Subordination of Guarantee Obligations on Dissolution, Liquidation
or Reorganization of Such Guarantor. Upon any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities, upon any dissolution or winding up or total or partial
liquidation or reorganization of such Guarantor, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings
(other than a liquidation or dissolution of such Guarantor into the Borrower or
another Guarantor), all Guarantor Senior Indebtedness of such Guarantor
(including. any interest accruing subsequent to an event specified in Section
7.6 or 7.7 whether or not such interest is an
81
allowed claim enforceable against such Guarantor) shall first be paid in full in
cash or Cash Equivalents, before the Lenders shall be entitled to receive any
payment with respect to any Guarantee Obligations of such Guarantor and upon any
such dissolution or winding up or liquidation or reorganization, any payment or
distribution of assets or securities of such Guarantor of any kind or character,
whether in cash, property or securities, to which the Lenders would be entitled
except for the provisions of this Section 11 shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor or their representatives to the
extent necessary to pay all of the Guarantor Senior Indebtedness of such
Guarantor to the holders of such Guarantor Senior Indebtedness.
(b) Subordination of Guarantee Obligations on Default on Senior
Indebtedness. Upon the maturity of any Guarantor Senior Indebtedness by lapse of
time, acceleration or otherwise, all such Guarantor Senior Indebtedness then due
and payable shall first be paid in full in cash or Cash Equivalents, before any
payment is made by such Guarantor or any Person acting on behalf of such
Guarantor with respect to the Guarantee Obligations of such Guarantor. No direct
or indirect payment by any Guarantor or any Person acting on behalf of such
Guarantor of any Guarantee obligations of such Guarantor whether pursuant to the
terms of the Bridge Loan or upon acceleration or otherwise shall be made, if at
the time of such payment, there exists a default (as defined in the document
governing any such Guarantor Senior Indebtedness) in the payment of all or any
portion of any principal, interest, fees, letter of credit reimbursement
obligations or other amounts payable in respect of any such Guarantor Senior
Indebtedness and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of such
Guarantor Senior Indebtedness. In addition, during the continuation of any other
event of default with respect to any such Guarantor Senior Indebtedness of such
Guarantor pursuant to which the maturity thereof may be accelerated, upon the
earlier of (i) receipt by the Agent of written notice from the agent or
representative of the holders of such Senior Indebtedness or (ii) if such
non-payment default results from the acceleration of the Bridge Loan, the date
of acceleration of the Bridge Loan, no such payment may be made by such
Guarantor under its Guarantee for a period ("Guarantor Payment Blockage Period")
commencing on the date of receipt of such notice or the date of the acceleration
referred to in clause (ii) above, as the case may be, and ending on the earlier
to occur of 179 days after receipt of such written notice by the Agent (unless
such Guarantor Payment Blockage Period shall be terminated by written notice to
the Agent from such agent) or the date of the acceleration of the Bridge Loan,
as the case may be (provided such Guarantor Senior Indebtedness shall
theretofore not have been accelerated). Notwithstanding anything herein to the
contrary, (x) in no event will a Guarantor Payment Blockage Period or successive
Guarantor Payment Blockage Periods with respect to the same payment on such
Guarantee extend beyond 179 days from the date the payment on such Guarantee was
due and (y) there must be 180 consecutive days in any 365-day period during
which no Guarantor Payment Blockage Period is in effect. For all purposes of
this Section 11.2(b), no event of default which existed or was continuing on the
date of the commencement of any Guarantor Payment Blockage Period with respect
to the Senior Indebtedness initiating such Guarantor Payment Blockage Period
shall be, or be made, the basis for the commencement of a second Guarantor
Payment Blockage Period by the holders or by the agent or other representative
of such Senior
82
Indebtedness whether or not within a period of 365 consecutive days, unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days.
(c) Rights and Obligations of the Lenders. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, the Agent or any Lender shall have received any payment in respect
of any Guarantee Obligation with respect to the Bridge Loan (other than
permitted by Sections (a) and (b) of this Section 11.2) at a time when such
payment is prohibited by this Section 11.2, then and in such event such payment
or distribution shall be received and held in trust for the holders of the
Guarantor Senior Indebtedness and shall be paid over or delivered to the holders
of the Guarantor Senior Indebtedness remaining unpaid to the extent necessary to
pay in full in cash or Cash Equivalents all Guarantor Senior Indebtedness in
accordance with their terms after giving effect to any concurrent payment or
distribution to the holders of such Guarantor Senior Indebtedness.
Nothing contained in this Section 11 will limit the right of the
Lenders to take any action to accelerate the maturity of the Bridge Loan
pursuant to Section 7 or to pursue any rights or remedies hereunder or
otherwise.
