REVOLVING CREDIT
AND
SECURITY AGREEMENT
GMAC COMMERCIAL CREDIT LLC,
AS AGENT AND LENDER
WITH
DELTA MILLS, INC.,
AS BORROWER
March 31, 2000
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TABLE OF CONTENTS
I. DEFINITIONS..........................................................................................1
1.1 Accounting Terms.........................................................................1
1.2 General Terms............................................................................1
1.3 Uniform Commercial Code Terms...........................................................16
1.4 Certain Matters of Construction.........................................................16
II. ADVANCES, PAYMENTS..................................................................................17
2.1 (a) Total Revolving Advances.....................................................17
2.2 Procedure for Borrowing Revolving Advances..............................................18
2.3 Disbursement of Advance Proceeds........................................................18
2.4 Repayment of Advances...................................................................18
2.5 Repayment of Excess Advances............................................................19
2.6 Statement of Account....................................................................19
2.7 Letters of Credit.......................................................................19
2.8 Issuance of Letters of Credit...........................................................20
2.9 Requirements For Issuance of Letters of Credit..........................................20
2.10 Additional Payments.....................................................................21
2.11 Manner of Borrowing and Payment.........................................................22
2.12 Use of Proceeds.........................................................................23
2.13 Defaulting Lender.......................................................................23
III. INTEREST AND FEES...................................................................................24
3.1 Interest................................................................................24
3.2 Letter of Credit Fees...................................................................25
3.3 Commitment Fee..........................................................................25
3.4 Computation of Interest and Fees........................................................26
3.5 Collateral Monitoring Fee...............................................................26
3.6 Maximum Charges.........................................................................26
3.7 Increased Costs.........................................................................26
3.8 Basis For Determining Interest Rate Inadequate or Unfair................................27
3.9 Capital Adequacy........................................................................28
IV. COLLATERAL: GENERAL TERMS..........................................................................28
4.1 Security Interest in the Collateral.....................................................28
4.2 Perfection of Security Interest.........................................................28
4.3 Disposition of Collateral...............................................................29
4.4 Preservation of Collateral..............................................................29
4.5 Ownership of Collateral.................................................................29
4.6 Defense of Agent's and Lender's Interests...............................................30
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4.7 Books and Records.......................................................................30
4.8 Financial Disclosure....................................................................30
4.9 Compliance with Laws....................................................................31
4.10 Inspection of Premises..................................................................31
4.11 Insurance...............................................................................31
4.12 Failure to Pay Insurance................................................................32
4.13 Payment of Taxes........................................................................32
4.14 Payment of Leasehold Obligations........................................................32
4.15 Receivables.............................................................................32
(a) Nature of Receivables........................................................32
(b) Solvency of Customers........................................................33
(c) Locations of Borrower........................................................33
(d) Collection of Receivables....................................................33
(e) Notification of Assignment of Receivables....................................33
(f) Power of Agent to Act on Borrower's Behalf...................................33
(g) No Liability.................................................................34
(h) Establishment of a Lockbox Account, Dominion Account.........................34
(i) Adjustments..................................................................35
4.16 Inventory...............................................................................35
4.17 Maintenance of Equipment................................................................35
4.18 Exculpation of Liability................................................................35
4.19 Environmental Matters...................................................................35
4.20 Financing Statements....................................................................37
V. REPRESENTATIONS AND WARRANTIES......................................................................37
5.1 Authority...............................................................................37
5.2 Formation and Qualification.............................................................37
5.3 Survival of Representations and Warranties..............................................38
5.4 Tax Returns.............................................................................38
5.5 Financial Statements....................................................................38
5.6 Corporate Name..........................................................................39
5.7 O.S.H.A. and Environmental Compliance...................................................39
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.............................39
5.9 Patents, Trademarks, Copyrights and Licenses............................................40
5.10 Licenses and Permits....................................................................41
5.11 Default of Indebtedness.................................................................41
5.12 No Default..............................................................................41
5.13 No Burdensome Restrictions..............................................................41
5.14 No Labor Disputes.......................................................................41
5.15 Margin Regulations......................................................................41
5.16 Investment Company Act..................................................................42
5.17 Disclosure..............................................................................42
5.18 Swaps...................................................................................42
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5.19 Conflicting Agreements..................................................................42
5.20 Application of Certain Laws and Regulations.............................................42
5.21 Business and Property of Borrower.......................................................42
VI. AFFIRMATIVE COVENANTS...............................................................................42
6.1 Payment of Fees.........................................................................43
6.2 Conduct of Business and Maintenance of Existence and Assets.............................43
6.3 Violations..............................................................................43
6.4 Government Receivables..................................................................43
6.5 Execution of Supplemental Instruments...................................................43
6.6 Payment of Indebtedness.................................................................43
6.7 Standards of Financial Statements.......................................................43
6.8 Year 2000 Compliance....................................................................44
6.9 Maximum Leverage Ratio..................................................................44
6.10 Sale of Rainsford Assets................................................................45
6.11 Material Contracts......................................................................45
VII. NEGATIVE COVENANTS..................................................................................45
7.1 Merger, Consolidation, Acquisition and Sale of Assets...................................45
7.2 Creation of Liens.......................................................................46
7.3 Guarantees..............................................................................46
7.4 Investments.............................................................................46
7.5 Loans...................................................................................46
7.6 Capital Expenditures....................................................................46
7.7 Dividends...............................................................................47
7.8 Indebtedness............................................................................47
7.9 Nature of Business......................................................................47
7.10 Transactions with Affiliates............................................................47
7.11 Leases..................................................................................47
7.12 Subsidiaries............................................................................47
7.13 Fiscal Year and Accounting Changes......................................................47
7.14 Pledge of Credit........................................................................47
7.15 Amendment of Articles of Incorporation, By-Laws.........................................48
7.16 Compliance with ERISA...................................................................48
7.17 Prepayment of Indebtedness..............................................................48
7.18 Management Compensation and Bonuses.....................................................48
VIII. CONDITIONS PRECEDENT................................................................................48
8.1 Conditions to Initial Advances..........................................................49
(a) Notes........................................................................49
(b) Filings, Registrations and Recordings........................................49
(c) Corporate Proceedings of Borrower and Guarantor..............................49
(d) Incumbency Certificate of Borrower and Guarantor.............................49
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(e) Certificates.................................................................49
(f) Good Standing Certificates...................................................50
(g) Legal Opinions...............................................................50
(h) No Litigation................................................................50
(i) Financial Condition Certificates.............................................50
(j) Collateral Examination.......................................................51
(l) Financial Projections and Other Financial Information........................51
(m) Other Documents..............................................................51
(n) Guaranties...................................................................51
(o) Insurance....................................................................51
(p) Payment Instructions.........................................................51
(q) Consents.....................................................................51
(r) No Adverse Material Change...................................................52
(s) Leasehold Agreements.........................................................52
(t) Net Worth....................................................................52
(u) Closing Certificate..........................................................52
(v) Borrowing Base...............................................................52
(y) Other........................................................................52
8.2 Conditions to Each Advance..............................................................52
(a) Representations and Warranties...............................................53
(b) No Default...................................................................53
(c) Maximum Advances.............................................................53
IX. INFORMATION AS TO BORROWER..........................................................................53
9.1 Disclosure of Material Matters..........................................................53
9.2 Schedules...............................................................................53
9.3 Environmental Reports...................................................................54
9.4 Litigation..............................................................................54
9.5 Material Occurrences....................................................................54
9.6 Government Receivables..................................................................54
9.7 Annual Financial Statements.............................................................54
9.8 Quarterly Financial Statements..........................................................55
9.9 Monthly Financial Statements............................................................55
9.10 Other Reports...........................................................................56
9.11 Additional Information..................................................................56
9.12 Projected Operating Budget..............................................................56
9.13 Variances From Operating Budget.........................................................56
9.14 Notice of Suits, Adverse Events.........................................................56
9.15 ERISA Notices and Requests..............................................................57
9.16 Additional Documents....................................................................57
X. EVENTS OF DEFAULT...................................................................................58
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XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT..........................................................60
11.1 Rights and Remedies.....................................................................60
11.2 Agent's Discretion......................................................................61
11.3 Setoff..................................................................................61
11.4 Rights and Remedies not Exclusive.......................................................61
XII. WAIVERS AND JUDICIAL PROCEEDINGS....................................................................61
12.1 Waiver of Notice........................................................................61
12.2 Delay...................................................................................62
12.3 JURY TRIAL WAIVER.......................................................................62
XIII. EFFECTIVE DATE AND TERMINATION......................................................................62
13.1 Term....................................................................................62
13.2 Termination.............................................................................63
XIV. REGARDING AGENT.....................................................................................63
14.1 Appointment.............................................................................63
14.2 Nature of Duties........................................................................64
14.3 Lack of Reliance on Agent and Resignation...............................................64
14.4 Certain Rights of Agent.................................................................65
14.5 Reliance................................................................................65
14.6 Notice of Default.......................................................................65
14.7 Indemnification.........................................................................65
14.8 Agent in its Individual Capacity........................................................66
14.9 Delivery of Documents...................................................................66
14.10 Borrower's Undertaking to Agent.........................................................66
XV. MISCELLANEOUS.......................................................................................66
15.1 GOVERNING LAW...........................................................................66
15.2 Entire Understanding....................................................................67
15.3 Successors and Assigns; Participations; New Lenders.....................................68
15.4 Application of Payments.................................................................69
15.5 Indemnity...............................................................................69
15.6 Notice..................................................................................70
15.7 Survival................................................................................71
15.8 Severability............................................................................71
15.9 Expenses................................................................................71
15.10 Injunctive Relief.......................................................................71
15.11 Consequential Damages...................................................................71
15.12 Captions................................................................................71
15.13 Counterparts; Telecopied Signatures.....................................................71
15.14 Construction...........................................................................71
v
REVOLVING CREDIT
AND
SECURITY AGREEMENT
Revolving Credit and Security Agreement dated March ___, 2000 among DELTA
MILLS, INC., a corporation organized under the laws of the State of Delaware
("Borrower"), the undersigned financial institutions (collectively, the
"Lenders" and individually a "Lender") and GMAC COMMERCIAL CREDIT LLC
("GMACCC"), a limited liability company formed under the laws of the State of
New York, as agent for the Lenders (GMACCC, in such capacity, the "Agent").
IN CONSIDERATION of the mutual covenants and undertakings herein contained,
each of Borrower, Lenders and Agent hereby agree as follows:
I. DEFINITIONS.
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1.1 Accounting Terms. As used in this Agreement, the Notes or any
-----------------
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP, provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP applied in preparation of all financial
statements of Borrower. All references herein to "consolidated basis" shall
apply to Borrower and all of its subsidiaries.
1.2 General Terms. For purposes of this Agreement the following terms shall
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have the following meanings:
"Accountants" shall have the meaning set forth in Section 9.7 hereof.
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"Advances" shall mean and include the Revolving Advances and Letters of
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Credit.
"Advance Rates" shall have the meaning set forth in Section 2.1(a)(y)(ii)
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hereof.
"Affiliate" of any Person shall mean (a) any Person (other than a
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Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with such Person, or (b) any Person who is a director
or officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this definition,
control of a Person shall mean the power, direct or indirect, (x) to vote ten
percent (10%) or more of the securities having ordinary voting power for the
election of directors of such Person, or (y) to direct or cause the direction of
the management and policies of such Person whether by contract or otherwise.
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"Agent" shall have the meaning set forth in the preamble to this Agreement
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and shall include its successors and assigns.
"Agent's security interest" or words of similar import shall have the
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meaning set forth in Section 4.1 hereof.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal to
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the higher of (i) the Prime Rate in effect on such day and (ii) the Federal
Funds Rate in effect on such day plus one-half of one percent (.5%).
"Applicable Margin for Domestic Rate Loans" shall mean, for any given
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month, if the Borrower's Leverage Ratio as at the last day of Borrower's
immediately preceding fiscal quarter (as determined from the Borrower's
financial statements most recently delivered in accordance with Section 9.8
hereof), is (a) greater than 4.5:1, then the Applicable Margin for Domestic Rate
Loans for such month shall be 0.75%; (b) greater than 4.0:1 but less than or
equal to 4.5:1, then the Applicable Margin for Domestic Rate Loans for such
month shall be 0.5%; (c) greater than 3.0:1 but less than or equal to 4.0:1,
then the Applicable Margin for Domestic Rate Loans for such month shall be
0.25%; and (d) equal to or less than 3.0:1, then the Applicable Margin for
Domestic Rate Loans for such month shall be 0%.
"Applicable Margin for Eurodollar Rate Loans" shall mean, for any given
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month, if the Borrower's Leverage Ratio as at the last day of Borrower's
immediately preceding fiscal quarter (as determined from the Borrower's
financial statements most recently delivered in accordance with Section 9.8
hereof), is (a) greater than 4.5:1, then the Applicable Margin for Eurodollar
Rate Loans for such month shall be 1.75%; (b) greater than 4.0:1 but less than
or equal to 4.5:1, then the Applicable Margin for Eurodollar Rate Loans for such
month shall be 1.50%; (c) greater than 3.0:1 but less than or equal to 4.0:1,
then the Applicable Margin for Eurodollar Rate Loans for such month shall be
1.25%; and (d) equal to or less than 3.0:1, then the Applicable Margin for
Eurodollar Rate Loans for such month shall be 1.0%.
"Assignment of Factoring Proceeds" shall mean the Assignment of Factoring
---------------------------------
Proceeds dated the Closing Date between Borrower and Factor.
"Authority" shall have the meaning set forth in Section 4.19(d) hereof.
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"Bank" shall mean The Bank of New York, and its successors and assigns.
----
"Blocked Accounts" shall have the meaning set forth in Section 4.15(h)
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hereof.
"Borrower" shall have the meaning set forth in the preamble to this
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Agreement and shall include its permitted successors and assigns.
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"Business Day" shall mean any day other than a day on which commercial
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banks in New York or South Carolina are authorized or required by law to close.
"Capital Lease" shall mean, as applied to any Person, any lease of any
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property (whether real, personal or mixed) by that Person as lessee which, in
accordance with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" shall mean (i) in the case of a corporation, capital stock,
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(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distribution of assets of, the issuing Person.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
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and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.
"Change of Control" shall mean the occurrence of any of the following
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events: (a) the Original Owner shall fail to own, directly or indirectly, one
hundred percent (100%) of the capital stock of Borrower; or (b) the occurrence
of a "Change of Control" under and as defined in the Senior Note Indenture.
"Charges" shall mean all taxes, charges, fees, imposts, levies or other
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assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation and property taxes,
custom duties, fees, assessments, liens, claims and charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority, domestic or
foreign (including, without limitation, the PBGC or any environmental agency or
superfund), upon the Collateral, the Borrower or any of its Affiliates.
"Closing Date" shall mean the date hereof.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from time
----
to time and the regulations promulgated thereunder.
"Collateral" shall mean and include:
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(a) all Receivables;
(b) all General Intangibles;
(c) all Inventory;
3
(d) all Subsidiary Stock;
(e) all of Borrower's right, title and interest in and to (i) all
merchandise returned or rejected by Customers, relating to or securing
any of the Receivables; (ii) all of Borrower's rights as a consignor,
a consignee, an unpaid vendor, mechanic, artisan, or other lienor,
including stoppage in transit, setoff, detinue, replevin, reclamation
and repurchase; (iii) all additional amounts due to Borrower from any
Customer relating to the Receivables; (iv) other property, including
warranty claims, relating to any goods securing this Agreement; (v)
all of Borrower's credit balances and factoring proceeds due from
Factor under the Factoring Agreement, (vi) to the extent arising out
of or resulting from the sale or lease of Inventory or rendering of
services by Borrower all instruments, documents, chattel paper,
deposit accounts; (vii) if and when obtained by Borrower, all real and
personal property of third parties in which Borrower has been granted
a lien or security interest as security for the payment or enforcement
of Receivables; and (viii) any other goods, personal property or real
property now owned or hereafter acquired in which Borrower has
expressly granted a security interest or may in the future grant a
security interest to Agent hereunder, or in any amendment or
supplement hereto or thereto, or under any other agreement between
Agent and Borrower;
(f) all of Borrower's ledger sheets, ledger cards, files, correspondence,
records, books of account, business papers, computers, computer
software (whether owned by Borrower or in which it has an interest),
computer programs, tapes, disks and documents relating to (a), (b),
(c), (d) or (e) of this Paragraph; and
(g) all proceeds and products of (a), (b), (c), (d), (e) and (f) in
whatever form, including, but not limited to: cash, deposit accounts
(whether or not comprised solely of proceeds), certificates of
deposit, insurance proceeds (including hazard, flood and credit
insurance), negotiable instruments and other instruments for the
payment of money, chattel paper, claims by Borrower against any third
parties for infringement of intellectual property, security
agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
"Commitment Percentage" of any Lender shall mean the percentage set forth
----------------------
below such Lender's name on the signature page hereof as same may be adjusted
upon any assignment by a Lender pursuant to Section 15.3(c) hereof.
"Commitment Transfer Supplement" shall mean a document in the form of
--------------------------------
Exhibit 15.3 hereto, properly completed and otherwise in form and substance
satisfactory to Agent by which the Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to make Advances under this Agreement.
"Consents" shall mean all filings and all licenses, permits, consents,
--------
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties, domestic or foreign, necessary to carry on Borrower's
business, including, without limitation, any Consents required under all
applicable federal, state or other applicable law.
4
"Controlled Group" shall mean all members of a controlled group of
-----------------
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with Borrower, are treated as a single employer
under Section 414 of the Code.
"Credit Risk" means the risk of loss resulting solely and exclusively from
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a Customer's inability to pay at maturity with respect to any Receivable
purchased under the Factoring Agreement.
"Customer" shall mean and include the account debtor with respect to any
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Receivable and/or the prospective purchaser of goods, services or both with
respect to any contract or contract right, and/or any party who enters into or
proposes to enter into any contract or other arrangement with Borrower, pursuant
to which Borrower is to deliver any personal property or perform any services.
"Default" shall mean an event which, with the giving of notice or passage
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of time or both, would constitute an Event of Default.
"Default Rate" shall mean a rate equal to two percent (2%) per annum in
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excess of (a) the Revolving Interest Rate and the Letter of Credit Fees in the
absence of an Overadvance, and (b) the Overadvance Rate during the existence of
an Overadvance.
"Defaulting Lender" shall have the meaning set forth in Section 2.13(a)
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hereof.
"Depository Accounts" shall have the meaning set forth in Section 4.15(h)
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hereof.
"Dispute" shall have the meaning set forth in the Factoring Agreement.
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"Documents" shall have the meaning set forth in Section 8.1(c) hereof.
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"Dollars" and the sign "$" shall mean lawful money of the United States of
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America.
"Domestic Rate Loan" shall mean any Revolving Advance that bears interest
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based upon the Alternate Base Rate.