Upon any payment or distribution of assets or securities referred to in
this Section 11, the Lenders (notwithstanding any other provision of this
Agreement) shall be entitled to rely upon any order or decree of a court of
competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making any
such payment or distribution, delivered to the Lender for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of Guarantor Senior Indebtedness, the amount thereof or payable thereon,
the amount or amounts paid or distributed hereon and all other facts pertinent
thereto or to this Section 11.
The Guarantors shall promptly give written notice to each of the
Lenders of any default or event of default under any Guarantor Senior
Indebtedness or under any agreement pursuant to which Guarantor Senior
Indebtedness may have been issued, and, in the event of any such event of
default, shall provide to the Agent the names and address of the trustees or
other representatives of holders of such Guarantor Senior Indebtedness.
With respect to the holders and owners of Guarantor Senior
Indebtedness, each Lender undertakes to perform only such obligations on the
part of such Lender as are specifically set forth in this Section 11, and no
implied covenants or obligations with respect to the holders or owners of
Guarantor Senior Indebtedness shall be read into this Agreement against the
Lenders. The Lenders shall not be deemed to owe any fiduciary duty to the
holders or owners of Guarantor Senior Indebtedness or to the agent under the
Senior Credit Facility or any other representative of the holders of the
Guarantor Senior Indebtedness.
11.3 Payments May Be Paid Prior to Dissolution
Nothing contained in this Section 11 or elsewhere in this Agreement
shall prevent or delay (i) Guarantors, except under the conditions described in
Section 11.2, from making
83
payments at any time for the purpose of making payments in respect of their
respective Guarantee Obligations, or from depositing with the Agent any moneys
for such payments, or (ii) subject to Section 11.2, the application by the Agent
of any moneys deposited with it for the purpose of making payments in respect of
Guarantee Obligations.
11.4 Rights of Holders of Guarantor Senior Indebtedness
Not To Be Impaired
No right of any present or future holder of any Guarantor Senior
Indebtedness to enforce subordination as provided in this Section 11 shall at
any time in any way be prejudiced or impaired by any act or failure to act by
any such holder, or by any noncompliance by the Guarantors with the terms and
provisions and covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with. Without in any way limiting the
generality of the foregoing Section, such holders of Guarantor Senior
Indebtedness may, at any time and from time to time without impairing or
releasing the subordination provided in this Section 11 or the obligations of
the Lenders hereunder to the holders of Guarantor Senior Indebtedness, do any
one or more of the following: (i) change the manner, place, terms or time of
payment of, or renew or alter, Guarantor Senior Indebtedness or otherwise amend
or supplement in any manner Guarantor Senior Indebtedness or any instrument
evidencing the same or any agreement under which any Guarantor Senior
Indebtedness is outstanding; (ii) sell, exchange, release, or otherwise deal
with any property pledged, mortgaged, or otherwise securing Guarantor Senior
Indebtedness or fail to perfect or delay in the perfection of the security
interest in such property; (iii) release any Person liable in any manner for the
collection of Guarantor Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Guarantors and any other Person. Each Lender
by purchasing or accepting a Note waives any and all notice of the creation,
modification, renewal, extension or accrual of any Guarantor Senior Indebtedness
and notice of or proof of reliance by any holder or owner of Guarantor Senior
Indebtedness upon this Section 11 and the Guarantor Senior Indebtedness shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Section 11, and all dealings between the Guarantors and the holders
and owners of the Guarantor Senior Indebtedness shall be deemed to have been
consummated in reliance upon this Section 11.
The provisions of this Section 11 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of the Guarantor Senior
Indebtedness.
11.5 Subrogation
Upon the payment in full in accordance with the terms of Section 11.2
of all amounts payable under or in respect of the Guarantor Senior Indebtedness,
the Lenders shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of assets of the
Guarantors made on such Guarantor Senior Indebtedness until the Guarantee
Obligations shall be paid in full in cash or Cash Equivalents in a manner
satisfactory to the holders of such Guarantor Senior Indebtedness in accordance
with the terms of Section 11.2; and for purposes of such subrogation no payments
or distributions to holders of such Guarantor Senior Indebtedness of any cash,
property or securities to which the
84
Lenders would be entitled except for the provisions of this Section 11, and no
payment over pursuant to the provisions of this Section 11 to holders of such
Guarantor Senior Indebtedness by the Lenders, shall, as between such Guarantor,
its creditors other than holders of such Guarantor Senior Indebtedness and the
Lenders, be deemed to be a payment by such Guarantor to or on account of such
Guarantor Senior Indebtedness, it being understood that the provisions of this
Section 11 are solely for the purpose of defining the relative rights of the
holders of such Guarantor Senior Indebtedness, on the one hand, and the Lenders,
on the other hand. A release of any claim by any holder of Guarantor Senior
Indebtedness shall not limit the Lenders' rights of subrogation under this
Section 11.5.