"EBITDA" shall mean for any given period for Borrower on a consolidated
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basis, (a) net income (or loss) determined in accordance with GAAP less all
extraordinary gains or losses plus (b) the aggregate amount of all depreciation
and amortization and other non-cash expenses during such period plus (c) the
aggregate amount of interests expense for such period plus (d) the aggregate
amount of all income taxes reflected on Borrower's financial statements for such
period.
"Eligible Inventory" shall mean and include raw material and finished goods
------------------
Inventory of Borrower located in the continental United States, excluding work
in process, valued
5
at the lower of cost or market value, determined on a first-in-first-out basis,
which is not, in Agent's opinion obsolete, slow moving or unmerchantable and
which Agent, in its judgment exercised in good faith, shall not deem ineligible
Inventory, based on such considerations as Agent may from time to time deem
appropriate including, without limitation, whether the Inventory is subject to a
perfected, first priority security interest in favor of Agent, for the ratable
benefit of Lenders, and whether the Inventory conforms to all standards imposed
by any governmental agency, division or department thereof which has regulatory
authority over such goods or the use or sale thereof. Notwithstanding anything
to the contrary contained herein, Eligible Inventory shall include Eligible L/C
Inventory and shall not include Inventory located in any public warehouse or
other rented or leased location unless (i) such rented or leased location is
located in the continental United States, and (ii) the warehousemen, lessor or
other third party owner of such location has executed a waiver with respect to
such Person's rights to the Inventory located at such premises, in form and
content satisfactory to Agent; provided, however, that on and after the date
which is 180 days after the Closing Date, Inventory located at the South
Carolina Bond property shall not be Eligible Inventory unless and until the
Agent shall have received a landlord's waiver satisfactory to the Agent with
respect to such Inventory.
"Eligible L/C Inventory" shall mean all raw material and finished goods
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Inventory owned by Borrower and covered by Letters of Credit, and which raw
material and finished goods Inventory are in transit to one of the Borrower's
locations in the Continental United States, and which raw material and finished
goods Inventory (a) as of the date such Inventory is owned by the Borrower (i)
is fully insured, (ii) is subject to a first priority security interest in and
lien upon such goods in favor of Agent, for the ratable benefit of Lenders
(except for any possessory lien upon such goods in the possession of a freight
carrier or shipping company securing only the freight charges for the
transportation of such goods to such Borrower) and (iii) all documents, notices,
instruments, statements and bills of lading relating thereto, if any, which
Agent may deem necessary or desirable to evidence ownership by Borrower and/or
to give effect to and protect the liens, security interests and other rights of
Agent in connection therewith, are delivered to Agent; and (b) are and remain
acceptable to Agent for lending purposes in its sole and absolute discretion.
"Eligible Receivables" shall mean and include each Receivable of Borrower
---------------------
arising in the ordinary course of Borrower's business and which Agent, in its
sole credit judgment, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time deem appropriate. Notwithstanding
the prior sentence, a Receivable shall be eligible if the Factor has assumed and
retained the Credit Risk on such Receivable, the Receivable is not in Dispute
and the proceeds of such Receivable have been assigned to Agent for the ratable
benefit of Lenders.
"Environmental Complaint" shall have the meaning set forth in Section
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4.19(d) hereof.
"Environmental Laws" shall mean all federal, state and local environmental,
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land use, zoning, health, chemical use, safety and sanitation laws, statutes,
ordinances and codes relating to the protection of the environment and/or
governing the use, storage, treatment, generation,
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transportation, processing, handling, production or disposal of Hazardous
Substances and the rules, regulations, policies, guidelines, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto, including, without limitation,
CERCLA and RCRA.
"Equipment" shall mean and include all of Borrower's goods (excluding
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Inventory) whether now owned or hereafter acquired and wherever located
including, without limitation, all equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings, fixtures, parts, accessories and all
replacements and substitutions therefor or accessions thereto.
"ERISA Plan" shall mean any employee benefit plan within the meaning of
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Section 3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
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amended from time to time and the rules and regulations promulgated thereunder.
"Eurodollar Rate Loan" shall mean any Advance that at any time bears
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interest based upon the Eurodollar Rate.
"Eurodollar Rate" shall mean the average thirty (30) day rate at which
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eurodollar deposits for one month are offered in the interbank eurodollar market
as reported from time to time in the Wall Street Journal, computed and averaged
monthly.
"Event of Default" shall mean the occurrence of any of the events set forth
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in Article X hereof.
"Factor" shall mean GMAC Commercial Credit LLC and its successors and
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assigns.
"Factoring Agreement" shall mean, individually and collectively, the
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Amended and Restated Factoring Service Agreement effective as of March 31, 1993
between Borrower and Factor, and the Factoring Service Agreement effective as of
July 15, 1986 between Borrower and Factor, as each such agreement exists, has
been or may hereafter be amended, restated, renewed, extended, supplemented,
substituted or otherwise modified from time to time.
"Federal Funds Rate" shall mean, for any day, the weighted average of the
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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 immediately 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 quotations for
such day on such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by the Bank.
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"Formula Amount" shall have the meaning set forth in Section 2.1(a) hereof.
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"Funded Indebtedness" means, with respect to any Person, without
---------------------
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.2, (b) all Indebtedness
of another Person of the type referred to in clause (a) above secured by (or for
which the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all Guaranty Obligations of
such Person with respect to Indebtedness of the type referred to in clause (a)
above of another Person, (d) Indebtedness of the type referred to in clause (a)
above of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto, and (e) all Indebtedness of such Person of the type referred to in
clause (a) above relating to deferred compensation of employees, officers and
directors of such Person.
"GAAP" shall mean generally accepted accounting principles in the United
----
States of America in effect from time to time.
"General Intangibles" shall mean and include all of Borrower's now owned
--------------------
and hereafter acquired general intangibles, as such term is defined in the
Uniform Commercial Code in effect in the State of New York from time to time, to
the extent arising out of or resulting from the sale or lease of Inventory or
the rendering of services by Borrower.
"GMACCC" shall have the meaning set forth in the preamble to this Agreement
------
and shall include its successors and assigns.
"Governmental Body" shall mean any nation or government, any state or other
-----------------
political subdivision thereof or any entity exercising the legislative,
judicial, regulatory or administrative functions of or pertaining to a
government.
"Guarantor" shall mean, individually and collectively, Delta Mills
---------
Marketing, Inc., a Delaware corporation, and any other Person that at any time
executes a Guaranty.
"Guaranty" shall mean, individually and collectively, each guaranty of the
--------
obligations of Borrower executed by a Guarantor in favor of Lenders.
"Guaranty Obligations" means, with respect to any Person, without
----------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of any other Person in
any manner, whether direct or indirect, and including without limitation any
obligation, whether or not contingent, (i) to purchase any such Indebtedness or
any property
8
constituting security therefor, (ii) to advance or provide funds or other
support for the payment or purchase of any such Indebtedness or to maintain
working capital, solvency or other balance sheet condition of such other Person
(including without limitation keep well agreements, maintenance agreements,
comfort letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless the
holder of such Indebtedness against loss in respect thereof. The amount of any
Guaranty Obligation hereunder shall (subject to any limitations set forth
therein) be deemed to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in respect of which
such Guaranty Obligation is made.
"Hazardous Discharge" shall have the meaning set forth in Section 4.19(d)
--------------------
hereof.
"Hazardous Substance" shall mean, without limitation, any flammable
--------------------
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or toxic substances or
related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental Conservation Law or any other applicable
Environmental Law and in the regulations adopted pursuant thereto.
"Hazardous Wastes" shall mean all waste materials subject to regulation
-----------------
under CERCLA, RCRA or applicable state law, and any other applicable Federal and
state laws now in force or hereafter enacted relating to hazardous waste
disposal.
"Hedging Agreements" means any interest rate protection agreement or
-------------------
foreign currency exchange agreement.
"Indebtedness" of any Person means (a) all obligations of such Person for
------------
borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest payments are
customarily made, (c) all obligations of such Person under conditional sale or
other title retention agreements relating to property purchased by such Person
(other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all obligations
of such Person issued or assumed as the deferred purchase price of property or
services purchased by such Person (other than (i) trade debt incurred in the
ordinary course of business and due within six months of the incurrence thereof
and (ii) deferred compensation payable to employees of such Person on a basis
generally consistent with past practices) which would appear as liabilities on a
balance sheet of such Person, (e) all obligations of such Person under
take-or-pay or similar arrangements or commodities agreements not entered into
in the ordinary course of such Person's business, (f) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or payable out of the
proceeds of production from, property owned or acquired by such Person, whether
or not the obligations secured thereby have been
9
assumed, (g) all Guaranty Obligations of such Person, (h) the principal portion
of all obligations of such Person under Capital Leases (but not under Operating
Leases), (i) all obligations of such Person under Hedging Agreements, (j) the
maximum amount of all standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (k) all preferred Capital
Stock issued by such Person and required by the terms thereof to be redeemed, or
for which mandatory sinking fund payments are due, by a fixed date, (l) the
principal portion of all obligations of such Person under synthetic leases and
(m) the Indebtedness of any partnership or unincorporated joint venture in which
such Person is a general partner or a joint venturer.
"Inventory" shall mean and include all of Borrower's now owned or hereafter
---------
acquired goods, merchandise and other personal property, wherever located, to be
furnished under any contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any
kind, nature or description which are or might be used or consumed in Borrower's
business or used in selling or furnishing such goods, merchandise and other
personal property, and all documents of title or other documents representing
them.
"Inventory Advance Rate" shall have the meaning set forth in Section
------------------------
2.1(a)(y)(ii) hereof.
"Lender" and "Lenders" shall have the meaning ascribed to such term in the
------ -------
preamble to this Agreement, including without limitation, GMACCC in its capacity
as Lender, and shall include each Person which is a transferee, successor or
assign of any Lender.
"Letters of Credit" shall have the meaning set forth in Section 2.7 hereof.
-----------------
"Letter of Credit Fees" shall have the meaning set forth in Section 3.2
----------------------
hereof.
"Leverage Ratio" shall mean, as of the last day of each fiscal quarter of
---------------
Borrower, the ratio of (a) the average outstanding Funded Indebtedness on the
last day of each month of the four consecutive fiscal quarters of Borrower's
ending on such date to (b) EBITDA for the four consecutive fiscal quarters of
Borrower's ending on such date.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, security interest, lien (whether statutory or otherwise), claim or
encumbrance, or preference, priority or other security agreement or preferential
arrangement held or asserted in respect of any asset of any kind or nature
whatsoever including, without limitation, any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as
any of the foregoing, and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Effect" shall mean a material adverse effect upon (a) the
-----------------------
condition, operations, assets or business of the applicable Person or Persons,
(b) Borrower's ability to pay the
10
Obligations in accordance with the terms thereof, (c) the value of the
Collateral or (d) the practical realization of the benefits of Lender's rights
and remedies under this Agreement and the material Other Documents.
"Maximum Loan Amount" shall mean $65,000,000 as reduced pursuant to Section
-------------------
6.10.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
-------------------
Sections 3(37) and 4001(a)(3) of ERISA.
"Net Worth" at a particular date, shall mean all amounts which would be
---------
included under shareholders' equity on a balance sheet of the Borrower on a
consolidated basis determined in accordance with GAAP as at such date.
"Notes" shall mean the Revolving Credit Notes.
-----
"Obligations" shall mean and include all loans, indebtedness, liabilities,
-----------
obligations, covenants and duties of Borrower to Agent and/or Lenders, of every
kind, nature and description, arising under or relating to this Agreement, the
Other Documents, or the transactions hereunder or relating hereto or under any
of the foregoing, including principal, interest, charges, fees, costs and
expenses, however evidenced, whether as principal, surety, endorser, guarantor
or otherwise, whether arising under this Agreement or the Other Documents,
whether now existing or hereafter arising, whether arising before, during or
after the initial Term or any renewal Term of this Agreement or after the
commencement of any case with respect to Borrower under the United States
Bankruptcy Code or any similar statute (including, without limitation, the
payment of interest and other amounts which would accrue and become due but for
the commencement of such case), whether direct or indirect, absolute or
contingent, joint or several, due or not due, primary or secondary, liquidated
or unliquidated, secured or unsecured, original, renewed or extended, and
whether arising directly or acquired from others, and including, without
limitation, Lenders' and Agent's fees, charges, commissions, interest, expenses,
costs and attorneys' fees chargeable to Borrower under this Agreement, the Other
Documents or in connection with any of the foregoing.
"Operating Leases" means, as applied to any Person, any lease (including,
-----------------
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) which is not a Capital Lease
other than any such lease in which that Person is the lessor.
"Original Owner" shall mean Alchem Chemical Corporation, and its permitted
--------------
successors and assigns.
"Other Documents" shall mean the Notes, the Questionnaire, the Assignment
---------------
of Factoring Proceeds and any and all other agreements, instruments and
documents, including, without limitation, notes, guaranties, pledges, additional
security agreements, powers of attorney, consents,
11
and all other writings heretofore, now or hereafter executed by Borrower and/or
delivered to Agent or any Lender in respect of the transactions contemplated by
this Agreement.
"Overadvance" shall have the meaning set forth in Section 3.1 hereof.
-----------
"Overadvance Rate" shall mean a per annum rate equal to one-half of one
-----------------
percent (1/2%) in excess of the (i) Revolving Interest Rate and (ii) the Letter
of Credit Fees.
"Parent" of any Person shall mean a corporation or other entity owning,
------
directly or indirectly, at least fifty percent (50%) of the shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the directors of the Person, or other Persons performing similar functions for
any such Person.
"Payment Office" shall mean initially Agent's office at 1290 Avenue of the
--------------
Americas, Third Floor, New York, New York; thereafter, such other office of
Agent, if any, which it may designate by notice to Borrower to be the Payment
Office.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" shall mean (a) Liens in favor of Agent for itself
-----------------------
and the ratable benefit of Lenders; (b) Liens for taxes, assessments or other
governmental charges not delinquent or being contested in good faith and by
appropriate proceedings and with respect to which proper reserves have been
taken by Borrowers; provided, that, the Lien shall have no effect on the
priority of the Liens in favor of Agent or the value of the assets in which
Agent has such a Lien and a stay of enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the financial statements referred to in Section
5.5, the existence of which Agent has consented to in writing, including,
without limitation, the liens on the South Carolina Bond Property in favor of
Florence County, South Carolina, Greenville County, South Carolina, and Marlboro
County, South Carolina; (d) deposits or pledges of cash to secure obligations
under worker's compensation, social security or similar laws, or under
unemployment insurance; (e) deposits or pledges of cash to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of Borrower's business; (f) judgment Liens that
have been stayed or bonded and mechanics', workers', materialmen's or other like
Liens arising in the ordinary course of Borrower's business with respect to
obligations which are not due or which are being contested in good faith by
Borrower; (g) Liens placed upon fixed assets hereafter acquired to secure a
portion of the purchase price thereof, provided that (x) any such lien shall not
encumber any other property of the Borrower and (y) the aggregate amount of
Indebtedness secured by such Liens incurred as a result of such purchases during
any fiscal year shall not exceed the amount provided for in Section 7.6; (h)
other Liens incidental to the conduct of Borrower's business or the ownership of
its property and assets which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit, and which do not in the
aggregate materially detract from Lender's rights in and to the Collateral or
the value of Borrower's property or assets or which do not materially impair the
use thereof in the
12
operation of Borrower's business; (i) Liens granted to Factor under the
Factoring Agreement, and (j) Liens disclosed on Schedule 1.2.
"Person" shall mean any individual, sole proprietorship, partnership,
------
corporation, business trust, joint stock company, trust, unincorporated
organization association, limited liability company, institution, public benefit
corporation, joint venture, entity or government (whether Federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof).
"Plan" shall mean any employee benefit plan within the meaning of Section
----
3(3) of ERISA, maintained for employees of Borrower or any member of the
Controlled Group or any such Plan to which Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.
"Prepayment Date" shall have the meaning set forth in Section 13.1 hereof.
---------------
"Prime Rate" shall mean the prime commercial lending rate of the Bank as
-----------
publicly announced to be in effect from time to time, such rate to be adjusted
automatically, without notice, on the effective date of any change in such rate.
This rate of interest is determined from time to time by the Bank as a means of
pricing some loans to its customers and is neither tied to any external rate of
interest or index nor does it necessarily reflect the lowest rate of interest
actually charged by the Bank to any particular class or category of customers of
the Bank.
"Pro Forma Balance Sheet" shall have the meaning set forth in Section
--------------------------
5.5(a) hereof.
"Pro Forma Financial Statements" shall have the meaning set forth in
---------------------------------
Section 5.5(b) hereof.
"Projections" shall have the meaning set forth in Section 5.5(b) hereof.
-----------
"Purchasing Lender" shall have the meaning set forth in Section 15.3(c)
------------------
hereof.
"Questionnaire" shall mean the Questionnaire and the responses thereto
-------------
provided by Borrower and delivered to Agent.
"Rainsford Assets" shall mean those certain real property and personal
-----------------
property assets of Borrower located in Edgefield, South Carolina which are under
contract to sell to Delta Apparel, Inc.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
----
Section 6901 et seq., as same may be amended from time to time.
13
"Real Property" shall mean all of Borrower's right, title and interest in
-------------
and to its existing and future owned or leased real property.
"Receivables" shall mean and include all of Borrower's now existing and
-----------
hereafter created accounts, as such term is defined in the Uniform Commercial
Code in effect in the State of New York from time to time, to the extent arising
out of or resulting from the sale or lease of Inventory or the rendering of
services by Borrower.
"Receivables Advance Rate" shall have the meaning set forth in Section
--------------------------
2.1(a)(y)(i) hereof.
"Releases" shall have the meaning set forth in Section 5.7(c)(i) hereof.
--------
"Reportable Event" shall mean a reportable event described in Section
-----------------
4043(b) of ERISA or the regulations promulgated thereunder.
"Required Lenders" shall mean Lenders holding at least fifty-one percent
-----------------
(51%) of the Advances.
"Reserves" shall mean the sum, from time to time, of all ineligible
--------
Receivables, ineligible Inventory, deductions, allowances, credits, retention,
bill and hold and consignment sales, standby and documentary Letters of Credit,
airway releases, steamship guarantees, and any other offsets asserted or granted
and such additional reserves as are deemed appropriate in Agent's sole
discretion. The Reserves may be increased or decreased by Agent at any time and
from time to time in the exercise of its reasonable discretion. Borrower
consents to any such increases or decreases and acknowledges that increasing the
Reserves may limit or restrict Advances requested by Borrower.
"Revolving Advances" shall mean all Advances made other than the Letters of
------------------
Credit.
"Revolving Credit Notes" shall have the meaning set forth in Section 2.1(a)
----------------------
hereof.
"Revolving Interest Rate" shall mean at any time and from time to time, an
------------------------
interest rate per annum equal to, as applicable, (a) with respect to Domestic
Rate Loans, the sum of the Alternate Base Rate plus the Applicable Margin for
Domestic Rate Loans, or (b) with respect to Eurodollar Rate Loans, the sum of
the Eurodollar Rate plus the Applicable Margin for Eurodollar Rate Loans.