If any payment or distribution to which the Lenders would otherwise
have been entitled but for the provisions of this Section 11 shall have been
applied, pursuant to the provisions of this Section 11, to the payment of all
amounts payable under the Guarantor Senior Indebtedness, then and in such case,
the Lenders shall be entitled to receive from the holders of such Guarantor
Senior Indebtedness at the time outstanding the full amount of any payments or
distributions received by such holders of Guarantor Senior Indebtedness in
excess of the amount sufficient to pay all Guarantor Senior Indebtedness payable
under or in respect of the Guarantor Senior Indebtedness in full in cash or Cash
Equivalents in accordance with the terms of Section 11.2.
11.6 Obligations of the Guarantors Unconditional
Nothing contained in this Section 11 or elsewhere in this Agreement or
in the Guarantees is intended to or shall impair as between the Guarantors and
the Lenders the obligations of the Guarantors, which are absolute and
unconditional, to pay to the Lenders the Guarantee Obligations as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the Lenders and creditors of the
Guarantors other than the holders of the Guarantor Senior Indebtedness, nor
shall anything herein or therein prevent the Lenders from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this Section 11 of the holders
of such Guarantor Senior Indebtedness in respect of cash, property or securities
of the Guarantors received upon the exercise of any such remedy.
The failure to make a payment in respect of Guarantee Obligations by
reason of any provision of this Section 11 shall not prevent the occurrence of
an Event of Default under Section 7.
11.7 Lenders Authorize Agent to Effectuate Subordination
Each Lender hereby authorizes and expressly directs the Agent on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Section 11 and appoints the Agent its attorney in
fact for such purpose including, without limitation, in the event of any
dissolution, winding up, liquidation or reorganization of any Guarantor (whether
in bankruptcy, insolvency, receivership, reorganization or similar proceedings
or upon an assignment for the benefit of creditors or any other similar remedy
or otherwise) tending towards liquidation of the business and assets of any
Guarantor, the immediate filing of a claim for the unpaid balance of the
Guarantee Obligations in the form
85
required in said proceedings and causing said claim to be approved. If the Agent
does not file a proper claim or proof of debt in the form required in such
proceeding prior to 30 days before the expiration of the time to file such claim
or claims, then the holders of the Guarantor Senior Indebtedness are hereby
authorized to have the right to file and are hereby authorized to file an
appropriate claim for and on behalf of the Lenders In the event of any such
proceeding, until the Guarantor Senior Indebtedness is paid in full in cash or
Cash Equivalents, without the consent of the holders of a majority in principal
amount outstanding of Guarantor Senior Indebtedness, no Lender shall waive,
settle or compromise any such claim or claims relating to the Obligations that
such Lender now or hereafter may have against the Guarantors.
SECTION 12 MISCELLANEOUS
12.1 Representation of the Lenders
Each Lender hereby represents that it is a commercial lender which
makes loans in the ordinary course of its business and that it will make the
Bridge Loan hereunder for its own account or the account of its affiliates in
the ordinary course of such business.
12.2 Participations in and Assignments of Bridge Loan
A. Each Lender shall have the right at any time to sell, assign,
transfer or negotiate all or any portion of its Bridge Notes or its Bridge Loan
Commitment in an aggregate amount of not less than $1,000,000 to any Eligible
Assignee, other than to an Eligible Assignee which has, or has an Affiliate
which has, a principal line of business similar to any principal line of
business of the Company or any of its Subsidiaries. In the case of any sale,
transfer or negotiation of all or part of the Bridge Loan or any Bridge Loan
Commitment authorized under this Section 12.2A, the assignee, transferee or
recipient shall become a party to this Agreement as a Lender by execution of an
assignment and assumption agreement; provided that (i) at such time Section 2.1A
shall be deemed modified to reflect the Bridge Loan Commitment of such new
Lender and of the existing Lenders, (ii) upon surrender of the Bridge Notes, new
Bridge Notes will be issued, at the Borrower's expense to such new Lender and to
the assigning Lender, such new Bridge Notes to be in conformity with the
requirements of Section 2.1D (with appropriate modifications) to the extent
needed to reflect the revised Bridge Loan Commitment, and (iii) the Agent shall
receive at the time of each such assignment, from the assigning or assignee
Lender, the payment of a non-refundable assignment fee of $3,500; and provided,
further, that such transfer or assignment will not be effective until recorded
by the Agent on the Register pursuant to Section 5.12. To the extent of any
assignment pursuant to this Section 12.2A, the assigning Lender shall be
relieved of its obligations hereunder with respect to assigned Bridge Loan
Commitment, and the assignee, transferee or recipient shall have, to the extent
of such sale, assignment, transfer or negotiation, the same rights, benefits and
obligations as it would if it were a Lender with respect to such Bridge Notes or
Bridge Loan Commitment, including, without limitation, the right to approve or
disapprove actions which, in accordance with the terms hereof, require the
approval of a Lender. At the time of each assignment pursuant to this Section
12.2A to an Eligible Assignee which is not already a Lender hereunder and which
is not a United States Person (as such term is defined in Section 7701 (a) (30)
of the Internal Revenue Code) for Federal income tax purposes, the respective
Eligible Assignee shall provide
86
to the Borrower and the Agent the appropriate Internal Revenue Service Forms
(and, if applicable a Section 12.2E(ii) Certificate) described in Section 12.2E.