"Senior Notes" shall mean, individually and collectively, any one of the 9
------------
5/8% Notes due 2007 issued by the Borrower in favor of the Senior Noteholders
pursuant to the Senior Note Indenture (including, without limitation, the
exchange of Senior B Notes for Senior A Notes thereunder) as such Senior Notes
may be amended, modified, restated or supplemented and in effect from time to
time.
14
"Senior Note Indenture" shall mean that certain Indenture dated as of
-----------------------
August 25, 1997 by and among the Borrower, Delta Mills Marketing, Inc. and The
Bank of New York, in its capacity as trustee for the Senior Noteholders, as the
same may be amended, modified, restated or supplemented and in effect from time
to time.
"Senior Noteholder" shall mean any one of the holders from time to time of
the Senior Notes.
"Settlement Date" shall mean the Closing Date and thereafter Wednesday of
----------------
each week unless such day is not a Business Day in which case it shall be the
next succeeding Business Day.
"South Carolina Bond Property" shall mean all property, both real and
-------------------------------
personal, subject to the South Carolina Lease.
"South Carolina Lease" shall mean that certain lease agreement dated as of
---------------------
May 26, 1994 among Florence County, South Carolina, Greenville County, South
Carolina and Marlboro County, South Carolina and the Borrower, as lessee.
"Subsidiary" shall mean a corporation or other entity of whose shares of
----------
stock or other ownership interests having ordinary voting power (other than
stock or other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Subsidiary Stock" shall mean all of the issued and outstanding shares of
-----------------
stock owned by Borrower of Delta Mills Marketing, Inc., a Delaware corporation.
"Term" shall mean the Closing Date through March ____, 2003.
----
"Termination Event" shall mean (i) a Reportable Event with respect to any
------------------
Plan or Multiemployer Plan; (ii) the withdrawal of Borrower or any member of the
Controlled Group from a Plan or Multiemployer Plan during a plan year in which
such entity was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA; (iii) the providing of notice of intent to terminate a Plan in a distress
termination described in Section 4041(c) of ERISA; (iv) the institution by the
PBGC of proceedings to terminate a Plan or Multiemployer Plan; (v) any event or
condition (a) which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or
Multiemployer Plan, or (b) that may result in termination of a Multiemployer
Plan pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of Borrower or
any member of the Controlled Group from a Multiemployer Plan.
15
"Toxic Substance" shall mean and include any material present on the Real
----------------
Property which has been shown to have significant adverse effect on human health
or which is subject to regulation under the Toxic Substances Control Act (TSCA),
15 U.S.C. Sections 2601 et seq., applicable state law, or any other applicable
Federal or state laws now in force or hereafter enacted relating to toxic
substances. "Toxic Substance" includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.
"Transactions" shall have the meaning set forth in Section 5.5(a) hereof.
------------
"Transferee" shall have the meaning set forth in Section 15.3(b) hereof.
----------
"Week" shall mean the time period commencing with a Wednesday and ending on
----
the following Tuesday.
"Year 2000 Compliant" shall mean the ability of the software and other
--------------------
processing capabilities of Borrower to correctly interpret and manipulate all
data, in whatever form including printed form, screen displays, financial
records, calculations and data, so that (i) successful transition to the year
2000 using the correct date has occurred and is continuing without human
intervention, (ii) correct results have been produced and continue to be
produced in forward or backward date calculations spanning century boundaries,
and there shall be no material errors in processing that may otherwise occur
because of the inability of the software or other processing capabilities to
recognize accurately the year 2000 or subsequent dates, and (iii) all regulatory
guidelines regarding the change of the century and year 2000 compliance are
complied with in all material respects.
"Undrawn Availability" shall mean for any given date, the sum of (a) the
---------------------
lesser of the Maximum Loan Amount and the Formula Amount minus (b) the sum of
(i) the aggregate outstanding Advances on such date plus (ii) the aggregate
amount of Borrower's accounts payable which are thirty (30) days or more past
due on such date.
1.3 Uniform Commercial Code Terms. All terms used herein and defined in the
-----------------------------
Uniform Commercial Code as adopted in the State of New York shall have the
meaning given therein unless otherwise defined herein.
1.4 Certain Matters of Construction. The terms "herein", "hereof" and
---------------------------------
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used herein in the singular also include the plural and vice versa. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any
instruments or agreements, including, without limitation, references to any of
the Other Documents shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
16
II. ADVANCES, PAYMENTS.
------------------
2.1 (a) Total Revolving Advances. Subject to the terms and conditions set
-------------------------
forth in this Agreement, including, without limitation, Section 2.1(b), each
Lender, severally and not jointly, shall make Revolving Advances to Borrower in
aggregate amounts outstanding at any time not greater than such Lender's
Commitment Percentage of the lesser of (x) the Maximum Loan Amount less the
aggregate undrawn amount of outstanding Letters of Credit and (y) an amount
equal to the sum of:
(i) ninety percent (90%) ("Receivables Advance Rate"), of Eligible
Receivables; plus
(ii) fifty percent (50%) ("Inventory Advance Rate"; and together with
the Receivables Advance Rate, collectively, the "Advance Rates"), of the
value of the Eligible Inventory, it being acknowledged by Borrower that
Agent may, in its sole and absolute discretion, establish from time to time
limits on the maximum amount of Revolving Advances made in respect of
Eligible Inventory; minus
(iii) the aggregate undrawn amount of outstanding Letters of Credit;
minus
(iv) Reserves.
The amount derived from the sum of Section 2.1(a)(y)(i), plus Section
2.1(a)(y)(ii), minus Section 2.1(a)(y)(iii), minus Section 2.1(a)(y)(iv) at any
time and from time to time shall be referred to as the "Formula Amount". The
Revolving Advances made by each Lender shall be evidenced by the secured
promissory note payable to the order of each such Lender substantially in the
form attached hereto as Exhibit 2.1(a) (collectively, "Revolving Credit Notes"),
appropriately completed, in a principal amount equal to the Maximum Loan Amount
multiplied by such Lender's Commitment Percentage. The Borrower may from time to
time borrow, repay and re-borrow under this Section 2.1 without penalty or
premium.
2.2 Procedure for Borrowing Revolving Advances.
------------------------------------------
(a) Borrower may notify Lender prior to 11:00 a.m. on a Business Day of a
Borrower's request to incur, on that day, a Revolving Advance hereunder. Such
request shall indicate the amount of the requested Revolving Advance and whether
the Borrower elects for such Revolving Advance to be a Domestic Rate Loan or a
Eurodollar Rate Loan. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or any Lender, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance bearing
interest at the rate applicable to Domestic Rate Loans as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or any
Lender, and such request shall be irrevocable.
17
(b) Notwithstanding anything to the contrary contained herein, upon the
occurrence of an Event of Default, and during its continuance, all Eurodollar
Rate Loans shall automatically be converted to Domestic Rate Loans, and Borrower
shall have no right to request, and Lender shall thereafter have no obligation
to make Eurodollar Rate Loans.
2.3 Disbursement of Advance Proceeds. All Advances shall be disbursed from
--------------------------------
whichever office or other place Agent may designate from time to time and,
together with any and all other Obligations of Borrower to Agent or Lenders,
shall be charged to Borrower's account on Agent's books. During the Term,
Borrower may use the Revolving Advances by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions of this Agreement. The proceeds
of each Revolving Advance requested by Borrower or deemed to have been requested
by Borrower under Section 2.2(a) hereof shall, with respect to requested
Revolving Advances to the extent Lenders make such Revolving Advances, be made
available to Borrower on the day so requested by way of credit to Borrower's
operating account at Bank of America, account number 3750866889, entitled
"Master Account for Delta Mills, Inc.", or such other bank as Borrower may
designate following notification to Agent, in federal funds or other immediately
available funds or, with respect to Revolving Advances deemed to have been
requested by Borrower, be disbursed to Agent to be applied to the outstanding
Obligations giving rise to such deemed request.
2.4 Repayment of Advances.
---------------------
(a) The Advances shall be due and payable in full on the last day of the
Term subject to earlier prepayment as herein provided.
(b) Agent agrees to credit Borrower's account as of the Business Day on
which Agent receives the proceeds of Receivables remitted to Agent by Factor
from time to time. With respect to all other items of payment received by Agent,
such items of payment shall be applied by Agent on account of the Obligations
upon confirmation to Agent by the Blocked Account bank or Depository Account
bank, as provided for in Section 4.15(h) hereof, that such items of payment have
been collected in good funds and finally credited to Agent's account. Agent is
not, however, required to credit Borrower's account for the amount of any item
of payment which is unsatisfactory to Agent and Agent may also charge Borrower's
account for the amount of any item of payment which is returned to Agent unpaid.
(c) All payments of principal, interest and other amounts payable
hereunder, or under any of the related agreements shall be made to Agent for
itself and the other Lenders at the Payment Office not later than 1:00 P.M. (New
York Time) on the due date therefor in lawful money of the United States of
America in federal funds or other funds immediately available to Agent. Agent
shall have the right to effectuate payment on any and all Obligations due and
owing hereunder by charging Borrower's account or by making Revolving Advances
as provided in Section 2.2 hereof.
18
(d) Borrower shall pay principal, interest, and all other amounts payable
hereunder, or under any Other Documents, without any deduction whatsoever,
including, but not limited to, any deduction for any setoff or counterclaim.
(e) Provided that no Advances are then outstanding and provided further
that no Event of Default has occurred and is continuing, Agent shall remit to an
operating account of Borrower, as directed by Borrower, all credit balances of
Borrower in good and collected funds.
2.5 Repayment of Excess Advances. The aggregate balance of Advances
------------------------------
outstanding at any time in excess of the lesser of the Maximum Loan Amount and
the Formula Amount shall be immediately due and payable without the necessity of
any notice demand or other formality, at the Payment Office, whether or not a
Default or Event of Default has occurred.
2.6 Statement of Account. Agent shall maintain, in accordance with its
--------------------
customary procedures, a loan account in the name of Borrower in which shall be
recorded the date and amount of each Advance made by Lenders and the date and
amount of each payment in respect thereof; provided, however, the failure by
Agent to record the date and amount of any Advance shall not adversely affect
Agent or any Lender. Each month, Agent shall send to Borrower a statement
showing the accounting for the Advances made, payments made or credited in
respect thereof, and other transactions between Lenders and Borrower during such
month. The monthly statements shall be deemed correct and binding upon Borrower
in the absence of manifest error and shall constitute an account stated between
Lenders and Borrower unless Agent receives a written statement of Borrower's
specific exceptions thereto within thirty (30) days after such statement is
received by Borrower. The records of Agent with respect to the loan account
shall be prima facie evidence of the amounts of Advances and other charges
thereto and of payments applicable thereto.
2.7 Letters of Credit. Subject to the terms and conditions hereof, Agent
-----------------
shall issue or cause the issuance of Letters of Credit ("Letters of Credit") on
behalf of Borrower; provided, however, that Agent will not be required to issue
or cause to be issued any Letters of Credit to the extent that the face amount
of such Letters of Credit would then cause sum of the outstanding Revolving
Advances plus the outstanding Letters of Credit (with the requested Letter of
Credit being deemed to be outstanding for purposes of this calculation) to
exceed the lesser of (x) the Maximum Loan Amount or (y) the Formula Amount.
Notwithstanding anything to the contrary contained herein, the maximum amount of
outstanding Letters of Credit shall not exceed $2,000,000 in the aggregate at
any time. All disbursements or payments related to Letters of Credit shall be
deemed to be Revolving Advances and shall bear interest at the Revolving
Interest Rate with respect to Domestic Rate Loans; Letters of Credit that have
not been drawn upon shall not bear interest but shall be subject to payment of
the Letter of Credit Fees.
2.8 Issuance of Letters of Credit.
-----------------------------
(a) Borrower may request Agent to issue or cause the issuance of a Letter
of Credit by delivering to Agent at the Payment Office, Bank's standard form of
Letter of Credit
19
Application (the "Letter of Credit Application") completed to the satisfaction
of Agent and Bank; and, such other certificates, documents and other papers and
information as Agent and Bank may reasonably request. Each Letter of Credit
shall be either (x) a standby Letter of Credit issued to support the obligations
(including pension or insurance obligations), contingent or otherwise, of the
Borrower or any of its subsidiaries, or (y) a commercial Letter of Credit in
respect of the purchase of goods or services by the Borrower or any of its
subsidiaries in the ordinary course of business.
(b) Each Letter of Credit shall, among other things, provide for the
payment of sight drafts when presented for honor thereunder in accordance with
the terms thereof and when accompanied by the documents described therein and
have an expiry date not later than one (1) year after such Letter of Credit's
date of issuance and in no event later than the last day of the Term. Each
Letter of Credit Application and each Letter of Credit shall be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500, and any amendments or
revision thereof and, to the extent not inconsistent therewith, the laws of the
State of New York.
2.9 Requirements For Issuance of Letters of Credit.
----------------------------------------------
(a) In connection with the issuance of any Letter of Credit, Borrower shall
indemnify, save and hold Agent and each Lender harmless from any loss, cost,
expense or liability, including, without limitation, payments made by Agent and
any Lender, and expenses and reasonable attorneys' fees incurred by Agent or any
Lender arising out of, or in connection with, any Letter of Credit to be issued
or created for Borrower. Borrower shall be bound by Agent's or any issuing or
accepting bank's regulations and good faith interpretations of any Letter of
Credit issued or created for its account, although this interpretation may be
different from its own; and, neither Agent nor any Lender, the bank which opened
the Letter of Credit, nor any of its correspondents shall be liable for any
error, negligence, or mistakes, whether of omission or commission, in following
Borrower's instructions or those contained in any Letter of Credit or of any
modifications, amendments or supplements thereto or in issuing or paying any
Letter of Credit, except for Agent's or such Lender's or such correspondents'
own willful misconduct.
(b) Borrower shall authorize and direct any bank which issues a Letter of
Credit to name Borrower as the "Account Party" therein and to deliver to Agent
all instruments, documents, and other writings and property received by the bank
pursuant to the Letter of Credit and to accept and rely upon Agent's
instructions and agreements with respect to all matters arising in connection
with the Letter of Credit, the application therefor or any acceptance
thereunder.
(c) In connection with all Letters of Credit issued or caused to be issued
by Agent under this Agreement, Borrower hereby appoints Agent, or its designee,
as its attorney, with full power and authority to sign and/or endorse Borrower's
name upon any warehouse or other receipts, letter of credit applications and
acceptances; to sign Borrower's name on bills of lading; to clear Inventory
through the United States of America Customs Department ("Customs") in the name
of Borrower or Agent or Agent's designee, and to sign and deliver to Customs
officials powers of
20
attorney in the name of Borrower for such purpose; and to complete in Borrower's
name or Agent's name, or in the name of Agent's designee, any order, sale or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof. Neither Agent nor its attorneys will be liable for any
acts or omissions nor for any error of judgment or mistakes of fact or law,
except for Agent's or its attorney's own willful misconduct. This power, being
coupled with an interest, is irrevocable during the Term and as long thereafter
as any Letters of Credit remain outstanding.
(d) Each Lender shall be deemed to have irrevocably purchased an undivided
participation in Agent's credit support enhancement provided to the issuing bank
of any Letter of Credit and each Revolving Advance made as a consequence of the
issuance of a Letter of Credit and all disbursements thereunder in an amount
equal to such Lender's applicable Commitment Percentage multiplied by the
outstanding amount of the Letters of Credit and disbursements thereunder. In the
event that at the time a disbursement under a Letter of Credit is made the
unpaid balance of Revolving Advances exceeds or would exceed, with the making of
such disbursement, the lesser of the Maximum Loan Amount or the Formula Amount,
and such disbursement is not reimbursed by Borrower within two (2) Business
Days, Agent shall promptly notify each Lender and upon Agent's demand each
Lender shall pay to Agent such Lender's pro rata share of such unreimbursed
disbursement together with such Lender's pro rata share of Agent's unreimbursed
costs and expenses relating to such unreimbursed disbursement. Upon receipt by
Agent of a repayment from Borrower of any amount disbursed under a Letter Credit
by Agent for which Agent had already been reimbursed by Lenders, Agent shall
deliver to each Lender that Lender's pro rata share of such repayment. Each
Lender's participation commitment shall continue until the last to occur of any
of the following events: (A) Agent ceases to be obligated to issue Letters of
Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding
and uncancelled or (C) all Persons (other than Borrower) have been fully
reimbursed for all payments made under or relating to Letters of Credit.
2.10 Additional Payments. Any sums expended by Agent or any Lender due to
--------------------
Borrower's failure to perform or comply with its Obligations under this
Agreement or any of the Other Documents including, without limitation,
Borrower's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be charged to Borrower's account as a Revolving Advance, shall bear interest
at the Revolving Interest Rate applicable to Domestic Rate Loans and shall be
added to the Obligations.
2.11 Manner of Borrowing and Payment.
-------------------------------
(a) Each borrowing of Revolving Advances shall be advanced according to the
applicable Commitment Percentages of Lenders.
(b) Each payment (including each prepayment and the proceeds of Receivables
remitted to Agent by Factor) by Borrower on account of the principal of and
interest on the Revolving Advances, shall be applied to the Revolving Advances
pro rata according to the applicable Commitment Percentages of Lenders. Except
as expressly provided herein, all payments
21
(including prepayments and the proceeds of Receivables remitted to Agent by
Factor) to be made by Borrower on account of principal, interest and fees shall
be made without set off or counterclaim and shall be made to Agent on behalf of
the Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New
York time, in Dollars and in immediately available funds.
(c) (i) Notwithstanding anything to the contrary contained in Sections
2.11(a) and (b) hereof, commencing with the first Business Day following the
Closing Date, each borrowing of Revolving Advances shall be advanced by Agent
and each payment by Borrower on account of Revolving Advances shall be applied
first to those Revolving Advances made by Agent. On or before 1:00 P.M., New
York time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (1) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (x) such Revolving Advances and
(y) such repayments and (2) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (x) such repayments and (y) such Revolving Advances.
(ii) Each Lender shall be entitled to earn interest at the applicable
Revolving Interest Rate on outstanding Advances which it has funded.
(iii) Promptly following each Settlement Date, Agent shall submit to each
Lender a certificate with respect to payments received and Advances made during
the Week immediately preceding such Settlement Date. Such certificate of Agent
shall be conclusive in the absence of manifest error.
(d) If any Lender or any Transferee (a "benefitted Lender") shall at any
time receive any payment of all or part of its Advances, or interest thereon, or
receive any Collateral in respect thereof (whether voluntarily or involuntarily
or by set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender's
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Advances, or shall provide such other Lender with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned in cash, to the extent of such recovery, but without interest.
Each Lender so purchasing a portion of another Lender's Advances may exercise
all rights of payment (including,
22
without limitation, rights of set off) with respect to such portion as fully as
if such Lender were the direct holder of such portion.
(e) Unless Agent shall have been notified by telephone, confirmed in
writing, by any Lender that such Lender will not make the amount which would
constitute its applicable Commitment Percentage of the Advances available to
Agent, Agent may (but shall not be obligated to) assume that such Lender shall
make such amount available to Agent and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly notify
Borrower of its receipt of any such notice from a Lender. If such amount is made
available to Agent on a date after a Settlement Date, such Lender shall pay to
Agent on demand an amount equal to the product of (i) the daily average Federal
Funds Rate (computed on the basis of a year of 360 days) during such period as
quoted by Agent times (ii) such amount, times (iii) the number of days from and
including such Settlement Date to the date on which such amount becomes
immediately available to Agent. A certificate of Agent submitted to any Lender
with respect to any amounts owing under this paragraph (e) shall be conclusive,
in the absence of manifest error. If such amount is not in fact made available
to Agent by such Lender within three (3) Business Days after such Settlement
Date, Agent shall be entitled to recover such an amount, with interest thereon
at the rate per annum then applicable to such Revolving Advances hereunder, on
demand from Borrower; provided, however, that Agent's right to such recovery
shall not prejudice or otherwise adversely affect Borrower's rights (if any)
against such Lender.
2.12 Use of Proceeds. Borrower shall apply the proceeds of Advances to (a)
---------------
fully repay existing senior secured indebtedness (other than the Senior Notes);
(b) provide for its ongoing working capital including letters of credit; (c) pay
fees and expenses relating to this transaction; and (d) provide for its general
corporate purposes.
2.13 Defaulting Lender.
-----------------
(a) Notwithstanding anything to the contrary contained herein, in the event
any Lender (x) has refused (which refusal constitutes a breach by such Lender of
its obligations under this Agreement) to make available its portion of any
Advance or (y) notifies either Agent or Borrower that it does not intend to make
available its portion of any Advance (if the actual refusal would constitute a
breach by such Lender of its obligations under this Agreement) (each, a "Lender
Default"), all rights and obligations hereunder of such Lender (a "Defaulting
Lender") as to which a Lender Default is in effect and of the other parties
hereto shall be modified to the extent of the express provisions of this Section
2.13 while such Lender Default remains in effect.
(b) Advances shall be incurred pro rata from Lenders (the "Non-Defaulting
Lenders") which are not Defaulting Lenders based on their respective Commitment
Percentages, and no Commitment Percentage of any Lender or any pro rata share of
any Advances required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of principal of any
type of Advances shall be applied to reduce the applicable Advances of each
Lender pro rata based on the aggregate of the outstanding Advances of that type
of all
23
Lenders at the time of such application; provided, that, such amount shall not
be applied to any Advances of a Defaulting Lender at any time when, and to the
extent that, the aggregate amount of Advances of any Non-Defaulting Lender
exceeds such Non-Defaulting Lender's Commitment Percentage of all Advances then
outstanding.
(c) A Defaulting Lender shall not be entitled to give instructions to Agent
or to approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of "Required
Lenders", a Defaulting Lender shall be deemed not to be a Lender and not to have
Advances outstanding.
(d) Other than as expressly set forth in this Section 2.13, the rights and
obligations of a Defaulting Lender (including the obligation to indemnify Agent)
and the other parties hereto shall remain unchanged. Nothing in this Section
2.13 shall be deemed to release any Defaulting Lender from its obligations under
this Agreement and the Other Documents, shall alter such obligations, shall
operate as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which Borrower, Agent or any Lender may have against any
Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.
(e) In the event a Defaulting Lender retroactively cures to the
satisfaction of Agent the breach which caused a Lender to become a Defaulting
Lender, such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.
III. INTEREST AND FEES.
-----------------
3.1 Interest. Interest on Advances shall be payable in arrears on the last
--------
day of each month. Interest charges shall be computed on the actual principal of
Advances outstanding during the month at a rate per annum equal to the
applicable Revolving Interest Rate. Whenever, subsequent to the date of this
Agreement, the Alternate Base Rate and/or the Eurodollar Rate is increased or
decreased, the Revolving Interest Rate with respect to Domestic Rate Loans
and/or Eurodollar Rate Loans, as the case may be, shall be similarly changed
without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate and/or the Eurodollar Rate, as the case may
be, during the time such change or changes remain in effect. In the event that
the aggregate outstanding amount of all Advances exceeds the lesser of the
Maximum Loan Amount and the Formula Amount for five (5) or more days in any
month during the Term (such excess, an "Overadvance"), the average daily balance
of all Advances and other amounts charged or chargeable to Borrowers' account
for such month shall bear interest at the Overadvance Rate. Upon and after the
occurrence of an Event of Default, and during the continuation thereof, the
Obligations shall bear interest at the Default Rate.
24
3.2 Letter of Credit Fees.
---------------------
(a) Borrower shall pay to (i) Agent for the ratable benefit of Lenders a
fee computed at a rate of (A) one-eighth of one percent (1/8%) per month on the
outstanding face amount of Letters of Credit that are not standby Letters of
Credit during such month and (B) the per annum Revolving Interest Rate
applicable to Domestic Rate Loans on the outstanding face amount of Letters of
Credit that are standby Letters of Credit during such month, and (ii) Bank, for
its own account, Bank's customary charges payable in connection with Letters of
Credit as in effect from time to time (the "Letter of Credit Fees"). Such fees
and charges shall be payable (x) in the case of any Letter of Credit, on its
opening, (y) in the case of a standby Letter of Credit, (1) monthly thereafter
in advance and (2) upon each increase in the outstanding amount thereof, and (z)
in the case of any Letter of Credit that is not a standby Letter of Credit, at
the time of each increase in face amount thereof. Any such charge in effect at
the time of a particular transaction shall be the charge for that transaction,
notwithstanding any subsequent change in Bank's prevailing charges for that type
of transaction. All Letter of Credit Fees payable hereunder shall be deemed
earned in full on the date when the same are due and payable hereunder and shall
not be subject to rebate or proration upon the termination of this Agreement for
any reason.
(b) Upon termination of this Agreement or upon the occurrence and
continuance of an Event of Default, Borrower will cause cash to be deposited and
maintained in an account with Agent, as cash collateral for the ratable benefit
of Lenders, in an amount equal to outstanding Letters of Credit, and Borrower
hereby irrevocably authorizes Agent, in its discretion, on Borrower's behalf and
in Borrower's name, to open such an account and to make and maintain deposits
therein, or in an account opened by Borrower, in the amounts required to be made
by Borrower, out of the proceeds of Receivables or other Collateral or out of
any other funds of Borrower coming into Agent's possession at any time. Agent
will invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent and Borrower mutually agree and the net
return on such investments shall be credited to such account and constitute
additional cash collateral. Borrower may not withdraw amounts credited to any
such account except upon payment and performance in full of all Obligations and
termination of this Agreement.
3.3 Commitment Fee. If, for any month during the Term, the average daily
---------------
outstanding balance of the Advances for each day of such month during such month
is less than the Maximum Loan Amount, then Borrower shall pay to Agent, for the
ratable benefit of Lenders, a fee at a rate equal to the product of the amount
by which the Maximum Loan Amount in effect at such time exceeds such average
daily outstanding balance of the Advances multiplied by (a) .30% if the
Borrower's Leverage Ratio is greater than 4.0:1; (b) .25% if the Borrower's
Leverage Ratio is greater than 3.0:1 but less than or equal to 4.0:1; and (c)
.20% if the Borrower's Leverage Ratio is equal to or less than 3.0:1. The
commitment fee shall be payable to Agent, for the ratable benefit of Lenders, in
arrears on the last day of each month, and shall not be subject to refund,
rebate or proration for any reason whatsoever. For the purposes of this Section
3.3, for any given date, the Borrower's Leverage Ratio shall be calculated as at
the last day of Borrower's immediately preceding fiscal quarter as determined
from the Borrower's financial statements most recently delivered to Agent from
time to time in accordance with Section 9.8 hereof.
25
3.4 Computation of Interest and Fees. Interest and fees hereunder shall be
--------------------------------
computed on the basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable on a day
other than a Business Day, the due date thereof shall be extended to the next
succeeding Business Day and interest thereon shall be payable at the applicable
Revolving Interest Rate during such extension.
3.5 Collateral Monitoring Fee. Borrower shall pay to Agent, for Agent's own
-------------------------
account, on the first day of each month following any month in which Agent
performs any collateral monitoring - namely any audit, field examination,
collateral analysis or other business analysis, the need for which is to be
reasonably determined by Agent and which monitoring is undertaken by Agent or
for Agent's benefit - a collateral monitoring fee in an amount equal to Agent's
per diem rate then in effect for each person employed to perform such
monitoring, plus all reasonable costs and disbursements incurred by Agent in the
performance of such examination or analysis (including, without limitation,
charges for fees and expenses of outside auditors used by Agent).
3.6 Maximum Charges. In no event whatsoever shall interest and other
----------------
charges charged hereunder exceed the highest rate permissible under law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that a court determines that Agent or any Lender has
received interest and other charges hereunder in excess of the highest rate
permissible hereto, such excess amount shall be first applied to any unpaid
principal balance owed by Borrower, and if the then remaining excess amount is
greater than the previously unpaid principal balance, Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed
amended to provide for such permissible rate.
3.7 Increased Costs. In the event that any applicable law, treaty or
----------------
governmental regulation, or any change therein or in the interpretation or
application thereof, or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any corporation or
bank controlling Agent or any Lender) and the office or branch where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or directive (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:
(a) subject Agent or any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Rate Loan or change the basis of
taxation of payments to Agent or any Lender of principal, fees, interest or any
other amount payable hereunder or under any Other Documents (except for changes
in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);
(b) impose, modify or hold applicable any reserve, special deposit,
assessment or similar requirement against assets held by, or deposits in or for
the account of, advances or loans by, or other credit extended by, any office of
Agent or any Lender, including (without limitation) pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or
26
(c) impose on Agent or any Lender or the London interbank Eurodollar market
any other condition with respect to this Agreement, any Other Documents or any
other Fixed Rate Loan;
and the result of any of the foregoing is to increase the cost to Agent or
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrowers shall promptly pay Agent or such Lender, upon its demand,
such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate. Agent or such Lender shall certify the amount of such
additional cost or reduced amount to Borrowers, and such certification shall be
conclusive absent manifest error.
3.8 Basis For Determining Interest Rate Inadequate or Unfair. In the event
---------------------------------------------------------
that Agent or any Lender shall have determined that:
(a) reasonable means do not exist for ascertaining the Eurodollar Rate;
(b) Dollar deposits in the relevant amount and for the relevant maturity
are not available in the London interbank Eurodollar market, with respect to an
outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed
conversion of a Domestic Rate Loan into a Eurodollar Rate Loan;
then Agent shall give Borrower prompt written, telephonic or telegraphic notice
of such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Domestic Rate Loan, unless Borrower
shall notify Agent no later than 10:00 a.m. (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such borrowing shall be canceled or made as an unaffected type of Eurodollar
Rate Loan, and (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to
have been converted to an affected type of Eurodollar Rate Loan shall be
continued as or converted into a Domestic Rate Loan. Until such notice has been
withdrawn, Lenders shall have no obligation to make a Eurodollar Rate Loan or
maintain outstanding Eurodollar Rate Loans and Borrower shall not have the right
to convert a Domestic Rate Loan into a Eurodollar Rate Loan.
3.9 Capital Adequacy.
----------------
(a) In the event that Agent or any Lender shall have determined that any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof by
any governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or any Lender
(for purposes of this Section 3.9, the term "Lender" shall include Agent or any
Lender and any corporation or bank controlling Agent or any Lender) and the
office or branch
27
where Agent or any Lender (as so defined) makes or maintains any Eurodollar Rate
Loans with any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on Agent's
or any Lender's capital as a consequence of its obligations hereunder to a level
below that which Agent or such Lender could have achieved but for such adoption,
change or compliance (taking into consideration Agent's and each Lender's
policies with respect to capital adequacy) by an amount deemed by Agent or any
Lender to be material, then, from time to time, Borrowers shall pay upon demand
to Agent or such Lender such additional amount or amounts as will compensate
Agent or such Lender for such reduction. In determining such amount or amounts,
Agent or such Lender may use any reasonable averaging or attribution methods.
The protection of this Section 3.9 shall be available to Agent and each Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the applicable law, regulation or condition.
(b) A certificate of Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate Agent or such Lender with respect to
Section 3.9(a) hereof when delivered to Borrowers shall be conclusive absent
manifest error.
IV. COLLATERAL: GENERAL TERMS
-------------------------
4.1 Security Interest in the Collateral. To secure the prompt payment and
------------------------------------
performance to Agent and each Lender of the Obligations, Borrower hereby
assigns, pledges and grants to Agent for itself and the ratable benefit of each
Lender a continuing, exclusive (except for Receivables factored and assigned to
Factor) first priority security interest in and to all of its Collateral,
whether now owned or existing or hereafter acquired or arising and wheresoever
located, except that, the security interest in and to the Receivables granted by
Borrower to Factor shall be senior to the security interests of Agent in and to
such Receivables. Borrower shall mark its books and records as may be necessary
or appropriate to evidence, protect and perfect Agent's security interest
("Agent's security interest") and shall cause its financial statements to
reflect such security interest.
4.2 Perfection of Security Interest. Borrower shall take all action that
--------------------------------
may be necessary or desirable, or that Agent may request, so as at all times to
maintain the validity, perfection, enforceability and priority of Agent's
security interest in the Collateral or to enable Agent to protect, exercise or
enforce its rights hereunder and in the Collateral, including, but not limited
to, (a) immediately discharging all Liens other than Permitted Encumbrances,
delivering to Agent, endorsed or accompanied by such instruments of assignment
as Agent may specify, and stamping or marking, in such manner as Agent may
specify, any and all chattel paper, instruments, letters of credits and advices
thereof and documents evidencing or forming a part of the Collateral, entering
into warehousing, lockbox and other custodial arrangements satisfactory to
Agent, and executing and delivering financing statements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent's security interest under the Uniform
Commercial Code or other applicable law. Agent is hereby authorized to file
financing statements signed by Agent instead
28
of Borrower in accordance with Section 9-402(2) of the Uniform Commercial Code
as adopted in the State of New York. All charges, expenses and fees Agent may
incur in doing any of the foregoing, and any local taxes relating thereto, shall
be charged to Borrower's account as a Revolving Advance, shall bear interest at
the Revolving Interest Rate applicable to Domestic Rate Loans, and shall be
added to the Obligations, or, at Agent's option, shall be paid to Agent for the
ratable benefit of Lenders immediately upon demand.
4.3 Disposition of Collateral. Borrower will safeguard and protect all
---------------------------
Collateral for Agent's general account and make no disposition thereof whether
by sale, lease or otherwise except (i) the sale of Inventory in the ordinary
course of business, and (ii) the transfer and/or sale of Receivables to Factor.
4.4 Preservation of Collateral. In addition to the rights and remedies set
--------------------------
forth in Section 11.1 hereof, Agent: (a) may at any time take such steps as
Agent deems necessary to protect Agent's security interest in and to preserve
the Collateral, including the hiring of such security guards or the placing of
other security protection measures as Agent may deem appropriate; (b) may employ
and maintain at Borrower's premises a custodian who shall have full authority to
do all acts necessary to protect Agent's security interests in the Collateral;
(c) may lease warehouse facilities to which Agent may move all or part of the
Collateral; (d) may use Borrower's owned or leased lifts, hoists, trucks and
other facilities or equipment for handling or removing the Collateral; and (e)
shall have, and is hereby granted, a right of ingress and egress to the places
where the Collateral is located, and may proceed over and through Borrower's
owned or leased property. Borrower shall cooperate fully with all of Agent's
efforts to preserve the Collateral and will take such actions to preserve the
Collateral as Agent may direct. All of Agent's expenses of preserving the
Collateral, including any costs, fees and expenses relating to the bonding of a
custodian, shall be charged to Borrower's account as a Revolving Advance, shall
bear interest at the Revolving Interest Rate applicable to Domestic Rate Loans
and shall be added to the Obligations. Agent shall, at Borrower's request from
time to time, provide to Borrower documentation substantiating any costs, fees
and expenses charged to Borrower's account under this Section 4.4.
4.5 Ownership of Collateral. With respect to the Collateral, at the time
-----------------------
the Collateral becomes subject to Agent's security interest: (a) Borrower shall
be the sole owner of and fully authorized and able to sell, transfer, pledge
and/or grant a first priority security interest in each and every item of its
respective Collateral to Agent; and, except for Permitted Encumbrances the
Collateral shall be free and clear of all Liens and encumbrances whatsoever; (b)
each document and agreement executed by each Borrower or delivered to Agent or
any Lender in connection with this Agreement shall be true and correct in all
material respects; (c) all signatures and endorsements of Borrower that appear
on such documents and agreements shall be genuine and Borrower shall have full
capacity to execute same; and (d) Borrower's Inventory shall be located as set
forth on Schedule 4.5 and shall not be removed from such location(s) without the
prior written consent of Agent except with respect to the sale of Inventory in
the ordinary course of business.
29
4.6 Defense of Agent's and Lender's Interests. Until (a) payment and
--------------------------------------------
performance in full of all of the Obligations and (b) termination of this
Agreement, Agent's security interests in the Collateral shall continue in full
force and effect. During such period Borrower shall not, without Agent's prior
written consent, pledge, sell (except Inventory in the ordinary course of
business and Receivables to Factor), assign, transfer, create or suffer to exist
a Lien upon or encumber or allow or suffer to be encumbered in any way except
for Permitted Encumbrances, any part of the Collateral. Borrower shall defend
Agent's security interests in the Collateral against any and all Persons
whatsoever. At any time following demand by Agent for payment of all
Obligations, Agent shall have the right to take possession of the indicia of the
Collateral and the Collateral in whatever physical form contained, including
without limitation: labels, stationery, documents, instruments and advertising
materials. If Agent exercises this right to take possession of the Collateral,
Borrower shall, upon demand, assemble it in the best manner possible and make it
available to Agent at a place reasonably convenient to Agent. In addition, with
respect to all Collateral, Agent and Lenders shall be entitled to all of the
rights and remedies set forth herein and further provided by the Uniform
Commercial Code or other applicable law. Borrower shall, and Agent may, at its
option, instruct all suppliers, carriers, forwarders, warehouses or others
receiving or holding cash, checks, Inventory, documents or instruments in which
Agent holds a security interest to deliver same to Agent and/or subject to
Agent's order and if they shall come into Borrower's possession, they, and each
of them, shall be held by Borrower in trust as Agent's trustee, and Borrower
will immediately deliver them to Agent in their original form together with any
necessary endorsement.
4.7 Books and Records. Borrower shall (a) keep proper books of record and
-----------------
account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including without limitation by reason of
enumeration, accruals for premiums, if any, due on required payments and
accruals for depreciation, obsolescence, or amortization of properties), which
should be set aside from such earnings in connection with its business. All
determinations pursuant to this subsection shall be made in accordance with, or
as required by, GAAP consistently applied in the opinion of the Accountants, as
shall then be regularly engaged by Borrower.