B. Each Lender may grant participations in all or any part of its
Bridge Notes or its Bridge Loan Commitment in an aggregate amount of not less
than $1,000,000 to any Eligible Assignee, other than to an Eligible Assignee
which has, or has an Affiliate which has, a principal line of business similar
to any principal line of business of the Company or any of its Subsidiaries.
C. The Borrower shall, at its own cost and expense, provide such
certificates, acknowledgments and further assurances in respect of this
Agreement and the Bridge Loan as any Lender may reasonably require in connection
with any participation, transfer or assignment pursuant to this Section 12.2.
D. Nothing in this Agreement shall prevent or prohibit any Lender from
pledging its Bridge Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank.
E. Each Lender that is an assignee or transferee of an interest under
this Agreement pursuant to Section 12.2A (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer) and
that is not a United States Person (as such term is defined in Section 7701 (a)
(30) of the Internal Revenue Code) agrees to deliver to the Borrower and the
Agent, on the date of such assignment or transfer to such Lender, (i) two
accurate and complete original signed copies of Internal Revenue Service Form
4224 or 1001 (or successor forms) certifying to such Lender's entitlement to a
complete exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the Lender is not
a "bank" within the meaning of Section 881(c) (3) (A) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form 1001 or 4224
pursuant to clause (i) above, (X) a certificate substantially in the form of
Exhibit IX (a Section 12.2E(ii) Certificate") and (Y) two accurate and complete
original signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Bridge Note. In addition, each Lender agrees that,
when a lapse in time or change in circumstances renders the previous
certification obsolete or inaccurate in any material respect, it will deliver to
the Borrower and the Agent two new accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001, or a Section 12.2E(ii)
Certificate and Form W-8, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Bridge Note, or it shall
immediately notify the Borrower and the Agent of its inability to deliver any
such Form or Certificate Subject to Section 12.2A and the immediately succeeding
sentence, and notwithstanding Section 12.19, the Borrower shall be entitled, to
the extent it is required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder or made on any other Loan Document for the account of any
Lender which is not a United States Person (as such term is defined in
87
Section 7701 (a) (30) of the Internal Revenue Code) for US. Federal income tax
purposes to the extent that such Lender has not provided to the Borrower U.S.
Internal Revenue Service Forms that establish a complete exemption from such
deduction or withholding. Notwithstanding anything to the contrary contained in
the preceding sentence or elsewhere in this Section 12.2E and except as set
forth in Section 12.2A, the Borrower agrees to pay additional amounts and to
indemnify and hold harmless each Lender (without regard to the identity of the
jurisdiction requiring the deduction or withholding), and reimburse such Lender
upon its written request, in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of any changes
after the date of any assignment or transfer in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, to the deducting or withholding of income or similar Taxes.
12.3 Expenses
Whether or not the transactions contemplated hereby shall be
consummated, the Borrower agrees to promptly pay (i) all the actual and
reasonable costs and expenses of preparation of the Loan Documents and all the
costs of furnishing all opinions by counsel for the Borrower (including without
limitation any opinions requested by the Lenders as to any legal matters arising
hereunder), and of the Borrower's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with; (ii) the actual and reasonable fees, expenses and disbursements
of Cleary, Gottlieb, Steen & Hamilton in connection with the negotiation,
preparation, execution and administration of the Loan Documents and the Bridge
Loan hereunder, and any amendments, modifications and waivers hereto or thereto
and consents to departures from the terms hereof and thereof; and (iii) after
the occurrence of an Event of Default, all actual and reasonable costs and
expenses (including actual and reasonable attorneys fees, including allocated
costs of internal counsel, and costs of settlement) incurred by the Lenders or
the Agent in enforcing any Obligations of or in collecting any payments due from
the Borrower hereunder or under the Bridge Notes by reason of such Event of
Default or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or of
any insolvency or bankruptcy proceedings.
12.4 Indemnity
In addition to the payment of expenses pursuant to Section 12.3,
whether or not the transactions contemplated hereby shall be consummated, the
Borrower agrees to indemnify, pay and hold each of the Lenders, the Agent and
any holder of any of the Bridge Notes, and each of their respective officers,
directors, employees, agents, representatives and affiliates (collectively
called the "Indemnitees"), harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, the actual and reasonable fees and disbursements
of counsel for such Indemnitees in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
such Indemnitee shall be designated as a party thereto), which may be suffered
by, imposed on, incurred by, or asserted against that Indemnitee, in any manner
resulting from, connected with, in respect of, relating to or arising out of
this Agreement, the other Loan Documents, the Commitment Letter,
88
the Lenders' agreements to make the Bridge Loan or the use or intended use of
any of the proceeds of the Bridge Loan hereunder, the issuance of the Exchange
Notes or the Take-Out Securities or the Acquisition including, without
limitation, any Environmental Liabilities and Costs or the breach of any
representation, warranty or covenant in this Agreement (the "Indemnified
Liabilities"); provided that the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Liabilities (i) to the extent
such liabilities are finally judicially determined to have resulted primarily
from (A) the gross negligence or willful misconduct of that Indemnitee or (B)
the failure of such Indemnitee to perform its obligations under any Loan
Document or (C) such Indemnitee's violation of law or (ii) in connection with
the obligations of any Indemnitee under any Loan Document or for any transfer
fees. To the extent that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
12.5 Setoff
Subject to Section 8, in addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Lender, the Agent and each subsequent holder of any Bridge Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower, or to any other Person, any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits (general
or special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured but not including trust
accounts or any other accounts held for the benefit of another Person) and any
other Indebtedness at any time held or owing by such Person or any such
subsequent holder to or for the credit or the account of the Company or the
Borrower against and on account of the obligations and liabilities of the
Company or the Borrower to such Person or such subsequent holder under this
Agreement and the Bridge Notes, including, but not limited to, all claims of any
nature or description arising out of or connected with this Agreement or the
Bridge Notes, irrespective of whether or not (a) such Person or such subsequent
holder shall have made any demand hereunder or (b) such Person or such
subsequent holder shall have declared the principal of or the interest on its
portion of the Bridge Loan and its Bridge Notes and other amounts due hereunder
to be due and payable as permitted by Section 7 and although said obligations
and liabilities, or any of them, may be contingent or unmatured.
12.6 Amendments and Waivers
No amendment, modification, termination or waiver of any term or
provision of this Agreement, of the Bridge Notes, any Guarantee or, prior to the
execution and delivery thereof, of the form of Registration Rights Agreement, or
the form of the Senior Subordinated Indenture or consent to any departure by the
Borrower or any Guarantor therefrom, shall in any event be effective without the
prior written concurrence of the Borrower or such Guarantor, as the case may be,
and the Agent and the Required Lenders, and, upon the request of any Lender, the
receipt of a written opinion of counsel of the Borrower addressed to the Lenders
to the effect that
89
such amendment, modification, termination, waiver or consent does not violate or
conflict with any of the terms and provisions of the Senior Credit Facility or
any other Contractual Obligation of the Borrower; provided that, notwithstanding
the third sentence of Section 12.15, without the prior written consent of each
Lender affected, an amendment, modification, termination or waiver of this
Agreement, any Bridge Notes, any Guarantee or, prior to the execution and
delivery thereof, of the form of Registration Rights Agreement, or the form of
the Senior Subordinated Indenture or consent to departure from a term or
provision hereof or thereof may not: (i) reduce the principal amount of Bridge
Notes whose holders must consent to any such amendment, modification,
termination, waiver or consent; (ii) reduce the rate of or extend the time for
payment of principal or interest on any Note; (iii) reduce the principal amount
of any Note; (iv) make any Note payable in money other than that stated in the
Note; (v) make any change in Section 2.4A(iv) or in the definition of Change of
Control, in the last paragraph of Section 7 or in Section 8.5, 11.5 or 12.6;
(vi) reduce the rate or extend the time of payment of fees or other compensation
payable to the Lenders hereunder; (vii) modify the provisions of Section 8 or
any of the defined terms related thereto in any manner adverse to the Lenders;
or (viii) waive performance by the Borrower of its obligations under, or consent
to any departure from any of the terms and provisions of, Section 2.4A(iv); and
provided, further, that without the consent of the Agent, no such amendment,
modification, termination or waiver may amend, modify, terminate or waive any
provision of Section 9 as the same applies to the Agent or any other provision
of this Agreement as it relates to the rights or obligations of the Agent. No
amendment, modification or waiver of any provision of this Agreement, the Bridge
Notes, any Guarantee or the form of the Senior Subordinated Indenture shall
adversely affect the rights of the holders of Senior Indebtedness or the holders
of Guarantor Senior Indebtedness without their consent. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. Notice to or demand on the Borrower in any case shall
entitle the Borrower to any further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.6 shall be binding upon each holder
of the Bridge Notes at the time outstanding, each further holder of the Bridge
Notes, and, if signed by the Borrower or a Guarantor, on the Borrower and such
Guarantor.