4.8 Financial Disclosure. Borrower hereby irrevocably authorizes and
---------------------
directs all accountants and auditors employed by Borrower at any time during the
Term to exhibit and deliver to Agent and each Lender copies of any of the
Borrower's financial statements, trial balances or other accounting records of
any sort in the accountant's or auditor's possession, and to disclose to Agent
and each Lender any information such accountants may have concerning Borrower's
financial status and business operations.
4.9 Compliance with Laws. Borrower shall comply with all acts, rules,
---------------------
regulations and orders of any legislative, administrative or judicial body or
official applicable to its respective Collateral or any part thereof or to the
operation of Borrower's business the non-compliance with which could have a
Material Adverse Effect on Borrower.
30
4.10 Inspection of Premises. At all reasonable times, Agent and each Lender
----------------------
shall have full access to and the right to audit, check, inspect and make
abstracts and copies from Borrower's books, records, audits, correspondence and
all other papers relating to the Collateral and the operation of Borrower's
business. Agent, any Lender and their agents may enter upon Borrower's premises
at any time during business hours and at any other reasonable time, and from
time to time, for the purpose of inspecting the Collateral and any and all
records pertaining thereto and the operation of Borrower's business.
4.11 Insurance. Borrower shall bear the full risk of any loss of any nature
---------
whatsoever with respect to the Collateral except to the extent that Factor has
assumed and retained the Credit Risk on any Receivable pursuant to the Factoring
Agreement. At Borrower's own cost and expense in amounts and with carriers
acceptable to Agent, Borrower shall keep all its insurable properties and
properties in which Borrower has an interest insured against the hazards of
fire, flood, sprinkler leakage, those hazards covered by extended coverage
insurance and such other hazards, and for such amounts, as is customary in the
case of companies engaged in businesses similar to Borrower's including, without
limitation, business interruption insurance; maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; maintain all such worker's compensation or similar insurance
as may be required under the laws of any state or jurisdiction in which Borrower
is engaged in business; furnish Agent with copies of all policies and evidence
of the maintenance of such policies by the renewal thereof at least thirty (30)
days before any expiration date, and appropriate loss payable endorsements in
form and substance satisfactory to Agent, naming Agent as a co-insured and loss
payee as its interests may appear with respect to all insurance coverage
referred to above with respect to property in which Agent has an interest and
providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such insurance shall be affected by any act or neglect of the insured or owner
of the property described in such policy, and (C) that such policy and loss
payable clauses may not be canceled, amended or terminated unless at least
thirty (30) days' prior written notice is given to Agent. In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and
Borrower to make payment for such loss to Agent and not to Borrower and Agent
jointly. If any insurance losses are paid by check, draft or other instrument
payable to Borrower and Agent jointly, Agent may endorse Borrower's name thereon
and do such other things as Agent may deem advisable to reduce the same to cash.
Agent is hereby authorized to adjust and compromise claims under insurance
coverage referred to in clauses (a) and (b) above. All loss recoveries received
by Agent upon any such insurance may be applied to the Obligations, in such
order as Agent in its sole discretion shall determine. Any surplus shall be paid
by Agent to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Agent, on demand.
4.12 Failure to Pay Insurance. If Borrower fails to obtain insurance as
-------------------------
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor for Borrower's account,
and charge Borrower's account therefor and such expenses so paid shall be part
of the Obligations.
31
4.13 Payment of Taxes. Borrower will pay, when due, all taxes, assessments
----------------
and other Charges lawfully levied or assessed upon Borrower or any of the
Collateral including, without limitation, real and personal property taxes,
assessments and charges and all franchise, income, employment, social security
benefits, withholding, and sales taxes except that Borrower may contest such
taxes, assessments and charges in good faith, provided that, Borrower has taken
adequate reserves on its books and records for such taxes and has prosecuted
such contests in accordance with all applicable tax regulations for appeal. If
any Charge by any governmental authority is or may be imposed on or as a result
of any transaction between Borrower, Agent and Lenders which Agent or any Lender
may be required to withhold or pay or if any Charges remain unpaid after the
date fixed for their payment, or if any claim shall be made which, in Agent's or
Lenders' judgment may possibly create a valid Lien on the Collateral, Agent may
without notice to Borrower pay the Charges and Borrower hereby indemnifies and
holds Agent and each Lender harmless in respect thereof. The amount of any
payment by Agent under this Section 4.13 shall be charged to the Borrower's
account as a Revolving Advance and added to the Obligations and, until Borrower
shall furnish Agent and each Lender with an indemnity therefor (or supply Agent
with evidence satisfactory to Agent and each Lender that due provision for the
payment thereof has been made), Agent may hold without interest any balance
standing to Borrower's credit and Agent shall retain Agent's security interest
in any and all Collateral held by Agent.
4.14 Payment of Leasehold Obligations. Borrower shall at all times pay,
----------------------------------
when and as due, its rental obligations under all material leases under which it
is a tenant, and shall otherwise comply, in all material respects, with all
other terms of such leases and, at Agent's reasonable request, will provide
evidence of having done so.
4.15 Receivables.
-----------
(a) Nature of Receivables. Each of the Receivables shall be a bona fide and
---------------------
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial invoice errors shall not be deemed to be a breach hereof)
with respect to an absolute sale or lease and delivery of goods upon stated
terms of Borrower, or work, labor or services theretofore rendered by Borrower
as of the date each Receivable is created. Each Receivable shall be due and
owing in accordance with Borrower's standard terms of sale for such Customer
without dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) Solvency of Customers. Each Customer, to the extent of Borrower's
----------------------
actual knowledge, as of the date each Receivable is created, is and will be
solvent and able to pay all Receivables on which the Customer is obligated in
full when due or with respect to such Customers of Borrower who are not solvent
Borrower has set up on its books and in its financial records bad debt reserves
adequate to cover such Receivables.
(c) Locations of Borrower. Borrower's chief executive office is located at
---------------------
the address set forth on Schedule 4.15(c) hereto. Until written notice is given
to Agent by Borrower of
32
any other office at which Borrower keeps its records pertaining to Receivables,
all such records shall be kept at such executive office.
(d) Collection of Receivables. Subject to the rights of Factor under the
--------------------------
Factoring Agreement, until Borrower's authority to do so is terminated by Agent
(which notice Agent may give at any time following the occurrence of an Event of
Default or a Default or when Agent in its sole discretion deems it to be in
Lenders' best interests to do so), Borrower will, at Borrower's sole cost and
expense, but on Agent's behalf and for Agent's account, collect as Agent's
property and in trust for Agent all amounts received on Receivables, and shall
not commingle such collections with Borrower's funds or use the same except to
pay Obligations. Borrower shall, upon request, deliver to Agent, the Blocked
Account or the Depository Account in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e) Notification of Assignment of Receivables. Subject to the rights of
-------------------------------------------
Factor under the Factoring Agreement, and upon the consent of the Factor, Agent
shall have the right to send notice of the assignment of, and Agent's security
interest in, the Receivables to any and all Customers or any third party holding
or otherwise concerned with any of the Collateral. Thereafter, Agent shall have
the sole right to collect the Receivables, take possession of the Collateral, or
both. Agent's actual collection expenses, including, but not limited to,
stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrower's account and added to the Obligations.
(f) Power of Agent to Act on Borrower's Behalf. Subject to the rights of
--------------------------------------------
Factor under the Factoring Agreement, Agent shall have the right to receive,
endorse, assign and/or deliver in the name of Agent or Borrower any and all
checks, drafts and other instruments for the payment of money relating to the
Receivables, and Borrower hereby waives notice of presentment, protest and
non-payment of any instrument so endorsed. Borrower hereby constitutes Agent or
Agent's designee as Borrower's attorney with power (i) to endorse Borrower's
name upon any notes, acceptances, checks, drafts, money orders or other
evidences of payment or Collateral; (ii) to sign Borrower's name on any invoice
or bill of lading relating to any of the Receivables, drafts against Customers,
assignments and verifications of Receivables; (iii) to send verifications of
Receivables to any Customer; (iv) to sign Borrower's name on all financing
statements or any other documents or instruments deemed necessary or appropriate
by Agent to preserve, protect, or perfect Agent's security interest in the
Collateral and to file same; (v) to demand payment of the Receivables; (vi) to
enforce payment of the Receivables by legal proceedings or otherwise; (vii) to
exercise all of Borrower's rights and remedies with respect to the collection of
the Receivables and any other Collateral; (viii) to settle, adjust, compromise,
extend or renew the Receivables; (ix) to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) to prepare, file and sign
Borrower's name on a proof of claim in bankruptcy or similar document against
any Customer; (xi) to prepare, file and sign Borrower's name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables; and (xii) to do all other acts and things necessary to carry
out this Agreement. All acts of said attorney or designee are hereby ratified
and
33
approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence; this power
being coupled with an interest is irrevocable during the Term and thereafter
while any of the Obligations remain unpaid. Agent shall have the right at any
time following the occurrence of an Event of Default to change the address for
delivery of mail addressed to Borrower to such address as Agent may designate
and to receive, open and dispose of all mail addressed to Borrower.
(g) No Liability. Neither Agent nor any Lender shall, under any
-------------
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument received in payment thereof, or for
any damage resulting therefrom. Subject to the Rights of the Factor under the
Factoring Agreement, Agent may, without notice or consent from Borrower, sue
upon or otherwise collect, extend the time of payment of, compromise or settle
for cash, credit or upon any terms any of the Receivables or any other
securities, instruments or insurance applicable thereto and/or release any
obligor thereof. Agent is authorized and empowered to accept the return of the
goods represented by any of the Receivables, without notice to or consent by
Borrower, all without discharging or in any way affecting Borrower's liability
hereunder.
(h) Establishment of a Lockbox Account, Dominion Account. All proceeds of
-----------------------------------------------------
Collateral shall, at the direction of Agent, be deposited by Borrower into a
lockbox account, dominion account or such other blocked account ("Blocked
Accounts") as Agent may require pursuant to an arrangement with such bank as may
be selected by Borrower and be acceptable to Agent. Borrower shall issue to any
such bank, an irrevocable letter of instruction directing said bank to transfer
such funds so deposited to Agent, either to any account maintained by Agent at
said bank or by wire transfer to appropriate account(s) of Agent. All funds
deposited in such Blocked Account shall immediately become the property of Agent
and Borrower shall obtain the agreement by such bank to waive any offset rights
against the funds so deposited. Neither Agent nor any Lender assumes any
responsibility for any Blocked Account arrangement, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder. Alternatively, Agent may establish
depository accounts ("Depository Accounts") in the name of Agent at a bank or
banks for the deposit of such funds and Borrower shall deposit all proceeds of
Collateral or cause same to be deposited, in kind, in such Depository Accounts
of Agent in lieu of depositing same to the Blocked Accounts.
(i) Adjustments. Borrower will not, without Agent's consent, compromise or
-----------
adjust any Receivables (or extend the time for payment thereof) or accept any
returns of merchandise or grant any additional discounts, allowances or credits
thereon except for those compromises, adjustments, returns, discounts, credits
and allowances (a) that are customary in the business of Borrower or (b) to
which the Factor has consented.
34
4.16 Inventory. All Inventory has been, and will be, produced by Borrower
---------
in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations and orders thereunder.
4.17 Maintenance of Equipment. The Equipment material to the conduct of the
------------------------
Borrower's business shall be maintained in good operating condition and repair
(reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the
Equipment shall be maintained and preserved to the extent and in the manner
customary for companies in businesses similar to the Borrower.
4.18 Exculpation of Liability. Nothing herein contained shall be construed
------------------------
to constitute Agent or any Lender as Borrower's agent for any purpose
whatsoever, nor shall Agent or any Lender be responsible or liable for any
shortage, discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume Borrower's obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of the terms and
conditions thereof.
4.19 Environmental Matters.
---------------------
(a) Borrower shall ensure that the Real Property remains in compliance with
all applicable Environmental Laws and shall not place or permit to be placed any
Hazardous Substances on any Real Property except as authorized by applicable
Environmental Laws.
(b) Borrower shall establish and maintain a system to assure and monitor
continued compliance with all applicable Environmental Laws which system shall
include periodic reviews of such compliance.
(c) Borrower shall employ in connection with the use of the Real Property
appropriate technology necessary to maintain compliance with any applicable
Environmental Laws and dispose of any and all Hazardous Waste generated at the
Real Property only at facilities and with carriers that maintain valid permits
under RCRA and any other applicable Environmental Laws. Borrower shall use its
best efforts to obtain certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport, storage or disposal facilities
or operators employed by Borrower in connection with the transport or disposal
of any Hazardous Waste generated at the Real Property.
(d) If Borrower obtains, gives or receives notice of any Release or threat
of Release of a reportable quantity of any Hazardous Substances at the Real
Property (any such event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation, request for information or
notification that it is potentially responsible for investigation or cleanup of
environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other
35
written notice with regard to any Hazardous Discharge or violation of
Environmental Laws affecting the Real Property or Borrower's interest therein
(any of the foregoing is referred to herein as an "Environmental Complaint")
from any Person, including any state agency responsible in whole or in part for
environmental matters in the state in which the Real Property is located or the
United States Environmental Protection Agency (any such person or entity
hereinafter the "Authority") in each case, then Borrower shall promptly, and in
any event within ten (10) Business Days, give written notice of same to Agent
detailing facts and circumstances of which Borrower is aware giving rise to the
Hazardous Discharge or Environmental Complaint. Such information is to be
provided to allow Agent to protect its security interest in the Collateral and
is not intended to create nor shall it create any obligation upon Agent or any
Lender with respect thereto.
(e) Borrower shall promptly forward to Agent copies of any request for
information, notification of potential liability, demand letter relating to
potential responsibility with respect to the investigation or cleanup of
Hazardous Substances at any other site owned, operated or used by Borrower to
dispose of Hazardous Substances and shall continue to forward copies of material
correspondence between Borrower and the Authority regarding such claims to Agent
until the claim is settled. Borrower shall promptly forward to Agent copies of
all documents and reports concerning a Hazardous Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such information
is to be provided solely to allow Agent to protect Agent's security interest in
the Collateral.
(f) Borrower shall respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action in order to safeguard the
health of any Person and to avoid subjecting the Collateral or Real Property to
any Lien.
(g) Promptly upon the written request of Agent, Borrower shall provide
Agent, at Borrower's expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Any report or
investigation of such Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the clean-up of such Hazardous
Discharge shall be acceptable to Agent. If such estimates, individually or in
the aggregate, exceed $100,000, Agent shall have the right to require Borrower
to post a bond, letter of credit or other security reasonably satisfactory to
Agent to secure payment of these costs and expenses.
(h) Borrower shall defend and indemnify Agent and Lenders and hold Agent,
Lenders and their respective employees, agents, directors and officers harmless
from and against all loss, liability, damage and expense, claims, costs, fines
and penalties, including attorney's fees, suffered or incurred by Agent or
Lenders under or on account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder, with respect to any Hazardous
Discharge, the presence of any Hazardous Substances affecting the Real Property,
whether or not the same originates or emerges from the Real Property or any
contiguous real estate, including any loss of
36
value of the Real Property as a result of the foregoing except to the extent
such loss, liability, damage and expense is attributable to any Hazardous
Discharge resulting from actions on the part of Agent or any Lender. Borrower's
obligations under this Section 4.19 shall arise upon the discovery of the
presence of any Hazardous Substances at the Real Property, whether or not any
federal, state, or local environmental agency has taken or threatened any action
in connection with the presence of any Hazardous Substances. Borrower's
obligation and the indemnifications hereunder shall survive the termination of
this Agreement.
(i) For purposes of Section 4.19 and 5.7, all references to Real Property
shall be deemed to include all of Borrower's right, title and interest in and to
its owned and leased premises.
4.20 Financing Statements. Except as respects the financing statements
---------------------
filed by Agent and the financing statements described on Schedule 1.2, no
financing statement covering any of the Collateral or any proceeds thereof is on
file in any public office.
V. REPRESENTATIONS AND WARRANTIES.
------------------------------
Borrower represents and warrants to the Agent and each of the Lenders as
follows:
5.1 Authority. Borrower has full power, authority and legal right to enter
---------
into this Agreement and the Other Documents and to perform all its Obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and of the Other Documents (a) are within Borrower's corporate powers,
have been duly authorized, are not in contravention of law or the terms of
Borrower's by-laws, certificate of incorporation or other applicable documents
relating to Borrower's formation or to the conduct of Borrower's business or of
any material agreement or undertaking to which Borrower is a party or by which
Borrower is bound, and (b) will not conflict with nor result in any breach in
any of the provisions of or constitute a default under or result in the creation
of any Lien except Permitted Encumbrances upon any asset of Borrower under the
provisions of any agreement, charter document, instrument, by-law, or other
instrument to which Borrower or its property is a party or by which it may be
bound.
5.2 Formation and Qualification.
---------------------------
(a) Borrower is duly incorporated and in good standing under the laws of
Delaware and is qualified to do business and is in good standing in the states
of North Carolina and South Carolina which constitute all states in which
qualification and good standing are necessary for Borrower to conduct its
business and own its property and where the failure to so qualify could have a
Material Adverse Effect on Borrower. Borrower has delivered to Agent true and
complete copies of its certificate of incorporation and by-laws and will
promptly notify Agent of any amendment or changes thereto.
37
(b) The only Subsidiary of Borrower is Delta Mills Marketing, Inc., a
Delaware corporation.
5.3 Survival of Representations and Warranties. All representations and
-------------------------------------------
warranties of Borrower contained in this Agreement and the Other Documents shall
be true at the time of Borrower's execution of this Agreement and the Other
Documents, and shall survive the execution, delivery and acceptance thereof by
the parties thereto and the closing of the transactions described therein or
related thereto.
5.4 Tax Returns. Borrower's federal tax identification number is
------------
13-2677657. Borrower has filed all federal, state and local tax returns and
other reports it is required by law to file through fiscal year 1998 and has
paid all taxes, assessments, fees and other governmental charges that are due
and payable except for those being contested in good faith in accordance with
Section 4.13 of this Agreement. Borrower has not received any notice of audit or
investigation with respect to its returns through fiscal year 1998. The
provision for taxes on the books of Borrower are adequate for all years not
closed by applicable statutes, and for its current fiscal year, and Borrower has
no knowledge of any deficiency or additional assessment in connection therewith
not provided for on its books.
5.5 Financial Statements.
--------------------
(a) The pro forma balance sheets of Borrower on a consolidated basis (the
"Pro Forma Balance Sheet") furnished to Agent on the Closing Date reflects the
consummation of the transactions contemplated under this Agreement
(collectively, the "Transactions") and is accurate, complete and correct and
fairly reflects the financial condition of Borrower on a consolidated basis as
of the Closing Date after giving effect to the Transactions, and has been
prepared in accordance with GAAP, consistently applied. The Pro Forma Balance
Sheet has been certified as accurate, complete and correct in all material
respects by the President or Chief Financial Officer of Borrower. All financial
statements referred to in this subsection 5.5(a), including the related
schedules and notes thereto, have been prepared, in accordance with GAAP, except
as may be disclosed in such financial statements.