12.7 Independence of Covenants
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitation of, another covenant shall not avoid the occurrence of an Event of
Default or Potential Event of Default if such action is taken or condition
exists.
12.8 Entirety
The Loan Documents and the Commitment Letter embody the entire
agreement of the parties and supersede all prior agreements and understandings,
if any, relating to the subject matter hereof and thereof.
90
12.9 Notices
Unless otherwise provided herein, any notice or other communications
herein required or permitted to be given shall be in writing and may be
personally served, telecopied, telexed or sent by mail and shall be deemed to
have been given when delivered in person, upon receipt of telecopy or telex
against receipt of answer back or four Business Days after depositing it in the
mail, registered or certified, with postage prepaid and properly addressed;
provided that notices shall not be effective until received. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 12.9) shall be set forth under each
party's name on the signature pages hereto.
12.10 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement and the Commitment Letter,
the making of the Bridge Loan hereunder and the execution and delivery of the
Bridge Notes and, notwithstanding the making of the Bridge Loan, the execution
and delivery of the Bridge Notes or any investigation made by or on behalf of
any party, shall continue in full force and effect. The closing of the
transactions herein contemplated shall not prejudice any right of one party
against any other party in respect of anything done or omitted hereunder or in
respect of any right to damages or other remedies.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of the Borrower set forth in Sections 12.3, 12.4,
12.14, 12.15, 12.17, 12.19, 12.22 and 12.23 shall survive the payment of the
Bridge Loan and the Bridge Notes and the termination of this Agreement.
12.11 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of the Agent or any Lender or any
holder of any Bridge Note in the exercise of any power, right or privilege
hereunder, under a Guarantee or under the Bridge Notes shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under this Agreement, under
a Guarantee or the Bridge Notes are cumulative to and not exclusive of any
rights or remedies otherwise available.
12.12 Severability
In case any provision in or obligation under this Agreement, under a
Guarantee or the Bridge Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
91
12.13 Headings
Section and Sub-section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
12.14 Applicable Law
THIS AGREEMENT, EACH GUARANTEE AND THE NOTES SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
12.15 Successors and Assigns; Subsequent Holders of Bridge Notes
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. The terms and provisions
of this Agreement and each Guarantee shall inure to the benefit of any assignee
or transferee of the Bridge Notes pursuant to Section 12.2A, and in the event of
such transfer or assignment, the rights and privileges herein conferred upon the
Lenders shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Except as provided in
Section 12.6, in determining whether the holders of a sufficient aggregate
principal amount of the Bridge Loan shall have consented to any action under
this Agreement, any amount of the Bridge Loan owned or held by the Borrower, any
Guarantor or any of their respective Affiliates shall be disregarded. The
Borrower's rights or any interest therein hereunder may not be assigned without
the prior express written consent of each of the Lenders.
12.16 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents or supplements may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto, and delivery
thereof to the Agent or, in the case of the Lenders, written telex or facsimile
notice or telephonic notification (confirmed in writing) of such execution and
delivery. The Agent will give the Company and each Lender prompt notice of the
effectiveness of this Agreement.
12.17 Consent to Jurisdiction; Venue; Waiver of Jury Trial
A. Any legal action or proceeding with respect to this Agreement, any
Bridge Note or any Guarantee may be brought in the courts of the State of New
York or of the United States for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the parties to this Agreement
hereby irrevocably accepts for itself and in respect of its respective property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
92
of the parties to this Agreement hereby further irrevocably waives any claim
that any such courts lack jurisdiction over such party, and agrees not to plead
or claim, in any legal action or proceeding with respect to this Agreement, the
Bridge Notes or the Guarantees brought in any of the aforesaid courts, that any
such court lacks jurisdiction over such party. Each of the parties to this
Agreement irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its respective address for notices pursuant
to Section 12.9, such service to become effective 30 days after such mailing To
the extent permitted by law, each of the parties to this Agreement hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any Bridge Note or any Guarantee that service of
process was in any way invalid or ineffective. Nothing herein shall affect the
right of any party to this Agreement to serve process in any other manner
permitted by law or to commerce legal proceedings or otherwise proceed against
any party in any other jurisdiction.
B. Each of the parties to this Agreement hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement, the Bridge Notes or the Guarantees brought in the courts referred to
in clause A above and hereby further irrevocably waives and agrees not to plead
or claim in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum.
C. Each of the parties to this Agreement hereby irrevocably waives all
right to a trial by jury in any action, proceeding or counterclaim arising out
of or relating to this Agreement, the Bridge Notes or the Guarantees or the
transactions contemplated hereby or thereby.
12.18 Payments Pro Rata
A. The Agent agrees that promptly after its receipt of each payment of
any interest or premium on or principal of the Bridge Notes from or on behalf of
the Borrower or any Guarantor, it shall, except as otherwise provided in this
Agreement, distribute such payment to the Lenders (other than any Lender that
has consented in writing to waive its pro rata share of such payment) pro rata
based upon their respective pro rata shares, if any, of such payment.
B. Each of the Lenders agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of set-off or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Loan Documents, or otherwise)
which is applicable to the payment of the principal of, or interest on, the
Bridge Loan of a sum which with respect to the related sum or sums received by
other Lenders is in a greater proportion than the total of such Obligation then
owed and due to such Lender bears to the total of such Obligation then owed and
due to all of the Lenders immediately prior to such receipt, then such Lender
receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Company to
such Lenders in such amount as shall result in a proportional participation by
all of the Lenders in such amount; provided that, if all or any portion of such
excess amount is
93
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
12.19 Taxes
A. Each payment by the Borrower or a Guarantor under this Agreement or
under any of the other Loan Documents shall, except as required by law, be made
without withholding or deduction for or on account of any and all present or
future Taxes. If any Taxes are required to be withheld or deducted from any such
payment, the Borrower (or, if the payment is made by a Guarantor, such
Guarantor) shall pay such additional amounts as may be necessary to ensure that
the net amount actually received by each Lender and the Agent after such
withholding or deduction is equal to the amount that each Lender and the Agent
would have received had no such withholding or deduction been required,
provided, however, that no such additional amounts shall be payable in respect
of (i) in the case of each Lender and the Agent, any Taxes imposed on its net
income and franchise taxes imposed on it by the jurisdiction under the laws of
which such Person is organized (unless such Taxes are imposed solely because the
payment was made by a Guarantor and would not have been imposed had such payment
instead been made by the Borrower) or (ii) any Taxes imposed on a payee by
reason of such payee's failure to comply with the provisions of Section 12.2E of
this Agreement.
B. The Borrower shall pay all Taxes referred to in Section 12.19A
before penalties are payable or interest accrues thereon, but if any such
penalties are payable or interest accrues, the Borrower shall make payment
thereof when due to the appropriate governmental authority.
C. The Borrower shall pay any present or future stamp, transfer or
documentary taxes or any other excise or property taxes, charges or similar
levies, and any penalties, additions to tax or interest due with respect
thereto, that may be imposed by any jurisdiction (or any political subdivision
or taxing authority thereof or therein) which arise from any payment made by the
Borrower hereunder or under any of the other Loan Documents or in connection
with the execution, delivery or registration of this Agreement or any of the
other Loan Documents.
D. If any Lender or the Agent pays any Taxes or other amounts that the
Borrower or a Guarantor is required to pay pursuant to this Section 12.19, the
Borrower shall indemnify it on demand in full in the currency in which such
Taxes or other amounts are paid, whether or not such Taxes were correctly or
legally asserted, together with interest thereon from and including the date of
payment to but excluding the date of reimbursement at a rate per annum
determined in accordance with Section 2.2.
E. The Borrower shall furnish to the Agent and each of the Lenders the
original or a certified copy of a receipt evidencing any payment of Taxes made
by the Borrower as soon as such receipt becomes available.
F. The provisions of this Section 12.19 shall survive the termination
of the Agreement and repayment of all Obligations.
94
12.20 Waiver of Stay, Extension or Usury Laws
The Borrower covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Borrower from paying all or any
portion of the principal of or interest on the Bridge Loan as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Agreement; and (to the extent
that it may lawfully do so) the Borrower hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Agent, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
12.21 Requirements of Law
(a) In the event that any change in law occurring after the date that
any lender becomes a Lender party to this Agreement with respect to such Lender
shall, in the opinion of such Lender, require that any Bridge Loan Commitment of
such Lender be treated as an asset or otherwise be included for purposes of
calculating the appropriate amount of capital to be maintained by such Lender or
any corporation controlling such Lender, and such change in law shall have the
effect of reducing the rate of return on such Lender's or such corporation's
capital, as the case may be, as a consequence of such Lender's obligations
hereunder to a level below that which such Lender or such corporation, as the
case may be, could have achieved but for such change in law (taking into account
such Lender's or such corporation's policies, as the case may be, with respect
to capital adequacy) by an amount deemed by such Lender to be material, then
from time to time following notice by such Lender to the Borrower of such change
in law as provided in paragraph (b) of this Section 12.21, within 15 days after
demand by such Lender, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender or such corporation, as the
case may be, for such reduction.