(b) The twelve-month cash flow projections of Borrower on a consolidated
basis and its projected balance sheets as of the Closing Date, copies of which
are annexed hereto as Exhibit 5.5(b) (the "Projections") were prepared by the
Chief Financial Officer of Borrower, are based on underlying assumptions which
provide a reasonable basis for the projections contained therein and reflect
Borrower's judgment based on present circumstances of the most likely set of
conditions and course of action for the projected period. The cash flow
Projections together with the Pro Forma Balance Sheet, are referred to as the
"Pro Forma Financial Statements".
5.6 Corporate Name. Borrower has not been known by any other corporate name
--------------
in the past five years and does not sell Inventory or perform services under any
other name except as set
38
forth on Schedule 5.6, nor has Borrower been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets of
any Person during the preceding five (5) years.
5.7 O.S.H.A. and Environmental Compliance.
-------------------------------------
(a) Borrower has duly complied with, and its facilities, business, assets,
property, leaseholds and Equipment are in compliance in all material respects
with, the provisions of the Federal Occupational Safety and Health Act, the
Environmental Protection Act, RCRA and all other Environmental Laws; there are
no outstanding citations, notices or orders of non-compliance issued to Borrower
or relating to its business, assets, property, leaseholds or Equipment under any
such laws, rules or regulations.
(b) Except to the extent non-compliance would not have a Material Adverse
Effect, Borrower has been issued all required federal, state and local licenses,
certificates or permits relating to all applicable Environmental Laws.
(c) To the best of Borrower's knowledge, (i) there are no visible signs of
releases, spills, discharges, leaks or disposal (collectively referred to as
"Releases") of Hazardous Substances at, upon, under or within any Real Property;
(ii) except as disclosed on Schedule 5.7, there are no underground storage tanks
or polychlorinated biphenyls on the Real Property; (iii) the Real Property has
never been used as a treatment, storage or disposal facility of Hazardous Waste;
and (iv) no Hazardous Substances are present on the Real Property, excepting
such quantities as are handled in accordance with all applicable manufacturer's
instructions and governmental regulations and in proper storage containers and
as are necessary for the operation of the commercial business of Borrower or of
its tenants.
5.8 Solvency; No Litigation, Violation, Indebtedness or Default.
-----------------------------------------------------------
(a) After giving effect to the Transactions, Borrower will be solvent, able
to pay its debts as they mature, will have capital sufficient to carry on its
business and all businesses in which it is about to engage, and (i) as of the
Closing Date, the fair present saleable value of its assets, calculated on a
going concern basis, is in excess of the amount of its liabilities and (ii)
subsequent to the Closing Date, the fair saleable value of its assets
(calculated on a going concern basis) will be in excess of the amount of its
liabilities.
(b) Except as disclosed in Schedule 5.8(b), Borrower does not have (i) any
pending or threatened, litigation, arbitration, actions or proceedings which
involve a reasonable possibility of having a Material Adverse Effect on
Borrower, and (ii) any Indebtedness other than the Obligations.
(c) Borrower is not in violation of any applicable statute, regulation or
ordinance in any respect which could reasonably be expected to have a Material
Adverse Effect on Borrower,
39
nor is Borrower in violation of any order of any court, governmental authority
or arbitration board or tribunal.
(d) Neither Borrower nor any member of the Controlled Group maintains or
contributes to any ERISA Plan other than those listed on Schedule 5.8(d) hereto.
Except as set forth in Schedule 5.8(d), (i) no Plan has incurred any
"accumulated funding deficiency," as defined in Section 302(a)(2) of ERISA and
Section 412(a) of the Code, whether or not waived, and Borrower and each member
of the Controlled Group has met all applicable minimum funding requirements
under Section 302 of ERISA in respect of each Plan, (ii) each Plan which is
intended to be a qualified plan under Section 401(a) of the Code as currently in
effect has been determined by the Internal Revenue Service to be qualified under
Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) neither Borrower nor any
member of the Controlled Group has incurred any liability to the PBGC other than
for the payment of premiums, and there are no premium payments which have become
due which are unpaid, (iv) no Plan has been terminated by the plan administrator
thereof nor by the PBGC, and there is no occurrence which would cause the PBGC
to institute proceedings under Title IV of ERISA to terminate any Plan, (v) at
this time, the current value of the assets of each Plan exceeds the present
value of the accrued benefits and other liabilities of such Plan and neither
Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued
benefits and other liabilities, (vi) neither Borrower or any member of the
Controlled Group has breached any of the responsibilities, obligations or duties
imposed on it by ERISA with respect to any Plan, (vii) neither Borrower or any
member of a Controlled Group has incurred any liability for any excise tax
arising under Section 4972 or 4980B of the Code, and no fact exists which could
give rise to any such liability, (viii) neither Borrower nor any member of the
Controlled Group or any fiduciary of, or any trustee to, any Plan, has engaged
in a "prohibited transaction" described in Section 406 of the ERISA or Section
4975 of the Code or taken any action which would constitute or result in a
Termination Event with respect to any such Plan which is subject to ERISA, (ix)
Borrower and each member of the Controlled Group has made all contributions due
and payable with respect to each Plan, (x) there exists no event described in
Section 4043(b) of ERISA, for which the thirty (30) day notice period contained
in 29 CFR Section 2615.3 has not been waived, (xi) no Borrower or any member of
the Controlled Group has any fiduciary responsibility for investments with
respect to any plan existing for the benefit of persons other than employees or
former employees of any Borrower and any member of the Controlled Group, and no
Borrower or and (xii) during the last three years neither Borrower nor any
member of the Controlled Group has withdrawn, completely or partially, from any
Multiemployer Plan so as to incur liability under the Multiemployer Pension Plan
Amendments Act of 1980.
5.9 Patents, Trademarks, Copyrights and Licenses. All patents, patent
------------------------------------------------
applications, trademarks, trademark applications, service marks, service mark
applications, copyrights, copyright applications, design rights, tradenames,
assumed names, trade secrets and licenses owned or utilized by Borrower are set
forth on Schedule 5.9, are valid and have been duly registered or filed with all
appropriate governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business; there is
no pending or to the knowledge of Borrower
40
threatened challenge to the validity of any such material patent, trademark,
copyright, design right, tradename, trade secret or license and Borrower is not
aware of any grounds for any challenge, except as set forth in Schedule 5.9
hereto. Each patent, patent application, patent license, trademark, trademark
application, trademark license, service mark, service mark application, service
mark license, copyright, copyright application and copyright license owned or
held by Borrower and all trade secrets used by Borrower consist of original
material or property developed by Borrower or was lawfully acquired by Borrower
from the proper and lawful owner thereof. Each of such items has been maintained
so as to preserve the value thereof from the date of creation or acquisition
thereof. With respect to all software used by Borrower, Borrower is in
possession of all source and object codes related to each piece of software or
is the beneficiary of a source code escrow agreement, each such source code
escrow agreement being listed on Schedule 5.9 hereto.
5.10 Licenses and Permits. Except as set forth in Schedule 5.10, Borrower
--------------------
(a) is in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, state or local
law or regulation for the operation of its business in each jurisdiction wherein
it is now conducting or proposes to conduct business and where the failure to
procure such licenses or permits could reasonably be expected to have a Material
Adverse Effect on Borrower.
5.11 Default of Indebtedness. Borrower is not in default in the payment of
-----------------------
the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
5.12 No Default. Borrower is not in default in the payment or performance
----------
of any of its contractual obligations which default could have a Material
Adverse Effect and no Default has occurred.
5.13 No Burdensome Restrictions. Borrower is not party to any contract or
---------------------------
agreement the performance of which could reasonably be expected to have a
Material Adverse Effect on such Borrower. Except in connection with the Senior
Notes and the South Carolina Bond Property, no Borrower has agreed or consented
to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.
5.14 No Labor Disputes. Borrower is not involved in any labor dispute;
------------------
there are no strikes or walkouts or union organization of Borrower's employees
threatened or in existence and no labor contract is scheduled to expire during
the Term other than as set forth on Schedule 5.14 hereto.
5.15 Margin Regulations. Borrower is not engaged, nor will it engage,
-------------------
principally or as one of its important activities, in the business of extending
credit for the purpose of "purchasing" or
41
"carrying" any "margin stock" within the respective meanings of each of the
quoted terms under Regulation U of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect. No part of the proceeds
of any Advance will be used for "purchasing" or "carrying" "margin stock" as
defined in Regulation U of such Board of Governors.
5.16 Investment Company Act. Borrower is not an "investment company"
------------------------
registered or required to be registered under the Investment Company Act of
1940, as amended, nor is it controlled by such a company.
5.17 Disclosure. No representation or warranty made by Borrower in this
----------
Agreement or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of fact or omits to state any fact necessary to make the statements
herein or therein not materially misleading. There is no fact known to Borrower
or which reasonably should be known to Borrower which Borrower has not disclosed
to Agent in writing with respect to the Transactions which could reasonably be
expected to have a Material Adverse Effect on Borrower.
5.18 Swaps. Borrower is not a party to, nor will it be a party to, any swap
-----
agreement whereby Borrower has agreed or will agree to swap interest rates or
currencies unless same provides that damages upon termination following an event
of default thereunder are payable on an unlimited "two-way basis" without regard
to fault on the part of either party.
5.19 Conflicting Agreements. No provision of any material mortgage,
-----------------------
indenture, contract, agreement, judgment, decree or order that is binding on the
Borrower or affecting the Collateral conflicts with, or requires any Consent
which has not already been obtained to, or would in any way prevent the
execution, delivery or performance of, the terms of this Agreement or the Other
Documents.
5.20 Application of Certain Laws and Regulations. Neither Borrower or any
--------------------------------------------
Affiliate of Borrower is subject to any statute, rule or regulation which
regulates the incurrence of any Indebtedness.
5.21 Business and Property of Borrower. Upon and after the Closing Date,
---------------------------------
Borrower does not propose to engage in any business other than the
manufacturing, marketing and sale of textiles and related accessories and
activities necessary to conduct the foregoing. On the Closing Date, Borrower
will own all the property and possess all of the rights and Consents necessary
for the conduct of the business of Borrower.
VI. AFFIRMATIVE COVENANTS.
---------------------
Borrower shall, until payment in full of the Obligations and termination of
this Agreement:
42
6.1 Payment of Fees. Pay to Agent when due all fees and expenses which
----------------
Agent incurs in connection with (a) the forwarding of Advance proceeds and (b)
the establishment and maintenance of any Blocked Accounts or Depository Accounts
as provided for in Section 4.15(h). Agent may, without making demand, charge the
account of Borrower for all such fees and expenses.
6.2 Conduct of Business and Maintenance of Existence and Assets. (a)
----------------------------------------------------------------
Conduct continuously and operate actively its business according to good
business practices and maintain all of its properties useful or necessary in its
business in good working order and condition (reasonable wear and tear excepted
and except as may be disposed of in accordance with the terms of this
Agreement), including, without limitation, all material licenses, patents,
copyrights, design rights, tradenames, trade secrets and trademarks and take all
actions necessary to enforce and protect the validity of any material
intellectual property right or other right included in the Collateral; (b) keep
in full force and effect its existence and comply with the laws and regulations
governing the conduct of its business except where noncompliance would
reasonably be expected not to have a Material Adverse Effect; and (c) make all
such reports and pay all such franchise and other taxes and license fees and do
all such other acts and things as may be lawfully required to maintain its
material rights, licenses, leases, powers and franchises under the laws of the
United States or any political subdivision thereof.
6.3 Violations. Promptly notify Agent in writing of any violation of any
----------
law, statute, regulation or ordinance of any Governmental Body, or of any agency
thereof, applicable to Borrower which might reasonably be expected to have a
Material Adverse Effect on Borrower.
6.4 Government Receivables. Take all steps necessary to protect Agent's
-----------------------
interest in the Collateral under the Federal Assignment of Claims Act or other
applicable state or local statutes or ordinances and deliver to Agent
appropriately endorsed, any instrument or chattel paper connected with any
Receivable arising out of contracts between Borrower and the United States, any
state or any department, agency or instrumentality of any of them.
6.5 Execution of Supplemental Instruments. Execute and deliver to Agent
---------------------------------------
from time to time, upon demand, such supplemental agreements, statements,
assignments and transfers, or instructions or documents relating to the
Collateral, and such other instruments as Agent may request, in order that the
full intent of this Agreement and the Other Documents may be carried into
effect.
6.6 Payment of Indebtedness. Pay, discharge or otherwise satisfy at or
------------------------
before maturity (subject, where applicable, to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever nature, except when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
Borrower shall have provided for such reserves as Agent may reasonably deem
proper and necessary, subject at all times to any applicable subordination
arrangement in favor of Lenders.
43
6.7 Standards of Financial Statements. Cause all financial statements
-----------------------------------
referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and 9.13 as to which
GAAP is applicable to be complete and correct in all material respects (subject,
in the case of interim financial statements, to normal year- end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except as
concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).
6.8 Year 2000 Compliance. Be fully Year 2000 Compliant at all times.
--------------------
6.9 Maximum Leverage Ratio.
----------------------
(a) Maintain as of the dates set forth below for the four consecutive
quarter period ending thereon, a maximum Leverage Ratio of not more than the
corresponding ratios set forth below:
Maximum Four Quarter
Leverage Ratio Period Ending
-------------- -------------
5.9:1 December 31, 1999
7.0:1 March 31, 2000
7.0:1 June 30, 2000
7.0:1 September 30, 2000
7.0:1 December 31, 2000
7.0:1 March 31, 2001
7.0:1 June 30, 2001
and as of the last day of each of Borrower's fiscal quarters occurring after
June 30, 2001 a maximum Leverage Ratio of not more than the lesser of (a) 7.0:1
or (b) an amount equal to Funded Indebtedness on the last day of the applicable
fiscal quarter divided by an amount equal to fifty percent (50%) of Borrower's
EBITDA for Borrower's four consecutive fiscal quarters ending on such date.
(b) At all times, if at the end of any fiscal quarter the aggregate amount
of outstanding Revolving Advances ("Actual Advances") exceeds the amount of
Revolving Advances set forth in the Borrower's business plan annexed hereto as
Exhibit 5.5(b), then the applicable maximum Leverage Ratio set forth in Section
6.9(a) above shall be increased by multiplying such maximum Leverage Ratio by
the quotient of (i) the Adjusted Funded Indebtedness (as defined below) on such
date divided by (ii) the projected Funded Indebtedness for such date as set
forth on Exhibit 5.5(b). For the purposes hereof, the term "Adjusted Funded
Indebtedness" for a particular date shall mean the sum of the projected Funded
Indebtedness for such date as set forth on Exhibit 5.5(b) plus the Actual
Advances on such date. For the purposes of clarity, the following is provided as
an example:
44
Funded Actual Scheduled Adjusted
------ ------ --------- --------
Indebtedness Advances Ratio Ratio
------------ -------- ----- -----
Per Business Plan 138,302 0 7.0:1 --
Actual 188,302* 50,000 -- 9.8:1
Quotient 1.4 -- -- 1.4
<FN>
* Adjusted Funded Indebtedness : 188,302 = 138,302 + 50,000
</FN>
6.10 Sale of Rainsford Assets. Consummate the sale of the Rainsford Assets
------------------------
within one hundred twenty (120) days from the Closing Date and remit the
proceeds of such sale up to $15,000,000, provided that, if such proceeds are
less than $15,000,000 (the difference between such amount and $15,000,000, a
"Shortfall"), Borrower shall remit to Lender such proceeds plus the amount of
the Shortfall, in each case to Agent as a mandatory prepayment of the Revolving
Advances and a permanent reduction of the Maximum Loan Amount.
6.11 Material Contracts. Deliver to Agent, upon Agent's reasonable request
------------------
from time to time, all material contracts of Borrower, including, without
limitation, management contracts, Hedging Agreements, compensation programs,
leases, union contracts, labor contracts, vendor supply contracts, lease
agreements and any other contracts which in each case are material to the
Collateral and/or the Borrower's operation and the conduct of its business.
VII. NEGATIVE COVENANTS.
------------------
Borrower shall not, until satisfaction in full of the Obligations and
termination of this Agreement:
7.1 Merger, Consolidation, Acquisition and Sale of Assets.
-----------------------------------------------------
(a) Without the prior written consent of Agent (not to be unreasonably
withheld or delayed), enter into any merger, consolidation or other
reorganization with or into any other Person or acquire all or a substantial
portion of the assets or stock of any Person or permit any other Person to
consolidate with or merge with it (except for purchases of Inventory of similar
type to that used by Borrower in the ordinary course of its business).
(b) During the Term, sell, lease, transfer or otherwise dispose of any of
its properties or assets, in which the proceeds of such sale, lease or transfer
exceeds an aggregate amount of $5,000,000 without the prior written consent of
Agent (not to be unreasonably withheld
45
or delayed), except (i) as permitted under Section 4.3 of this Agreement; (ii)
the contemplated sales of the Rainsford Assets, the Borrower's Hainsworth plant
located in Anderson, South Carolina, the Borrower's Steveco Fabrics Division
plant located in Greensboro, South Carolina, and approximately twelve (12) acres
of real property located adjacent to the Borrower's plant located in Fountain
Inn, South Carolina, all of which such contemplated sales are hereby consented
to by Agent and the Lenders, and (iii) the harvest of timber at Borrower's
Pampico Plant.
7.2 Creation of Liens. Create or suffer to exist any Lien or transfer upon
-----------------
or against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.
7.3 Guarantees. Become liable upon the obligations of any Person by
----------
assumption, endorsement or guaranty thereof or otherwise (other than to Lenders)
except (a) as disclosed on Schedule 7.3, and (b) the endorsement of checks in
the ordinary course of business.
7.4 Investments. Purchase or acquire obligations or stock of, or any other
-----------
interest in, any other Person, except (a) obligations issued or guaranteed by
the United States of America or any agency thereof; (b) commercial paper with
maturities of not more than 180 days and a published rating of not less than A-1
or P-1 (or the equivalent rating); (c) certificates of time deposit and bankers'
acceptances having maturities of not more than 180 days and repurchase
agreements backed by United States government securities of a commercial bank if
(i) such bank has a combined capital and surplus of at least $500,000,000, or
(ii) its debt obligations, or those of a holding company of which it is a
Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency; and (d) U.S. money market funds that invest
solely in obligations issued or guaranteed by the United States of America or an
agency thereof; and (e) investments disclosed on Schedule 7.4 annexed hereto.
7.5 Loans. Make advances, loans or extensions of credit to any Person,
-----
including without limitation, any Parent, or any Subsidiary or Affiliate that is
not a Guarantor except with respect to the extension of commercial trade credit
in connection with the sale of Inventory in the ordinary course of its business
7.6 Capital Expenditures. For each of Borrower's fiscal years set forth
---------------------
below, make expenditures, on a consolidated basis, in connection with the
maintenance of its capital assets in excess of the aggregate amounts set forth
below for the corresponding fiscal year:
Maximum
Capital Expenditure Fiscal Year
------------------- -----------
$15,000,000 Fiscal year ending June 30, 2000
$15,000,000 Fiscal year ending June 30, 2001
$15,000,000 Fiscal year ending June 30, 2002
$15,000,000 Fiscal year ending June 30, 2003
46
7.7 Dividends. Declare, pay or make any dividend or distribution on any
---------
shares of the common stock or preferred stock of Borrower (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock) or apply any of its funds, property or assets to the purchase, redemption
or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of Borrower,
except that, Borrower may declare pay or make dividends on any shares of the
common stock or preferred stock of the Borrower if, after giving effect to any
such dividend, no Event of Default exists or would exist and an Undrawn
Availability of at least $1.00 exists or would exist.
7.8 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness
------------
(exclusive of trade debt) except in respect of (a) Obligations to Lenders; (b)
Indebtedness incurred for capital expenditures permitted under Section 7.6
hereof; (c) Indebtedness owing under the Senior Notes; and (d) Indebtedness
disclosed on Schedule 7.8 hereof.
7.9 Nature of Business. Substantially change the nature of the business in
------------------
which it is presently engaged, nor except as specifically permitted herein
purchase or invest, directly or indirectly, in any assets or property other than
in the ordinary course of business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted.
7.10 Transactions with Affiliates. Directly or indirectly, purchase,
------------------------------
acquire or lease any property from, or sell, transfer or lease any property to,
or otherwise deal with, any Affiliate, except transactions in the ordinary
course of business, on an arm's-length basis on terms no less favorable than
terms which would have been obtainable from a Person other than an Affiliate;
provided that dealings pursuant to the Management Services Agreement and Income
Tax Sharing Agreement with Delta Woodside Industries, Inc. are specifically
permitted.
7.11 Leases. Enter as lessee into any Operating Lease which, after giving
------
effect thereto, would cause Borrower's aggregate annual rental payments for all
leased property to exceed $5,000,000 in any one fiscal year.
7.12 Subsidiaries.
------------
(a) Form any Subsidiary.
(b) Enter into any partnership, joint venture or similar arrangement.
7.13 Fiscal Year and Accounting Changes. Change its fiscal year from the
------------------------------------
Saturday closest to June 30 or make any change (i) in accounting treatment and
reporting practices except as permitted by GAAP or (ii) in tax reporting
treatment except as permitted by law.
7.14 Pledge of Credit. Except as permitted by this Agreement, now or
-----------------
hereafter pledge Agent's or any Lender's credit on any purchases or for any
purpose whatsoever or use any portion
47
of any Advance in or for any business other than Borrower's business as
conducted on the date of this Agreement.
7.15 Amendment of Articles of Incorporation, By-Laws. Amend, modify or
-------------------------------------------------
waive any term or material provision of its Articles of Incorporation or By-Laws
in any manner adverse to the Agent or the Lenders hereunder or that would affect
in any way the perfection of Agent's security interest in the Collateral or the
preservation of the Collateral, unless required by law.
7.16 Compliance with ERISA. (i) (x) Maintain, or permit any member of the
---------------------
Controlled Group to maintain, or (y) become obligated to contribute, or permit
any member of the Controlled Group to become obligated to contribute, to any
material ERISA Plan that is a defined benefit pension plan, other than those
material ERISA Plans disclosed on Schedule 5.8(d), if such maintenance or
obligation to contribute would create a material liability for Borrower or the
Controlled Group; (ii) engage, or permit any member of the Controlled Group to
engage, in any non- exempt "prohibited transaction", as that term is defined in
section 406 of ERISA and Section 4975 of the Code where such prohibited
transaction would create a material liability for Borrower or the Controlled
Group; (iii) incur, or permit any member of the Controlled Group to incur, any
"accumulated funding deficiency", as that term is defined in Section 302 of
ERISA or Section 412 of the Code; (iv) terminate, or permit any member of the
Controlled Group to terminate, any material ERISA Plan that is a defined benefit
pension plan where such event could reasonably result in any material ERISA
liability of Borrower or any member of the Controlled Group or the imposition of
a lien on the property of Borrower or any member of the Controlled Group
pursuant to Section 4068 of ERISA; (v) except for payments due at Closing which
shall not exceed $100,000, incur, or permit any member of the Controlled Group
to incur, any withdrawal liability to any Multiemployer Plan; (vi)fail promptly
to notify Agent of the occurrence of any Termination Event; (vii) fail to
comply, or permit a member of the Controlled Group to fail to comply in any
material respects, with the requirements of ERISA or the Code or other
applicable laws in respect of any material ERISA Plan where such failure could
reasonably result in a liability for the Borrower or the Controlled Group;
(viii) fail to meet, or permit any member of the Controlled Group to fail to
meet, all minimum funding requirements under ERISA.
7.17 Prepayment of Indebtedness. At any time, directly or indirectly,
----------------------------
prepay any Indebtedness (other than to Lenders), or repurchase, redeem, retire
or otherwise acquire any Indebtedness of Borrower, except that Borrower may from
time to time make prepayments in respect of the Senior Notes provided that,
after giving effect to any such prepayment, no Event of Default then exists or
would exist and Borrower shall have an Undrawn Availability of not less than
$1.00.
7.18 Management Compensation and Bonuses. Declare, pay or make any bonuses
-----------------------------------
to Borrower's management personnel in cash or Collateral unless, after giving
effect to any such payment, no Event of Default exists or would then exist and
an Undrawn Availability of at least $1.00 exists or then would exist.
48
VIII. CONDITIONS PRECEDENT.
--------------------
8.1 Conditions to Initial Advances. The agreement of Lenders to make the
-------------------------------
initial Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Lenders, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:
(a) Notes. Agent shall have received the Notes duly executed and delivered
-----
by an authorized officer of Borrower;
(b) Filings, Registrations and Recordings. Each document (including,
----------------------------------------
without limitation, any Uniform Commercial Code financing statement) required by
this Agreement, or any Other Document required under law or reasonably requested
by the Agent to be filed, registered or recorded in order to create, in favor of
Agent, a perfected security interest in or lien upon the Collateral shall have
been properly filed, registered or recorded in each jurisdiction in which the
filing, registration or recordation thereof is so required or requested, and
Agent shall have received an acknowledgment copy, or other evidence satisfactory
to it, of each such filing, registration or recordation and satisfactory
evidence of the payment of any necessary fee, tax or expense relating thereto;
(c) Corporate Proceedings of Borrower and Guarantor. Agent shall have
---------------------------------------------------
received, in form and substance reasonably satisfactory to Agent, a copy of the
resolutions in form and substance satisfactory to Agent in its sole discretion,
of the Board of Directors of Borrower and Guarantor authorizing (i) the
execution, delivery and performance of this Agreement and the Other Documents,
the Notes, any related agreements to any of the foregoing, (collectively the
"Documents") and (ii) the granting by Borrower and each Guarantor of the Liens
upon the Collateral in favor of Agent for itself and the ratable benefit of
Lenders, in each case certified by the Secretary or an Assistant Secretary of
Borrower and Guarantor as of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate;
(d) Incumbency Certificate of Borrower and Guarantor. Agent shall have
---------------------------------------------------
received, in form and substance reasonably satisfactory to Agent, a certificate
of the Secretary or an Assistant Secretary of Borrower and Guarantor, dated the
Closing Date, as to the incumbency and signature of the officers of Borrower and
Guarantor executing this Agreement, and Borrower executing any of the Other
Documents or any certificate or other documents to be delivered by it pursuant
hereto, together with evidence of the incumbency of such Secretary or Assistant
Secretary;
(e) Certificates. Agent shall have received, in form and substance
------------
satisfactory to Agent in its sole discretion, a copy of the Articles or
Certificate of Incorporation or other charter documents of Borrower and
Guarantor and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with
copies of the By- Laws of Borrower and Guarantor, and all agreements of
Borrower's shareholders certified as accurate and complete by the Secretary of
Borrower and Guarantor;
(f) Good Standing Certificates. Agent shall have received, in form and
----------------------------
substance satisfactory to Agent in its sole discretion, good standing
certificates for Borrower and Guarantor dated not more than thirty (30) days
prior to the Closing Date, issued by the Secretary of State or other appropriate
official of Borrower's and Guarantor's jurisdiction of incorporation and each
jurisdiction where the conduct of Borrower's and Guarantor's business activities
or the ownership of its properties necessitates qualification except as provided
in that certain Letter re: Post Closing Items dated the date hereof between
Borrower and Agent;
(g) Legal Opinions. Agent shall have received the executed legal opinion of
--------------
Wyche, Burgess, Freeman & Parham, PA in form and substance reasonably
satisfactory to Agent in its sole discretion, which shall cover such matters
incident to the transactions contemplated by this Agreement, the Notes, and
related agreements as Agent may reasonably require and Borrower hereby
authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;
(h) No Litigation. (i) No litigation, investigation or proceeding before or
-------------
by any arbitrator or Governmental Body shall be continuing or threatened against
Borrower or Guarantor or against the officers or directors of Borrower or
Guarantor or (A) in connection with the Documents or any of the Transactions and
which, in the reasonable opinion of Agent, is deemed material or (B) which if
adversely determined, could, in the reasonable opinion of Agent, have a Material
Adverse Effect on Borrower or Guarantor; and (ii) no injunction, writ,
restraining order or other order of any nature materially adverse to Borrower or
Guarantor or the conduct of its business or inconsistent with the due
consummation of the Transactions shall have been issued by any Governmental
Body;
(i) Financial Condition Certificates. Agent shall have received an executed
--------------------------------
Officer's Certificate in form and substance reasonably satisfactory to Agent,
certifying the solvency of Borrower on a consolidated basis after giving effect
to the Transactions and the Indebtedness contemplated hereby and as to
Borrower's financial resources and its ability to meet their obligations and
liabilities as they become due; to the effect that as of the Closing Date and
after giving effect to the Transactions:
(i) the assets of Borrower at a fair valuation, exceed the total
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities) of Borrower;
(ii) current monthly projections for fiscal year 2000, including Borrower's
projected income statement, balance sheet and cash flow statement in form and
substance satisfactory to Agent in its sole discretion, and which are based on
underlying assumptions which provide a reasonable basis for the projections and
which reflect Borrower's judgment based on present circumstances of the most
likely set of conditions and Borrower's most likely course of action
49
for the period projected, demonstrate Borrower will have sufficient cash flow to
enable it to pay its debts as they mature; and
(iii) Borrower on a consolidated basis does not have an unreasonably small
capital base with which to engage in its anticipated business.
For purposes of this subsection (i), the "fair valuation" of the assets of
Borrower on a consolidated basis shall be determined on the basis of the amount
which may be realized within a reasonable time, either through collection or
sale of such assets at market value, conceiving the latter as the amount which
could be obtained for the property in question within such period by a capable
and diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions;
(j) Collateral Examination. Agent shall have completed Collateral
------------------------
examinations, the results of which shall be satisfactory in form and substance
to Agent, of the Receivables, Inventory, General Intangibles and other
Collateral of Borrower and all books and records in connection therewith;
(k) Fees. Agent shall have received all fees that are due and payable to
----
Agent and Lenders on or prior to the Closing Date pursuant to Article III
hereof;
(l) Financial Projections and Other Financial Information. Agent shall have
-----------------------------------------------------
received, in form and substance reasonably satisfactory to Agent, financial
projections for Borrower on a consolidated basis which shall be satisfactory in
all respects to Agent and upon which Agent may rely for the purposes of entering
into this Agreement. Agent shall have also received a copy of the Borrower's
Form 10-Q for the period ending December 31, 1999, a copy of which is annexed
hereto as Exhibit 81;
(m) Other Documents. Agent shall have received final executed copies of the
---------------
Amendments to the Factoring Agreement and all related agreements, documents and
instruments as in effect on the Closing Date and the transactions contemplated
by such documentation shall be consummated concurrently with the making of the
initial Advances, and executed Notes and all Other Documents, each in form and
substance reasonably satisfactory to Agent;
(n) Guaranties. Agent shall have received an original, executed Guaranty
----------
from each Guarantor and all related documents, each in form and substance
reasonably satisfactory to Agent;
(o) Insurance. Agent shall have received in form and substance reasonably
---------
satisfactory to Agent, a certificate with respect to Borrower's casualty
insurance policies, together with loss payable endorsements on Agent's standard
form of loss payee endorsement naming Agent as loss payee;
50
(p) Payment Instructions. Agent shall have received, in form and substance
--------------------
satisfactory to Agent in its sole discretion, written instructions from Borrower
directing the application of proceeds of the initial Advances made pursuant to
this Agreement;
(q) Consents. Agent shall have received, in form and substance reasonably
--------
satisfactory to Agent, any and all Consents necessary to permit the effectuation
of the transactions contemplated by this Agreement and the Other Documents; and,
Agent shall have received such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as Agent and its counsel
shall deem necessary;
(r) No Adverse Material Change. (i) Since December 31, 1999, there shall
----------------------------
not have occurred (w) any material adverse change in the condition, financial or
otherwise, operations, properties or prospects of Borrower or Guarantor, (x) any
material damage or destruction to any of the Collateral nor any material
depreciation in the value of the Receivables or Inventory and (y) any event,
condition or state of facts which could reasonably be expected to have a
Material Adverse Effect on Borrower or Guarantor, and (z) any material deviation
from the forecasts furnished to Agent with respect to Borrower, and (ii) no
representations made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;
(s) Leasehold Agreements. Agent shall have received landlord, mortgagee or
--------------------
warehouseman agreements in form and substance reasonably satisfactory to Agent
with respect to all premises leased by Borrower, other than the South Carolina
Bond properties and except as provided in that certain Letter re: Post Closing
Items dated the date hereof by and between Borrower and Agent, at which books
and records relating to Receivables are located;
(t) Net Worth. Agent shall have received the Pro Forma Balance Sheet from
---------
Borrower reflecting a Net Worth of at least $42,000,000.
(u) Closing Certificate. Agent shall have received, in form and substance
-------------------
reasonably satisfactory to Agent, a closing certificate signed by the Chief
Financial Officer of Borrower dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and the Other
Documents are true and correct on and as of such date, (ii) Borrower is on such
date in compliance with all the terms and provisions set forth in this Agreement
and the Other Documents and (iii) on such date no Default or Event of Default
has occurred or is continuing;
(v) Borrowing Base. Agent shall have received, in form and substance
---------------
satisfactory to Agent, evidence from Borrower that the aggregate amount of
Eligible Receivables and Eligible Inventory is sufficient in value and amount to
support Advances in the amount requested by Borrower on the Closing Date;
(y) Other. Agent shall have received in form and substance reasonably
-----
satisfactory to Agent, evidence of all corporate and other proceedings, and all
documents,
51
instruments and other legal matters in connection with the Transactions shall be
reasonably satisfactory in form and substance to Agent, Lenders and their
counsel.
8.2 Conditions to Each Advance. The agreement of Lenders to make any
----------------------------
Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject to the satisfaction of the following conditions
precedent as of the date such Advance is made:
(a) Representations and Warranties. Each of the representations and
--------------------------------
warranties made by Borrower in or pursuant to this Agreement, the Other
Documents and any related agreements to which it is a party, and each of the
representations and warranties contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement, the Other Documents or any related agreement shall be true and
correct in all material respects on and as of such date as if made on and as of
such date, except to the extent such representation and warranty specifically
relates to an earlier date;
(b) No Default. No Event of Default or Default shall have occurred and be
----------
continuing on such date, or would exist after giving effect to the Advances
requested to be made, on such date, provided, however that Lenders, in their
sole discretion, may continue to make Advances notwithstanding the existence of
an Event of Default or Default and that any Advances so made shall not be deemed
a waiver of any such Event of Default or Default; and
(c) Maximum Advances. In the case of any Advances requested to be made,
-----------------
after giving effect thereto, the aggregate Advances shall not exceed the maximum
amount of Advances permitted under Section 2.1 hereof.
Each request for an Advance by Borrower hereunder shall constitute a
representation and warranty by Borrower as of the date of such Advance that the
conditions contained in this subsection shall have been satisfied.
IX. INFORMATION AS TO BORROWER.
--------------------------
Borrower shall, until satisfaction in full of the Obligations and the
termination of this Agreement:
9.1 Disclosure of Material Matters. Promptly upon learning thereof, report
------------------------------
to Agent all matters materially affecting the value, enforceability or
collectibility of any portion of the Collateral including, without limitation,
Borrower's reclamation or repossession of, or the return to Borrower of, a
material amount of goods or claims or disputes asserted by any Customer or other
obligor.
9.2 Schedules. Deliver to Agent on the fifteenth day of each calendar month
---------
for the immediately preceding calendar month or more frequently as Agent may
request from time to time, (a) a Borrowing Base Certificate, (b) Inventory
reports, (c) accounts receivable reports, (d) accounts
52
payable schedules, and (e) cash collection reports. In addition, Borrower will
deliver to Agent at such intervals as Agent may require: (i) confirmatory
assignment schedules, (ii) copies of Customer's invoices, (iii) evidence of
shipment or delivery, and (iv) such further schedules, documents and/or
information regarding the Collateral as Agent may reasonably require including,
without limitation, trial balances and test verifications. Agent shall have the
right to confirm and verify all Receivables by any manner and through any medium
it considers advisable and do whatever it may deem reasonably necessary to
protect its interests hereunder. The items to be provided under this Section are
to be in form satisfactory to Agent and executed by Borrower and delivered to
Agent from time to time solely for Agent's convenience in maintaining records of
the Collateral, and Borrower's failure to deliver any of such items to Agent
shall not affect, terminate, modify or otherwise limit Agent's security interest
with respect to the Collateral.
9.3 Environmental Reports. Furnish Agent, at Agent's reasonable request
----------------------
from time to time, with a certificate signed by the President and/or Chief
Financial Officer of Borrower stating, to the best of his knowledge, that
Borrower is in compliance in all material respects with all federal, state and
local laws relating to environmental protection and control and occupational
safety and health. To the extent Borrower is not in compliance with the
foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action Borrower will implement in order to
achieve full compliance.
9.4 Litigation. Promptly notify Agent in writing of any litigation, suit or
----------
administrative proceeding affecting Borrower, whether or not the claim is
covered by insurance, and of any suit or administrative proceeding, which may be
reasonably expected to have a Material Adverse Effect on Borrower.