(b) The Borrower shall not be required to make any payments to any
Lender for any additional amounts pursuant to this Section 12.21 unless such
Lender has given written notice to the Borrower, through the Agent, of its
intent to request such payments prior to or within 60 days after the date on
which such Lender became entitled to claim such amounts. If any Lender requests
compensation from the Borrower under this Section 12.21, the Borrower may, by
notice to such Lender (with a copy to the Agent), suspend the obligation of such
Lender thereafter to make or continue Bridge Loan, until the requirement of law
giving rise to such request ceases to be in effect; provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested.
12.22 Confidentiality
Each Lender shall hold all non-public information obtained pursuant to
the requirements of or in connection with this Agreement which has been
identified as confidential by the Borrower in accordance with such Lender's
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices, it being
95
understood and agreed by the Borrower that (i) in any event a Lender may make
disclosures reasonably required by any bona fide assignee, transferee or
participant in connection with the contemplated assignment or transfer by such
Lender of any Bridge Loan or any participation therein or as required or
requested by any governmental agency or representative thereof or pursuant to
legal process; provided that unless specifically prohibited by applicable law or
court order, each Lender shall notify the Borrower of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information and (ii) a Lender may share with any of
its affiliates, and such affiliates may share with any Lender, any information
related to the Borrower or any of its Affiliates (including information relating
to creditworthiness), the Acquisition or the financing therefor; and provided,
further, that in no event shall any Lender be obligated or required to return
any materials furnished by the Company or any of its Subsidiaries. In connection
with any sales, assignments or transfers referred to in Section 12.2A, a Lender
shall obtain agreements from the purchasers, assignees or transferees, as the
case may be, reasonably satisfactory to the Borrower, that such parties will
comply with this Section 12.22.
12.23 Compensation
The Borrower shall compensate each Lender, upon its written request
(which request shall set forth the basis for requesting such compensation), for
all reasonable losses, expenses and liabilities (including, without limitation,
any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund its
Bridge Loan but excluding loss of anticipated profit with respect to any Bridge
Loan) which such Lender may sustain: (i) if for any reason (other than a default
by such Lender or the Agent) a borrowing of the Bridge Loan does not occur on a
date specified therefor in a Notice of Borrowing (whether or not withdrawn by
the Borrower); (ii) if any repayment of the Bridge Loan occurs on a date which
is not the last day of an Interest Period applicable hereto; (iii) if any
prepayment of any Bridge Loan is not made on any date specified in a notice of
prepayment given by the Borrower; or (iv) as a consequence of any other default
by the Borrower to repay its Bridge Loan when required by the terms of this
Agreement. Calculation of all amounts payable to a Lender under this Section
12.23 shall be made as though that Lender had actually funded the Bridge Loan
utilizing the Applicable LIBOR Rate, through the purchase of a LIBOR rate
deposit bearing interest at the Applicable LIBOR Rate in an amount equal to the
amount of that Loan, having a maturity comparable to the relevant Interest
Period.
96
WITNESS the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
COMPANY:
GALEY & LORD INDUSTRIES, INC.
By: /s/ Michael R. Harmon
---------------------------------
Name: Michael R. Harmon
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
GUARANTORS:
GALEY & LORD, INC.
By: /s/ Michael R. Harmon
---------------------------------
Name: Michael R. Harmon
Title: Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
G&L SERVICE COMPANY, NORTH
AMERICA, INC.
By: /s/ Michael R. Harmon
-----------------------------------
Name: Michael R. Harmon
Title: President, Treasurer and Secretary
Notice Address:
7736 McCloud Road
One Triad Center, Suite 300
Greensboro, NC 27409
Attention: Michael R. Harmon
Telephone: (910) 665-3037
Telecopy (910) 665-3113
AGENT:
FIRST UNION CORPORATION
as agent
By: /s/ Braxton B. Comer
----------------------------------
Name: Braxton B. Comer
Title: Senior Vice President
Notice Address:
301 South College Street
Charlotte, NC 28288
Attention: Kevin Smith
Telephone: (704) 374-4702
Telecopy: (704) 383-9527
LENDERS:
Commitment: $250,000,000 FIRST UNION CORPORATION
By: /s/ Braxton B. Comer
-----------------------------------
Name: Braxton B. Comer
Title: Senior Vice President
Notice Address:
301 South College Street
Charlotte, NC 28288
Attention: Kevin Smith
Telephone: (704) 374-4702
Telecopy: (704) 383-9527