9.5 Material Occurrences. Promptly notify Agent in writing upon the
---------------------
occurrence of (a) any Event of Default or Default; (b) any default or event of
default under the Senior Note Indenture; (c) any event, development or
circumstance whereby any financial statements or other reports furnished to
Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of Borrower
as of the date of such statements; (d) any accumulated retirement plan funding
deficiency which, if such deficiency continued for two plan years and was not
corrected as provided in Section 4971 of the Code, could subject Borrower to a
tax imposed by Section 4971 of the Code; (e) each and every default by Borrower
which might result in the acceleration of the maturity of any Indebtedness,
including the names and addresses of the holders of such Indebtedness with
respect to which there is a default existing or with respect to which the
maturity has been or could be accelerated, and the amount of such Indebtedness;
and (f) any other development in the business or affairs of Borrower which would
have a Material Adverse Effect; in each case describing the nature thereof and
the action Borrower proposes to take with respect thereto.
9.6 Government Receivables. Notify Agent immediately if any of its
-----------------------
Receivables arise out of contracts between Borrower and the United States, any
state, or any department, agency or instrumentality of any of them.
53
9.7 Annual Financial Statements. Furnish Agent and each of the Lenders
-----------------------------
within ninety (90) days after the end of each fiscal year of Borrower, as the
case may be, financial statements of Borrower on a consolidated and
consolidating basis, including, but not limited to, statements of income and
stockholders' equity and cash flow from the beginning of the current fiscal year
to the end of such fiscal year and the balance sheet as at the end of such
fiscal year, all prepared in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and reported upon without
qualification by an independent certified public accounting firm satisfactory to
Agent (the "Accountants"). The audit report of such accounting firm with respect
to the Borrower's financial statements shall be accompanied by a statement of
such accounting firm certifying that (i) they have caused the Loan Agreement to
be reviewed, (ii) in making the examination upon which such report was based
either no information came to their attention which to their knowledge
constituted an Event of Default or a Default under this Agreement or any Other
Document or, if such information came to their attention, specifying any such
Default or Event of Default, its nature, when it occurred and whether it is
continuing, and such report shall contain or have appended thereto calculations
which set forth the Borrower's compliance with the requirements or restrictions
imposed by Sections 6.10 and 7.6. In addition, the Borrower's reports shall be
accompanied by a certificate of the President and/or Chief Financial Officer of
Borrower which shall state that, based on an examination sufficient to permit
him to make an informed statement, no Default or Event of Default exists, or, if
such is not the case, specifying such Default or Event of Default, its nature,
when it occurred, whether it is continuing and the steps being taken by Borrower
with respect to such default and, such certificate shall have appended thereto
calculations which set forth Borrower's compliance with the requirements or
restrictions imposed by Sections 6.9 and 7.6 hereof.
9.8 Quarterly Financial Statements. Furnish Agent and each of the Lenders,
------------------------------
within forty- five (45) days after the end of each fiscal quarter of Borrower,
an unaudited balance sheet of Borrower, on both a consolidated and consolidating
basis, and unaudited statements of income and stockholders' equity and cash flow
of Borrower reflecting results of operations for the consecutive twelve month
period ending on the last day of such quarter and for such quarter, prepared on
a basis consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The Borrower's reports shall
be accompanied by a certificate signed by the President and/or Chief Financial
Officer of Borrower, which shall state that, based on an examination sufficient
to permit him to make an informed statement, no Default or Event of Default
exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such default and, such certificate shall
have appended thereto calculations which set forth Borrower's compliance with
the requirements or restrictions imposed by Sections 6.9 and 7.6 hereof.
9.9 Monthly Financial Statements. Furnish Agent and each of the Lenders
------------------------------
within thirty (30) days after the end of each month, an unaudited balance sheet
of Borrower, on a consolidated and consolidating basis, and unaudited statements
of income and stockholders' equity and cash flow of Borrower, on a consolidated
and consolidating basis, reflecting results of operations from the beginning of
the fiscal year to the end of such month and for such month, prepared on a basis
54
consistent with prior practices and complete and correct in all material
respects, subject to normal year end adjustments. The reports shall be
accompanied by a certificate signed by the President and/or Chief Financial
Officer of Borrower, which shall state that, based on an examination sufficient
to permit him to make an informed statement, no Default or Event of Default
exists, or, if such is not the case, specifying such Default or Event of
Default, its nature, when it occurred, whether it is continuing and the steps
being taken by Borrower with respect to such event and, such certificate shall
have appended thereto calculations which set forth Borrower's compliance with
the requirements or restrictions imposed by Sections 6.10 and 7.6 hereof.
9.10 Other Reports. Furnish Agent and each of the Lenders as soon as
--------------
available, but in any event within ten (10) days after the issuance thereof,
with (i) copies of such financial statements, reports and returns as Borrower
shall send to its stockholders, and (ii) copies of all notices sent to the
Securities and Exchange Commission. In addition to and not in limitation of the
foregoing, Borrower shall cause Guarantors to furnish Agent with annual
financial statements requested by Agent from time in form and substance
satisfactory to Agent.
9.11 Additional Information. Furnish Agent and each of the Lenders with
-----------------------
such additional information as Agent shall reasonably request in order to enable
Agent to determine whether the terms, covenants, provisions and conditions of
this Agreement have been complied with by Borrower including, without limitation
and without the necessity of any request by Agent, (a) copies of all
environmental audits and reviews, if any (b) at least thirty (30) days prior
thereto, notice of Borrower's opening of any new office or place of business
that is material or Borrower's closing of any existing office or place of
business that is material, and (c) promptly upon Borrower's learning thereof,
notice of any labor dispute to which Borrower may become a party, any strikes or
walkouts relating to any of its plants or other facilities, and the expiration
of any labor contract to which Borrower is a party or by which Borrower is
bound.
9.12 Projected Operating Budget. Furnish Agent and each of the Lenders, no
--------------------------
later than thirty (30) days prior to the beginning of Borrower's fiscal years
commencing with fiscal year 2001, a month by month projected operating budget
and cash flow of Borrower, on a consolidated and consolidating basis, for such
fiscal year (including an income statement, statements of cash disbursements,
cash collections and borrowing base projections for each month and a balance
sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial
Officer of Borrower to the effect that such projections have been prepared on
the basis of sound financial planning practice consistent with past budgets and
financial statements and that such officer has no reason to question the
reasonableness of any material assumptions on which such projections were
prepared. Agent may request from time to time updated projections if the
Borrower fails to perform consistent with any projections submitted to Agent
from time to time or should the results of any field audit, collateral
examination or other analysis of Borrower be unsatisfactory to Agent in its sole
discretion.
9.13 Variances From Operating Budget. Furnish Agent and each of the
----------------------------------
Lenders, concurrently with the delivery of the financial statements referred to
in Section 9.7 and each
55
quarterly report, a written report summarizing all material variances from
budgets submitted by Borrower pursuant to Section 9.12 and a discussion and
analysis by management with respect to such variances.
9.14 Notice of Suits, Adverse Events. Furnish Agent with prompt notice of
--------------------------------
(a) any lapse or other termination of any Consent issued to Borrower by any
Governmental Body, (b) any refusal by any Governmental Body to renew or extend
any such Consent; and (c) copies of any periodic or special reports filed by
Borrower with any Governmental Body, if such reports indicate any material
change in the business, operations, affairs or condition of Borrower, or if
copies thereof are requested by Lender, and copies of any material notices and
other communications from any Governmental Body which specifically relate to
Borrower.
9.15 ERISA Notices and Requests. Furnish Agent with immediate written
----------------------------
notice in the event that (a) Borrower or any member of the Controlled Group
knows or has reason to know that a Termination Event has occurred, together with
a written statement describing such Termination Event and the action, if any,
which Borrower or member of the Controlled Group has taken, is taking, or
proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with
respect thereto, (b) Borrower or any member of the Controlled Group knows or has
reason to know that a prohibited transaction (as defined in Sections 406 of
ERISA and 4975 of the Code) has occurred together with a written statement
describing such transaction and the action which Borrower or any member of the
Controlled Group has taken, is taking or proposes to take with respect thereto,
(c) a funding waiver request has been filed with respect to any Plan together
with all communications received by Borrower or any member of the Controlled
Group with respect to such request, (d) any increase in the benefits of any
existing defined benefit pension Plan or the establishment of any new defined
benefit pension Plan or the commencement of contributions to any defined benefit
pension Plan to which Borrower or any member of the Controlled Group was not
previously contributing shall occur, (e) Borrower or any member of the
Controlled Group shall receive from the PBGC a notice of intention to terminate
a Plan or to have a trustee appointed to administer a Plan, together with copies
of each such notice, (f) Borrower or any member of the Controlled Group shall
receive any favorable or unfavorable determination letter from the Internal
Revenue Service regarding the qualification of a Plan under Section 401(a) of
the Code, together with copies of each such letter; (g) Borrower or any member
of the Controlled Group shall receive a notice regarding the imposition of
withdrawal liability, together with copies of each such notice; (h) Borrower or
any member of the Controlled Group shall fail to make a required installment or
any other required payment under Section 412 of the Code on or before the due
date for such installment or payment; (i) Borrower or any member of the
Controlled Group knows that (i) a Multiemployer Plan has been terminated, (ii)
the administrator or plan sponsor of a Multiemployer Plan intends to terminate a
Multiemployer Plan, or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan.
56
9.16 Additional Documents. Execute and deliver to Agent, upon request, such
--------------------
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF DEFAULT.
-----------------
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
10.1 (a) failure by Borrower to pay any principal on the Obligations when
due, whether at maturity or by reason of acceleration pursuant to the terms of
this Agreement, or by required prepayment or failure to pay any other
liabilities or make any other payment, fee or charge provided for herein or any
Other Document when due;
(b) failure by Borrower to pay any interest on the Obligations when due or
reimburse Agent and Lenders for any Obligations under drawings on Letters of
Credit when due which is unremedied for a period of three (3) days;
10.2 any representation or warranty made by Borrower in this Agreement, the
Factoring Agreement, the letter re: Trade Styles, the Note, the Stock Pledge and
Security Agreement or any related agreement or in any certificate, document or
financial or other statement furnished at any time in connection herewith or
therewith shall prove to have been misleading in any material respect on the
date when made;
10.3 failure by Borrower to (i) furnish financial information when due or
when requested, or (ii) permit the inspection of its books or records;
10.4 issuance of a notice of Lien, levy, assessment, injunction or
attachment against a material portion of Borrower's property;
10.5 failure or neglect of Borrower to perform, keep or observe any term,
provision, condition, covenant herein contained, or contained in any other
agreement or arrangement, now or hereafter entered into between Borrower and any
Lender;
10.6 any judgment is rendered or judgment liens filed against Borrower for
an aggregate amount in excess of $250,000 which within thirty (30) days of such
rendering or filing is not either satisfied, stayed or discharged of record, or
which at any time is unstayed;
10.7 Borrower shall (i) apply for, consent to or suffer the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect),
57
(iv) be adjudicated a bankrupt or insolvent, (v) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vi) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, (vii) or take any
action for the purpose of effecting any of the foregoing;
10.8 Borrower shall admit in writing its inability, or be generally unable,
to pay its debts as they become due or cease operations of its present business;
10.9 the Original Owner or any Subsidiary of Borrower, or any Guarantor
shall (i) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (ii) admit in writing
its inability, or be generally unable, to pay its debts as they become due or
cease operations of its present business, (iii) make a general assignment for
the benefit of creditors, (iv) commence a voluntary case under any state or
federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a
bankrupt or insolvent, (vi) file a petition seeking to take advantage of any
other law providing for the relief of debtors, (vii) acquiesce to, or fail to
have dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;
10.10 any change in Borrower's condition or affairs (financial or
otherwise) which in Lenders' good faith opinion, impairs the ability of Borrower
to perform its Obligations under this Agreement;
10.11 any Lien created hereunder or provided for hereby or under any
related agreement that is intended to be an exclusive, first priority interest
for any reason ceases to be or is not a valid and perfected Lien having a first
priority interest;
10.12 an event of default has occurred and been declared under the Senior
Note Indenture which default has not been cured or waived within any applicable
grace period and for which the trustee thereunder is permitted to take action;
10.13 a default of the obligations of Borrower under any other agreement to
which it is a party (including, without limitation, a default under or
termination of the Factoring Agreement) shall occur which materially adversely
affects its condition, affairs or prospects (financial or otherwise) which
default is not cured within any applicable grace period;
10.14 termination or breach of any Guaranty or similar agreement executed
and delivered to Agent in connection with the Obligations of Borrower, or if any
Guarantor attempts to terminate, challenges the validity of, or its liability
under, any such Guaranty or similar agreement;
10.15 any Change of Control shall occur;
58
10.16 any material provision of this Agreement or any of the Other
Documents shall, for any reason, cease to be valid and binding on Borrower, or
Borrower shall so claim in writing to Agent;
10.17 if (i) any Governmental Body shall (A) revoke, terminate, suspend or
adversely modify any license, permit, patent, trademark or tradename of
Borrower, or (B) commence proceedings to suspend, revoke, terminate or adversely
modify any such license, permit, trademark, tradename or patent and such
proceedings shall not be dismissed or discharged within sixty (60) days, or (C)
schedule or conduct a hearing on the renewal of any license, permit, trademark,
tradename or patent necessary for the continuation of Borrower's business and
the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent; and (ii) any agreement which is
necessary or material to the operation of Borrower's business shall be revoked
or terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination, and such revocation
or termination and non-replacement could have a Material Adverse Effect on
Borrower;
10.18 any portion of the Collateral shall be seized or taken by a
Governmental Body, or Borrower or the title and rights of Borrower or any other
Person with respect to any material portion of the Collateral shall have become
the subject matter of litigation which might, in the reasonable opinion of
Lenders, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;
10.19 an event or condition specified in Sections 7.16 or 9.15 hereof shall
occur or exist with respect to any Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower or any
member of the Controlled Group shall incur, or in the opinion of Lenders be
reasonably likely to incur, a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, could reasonably be expected to have a
Material Adverse Effect on Borrower;
XI. LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.
------------------------------------------
11.1 Rights and Remedies. Upon the occurrence of (i) a Default pursuant to
-------------------
Section 10.7(vi) or any other Event of Default pursuant to Section 10.7 all
Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and (ii) any
of the other Events of Default and at any time thereafter (such default not
having previously been cured), at the option of Required Lenders all Obligations
shall be immediately due and payable and Lenders shall have the right to
terminate this Agreement and to terminate all obligations of Lenders herewith,
including, without limitation, the obligation to make Advances. Upon the
occurrence of any Event of Default, Agent shall have the right to exercise any
and all other rights and remedies provided for herein, any of the Other
Documents under the Uniform Commercial Code and at law or equity generally,
including, without limitation, the right to foreclose
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the security interests granted herein and to realize upon any Collateral by any
available judicial procedure and/or to take possession of and sell any or all of
the Collateral with or without judicial process. Agent may enter Borrower's
premises or other premises without legal process and without incurring liability
to Borrower therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Borrower to make
the Collateral available to Lenders at a convenient place. With or without
having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may elect. Except as to
that part of the Collateral which is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, Agent shall
give Borrower reasonable notification of such sale or sales, it being agreed
that in all events written notice mailed to Borrower at least ten (10) days
prior to such sale or sales is reasonable notification. At any public sale Agent
or any Lender may bid for and become the purchaser, and Agent, any Lender or any
other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity
of redemption and such right and equity are hereby expressly waived and released
by Borrower. In connection with the exercise of the foregoing remedies, Agent is
granted permission, without charge, to use all of Borrower's trademarks, trade
styles, trade names, patents, patent applications, licenses, franchises and
other proprietary rights which are used in connection with (a) Inventory for the
purpose of disposing of such Inventory and (b) Equipment for the purpose of
completing the manufacture of unfinished goods. The proceeds realized from the
sale of any Collateral shall be applied as follows: first, to the reasonable
costs, expenses and attorneys' fees and expenses incurred by Agent and Lenders
for collection and for acquisition, completion, protection, removal, storage,
sale and delivery of the Collateral; second, to interest due upon any of the
Obligations; and, third, to the principal of the Obligations. If any deficiency
shall arise, Borrower shall remain liable to Agent and Lenders therefor.
11.2 Agent's Discretion. Agent shall have the right in its sole discretion
------------------
to determine which rights, Liens, security interests or remedies Agent may at
any time pursue, relinquish, subordinate, or modify or to take any other action
with respect thereto and such determination will not in any way modify or affect
any of Agent's or Lenders' rights hereunder.
11.3 Setoff. In addition to any other rights which Agent or any Lender may
------
have under applicable law, upon the occurrence of an Event of Default hereunder,
Agent and each Lender shall have a right to apply Borrower's property held by
Agent, such Lender or by the Bank to reduce the Obligations.
11.4 Rights and Remedies not Exclusive. The enumeration of the foregoing
----------------------------------
rights and remedies is not intended to be exhaustive and the exercise of any
right or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.
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XII. WAIVERS AND JUDICIAL PROCEEDINGS.
--------------------------------
12.1 Waiver of Notice. Borrower hereby waives notice of non-payment of any
----------------
of the Receivables, demand, presentment, protest and notice thereof with respect
to any and all instruments, notice of acceptance hereof, notice of loans or
advances made, credit extended, Collateral received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2 Delay. No delay or omission on Agent's or any Lender's part in
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exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
12.3 JURY TRIAL WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
------------------
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY
HEREBY CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO
TRIAL BY JURY.
XIII. EFFECTIVE DATE AND TERMINATION.
------------------------------
13.1 Term. This Agreement, which shall inure to the benefit of and shall be
----
binding upon the respective successors and permitted assigns of Borrower, Agent
and each Lender, shall become effective on the date hereof and shall continue in
full force and effect until the last day of the Term unless sooner terminated as
herein provided. Borrower may terminate this Agreement at any time upon sixty
(60) days' prior written notice upon payment in full of the Obligations,
including, without limitation, all fees payable hereunder for the balance of the
Term. In the event that this Agreement is terminated and the Obligations are
prepaid in full prior to the last day of the Term (the date of such prepayment
hereinafter referred to as the "Prepayment Date"), Borrower shall pay to Agent
for the ratable benefit of Lenders an early termination fee in an amount equal
to (x) one percent (1%) of the Maximum Loan Amount if the Prepayment Date occurs
on or after the Closing Date to and including the date immediately preceding the
first anniversary of the Closing Date, (y) one half of one percent
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(0.5%) of the Maximum Loan Amount if the Prepayment Date occurs on or after the
first anniversary of the Closing Date to and including the date immediately
preceding the second anniversary of the Closing Date, and (z) one quarter of one
percent (.25%) of the Maximum Loan Amount if the Prepayment Date occurs on or
after the second anniversary of the Closing Date to and including the date
immediately preceding the last day of the Term or during any renewal Term. In
each case, the Maximum Loan Amount is the one in effect on the termination date.
13.2 Termination. The termination of the Agreement shall not affect
-----------
Borrower's, Agent's or any Lender's rights, or any of the Borrower's Obligations
having their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully
disposed of, concluded or liquidated. The Liens and rights granted to Agent and
Lenders hereunder and the financing statements filed hereunder shall continue in
full force and effect, notwithstanding the termination of this Agreement or the
fact that Borrower's respective account may from time to time be temporarily in
a zero or credit position, until all of the Obligations of Borrower have been
paid or performed in full after the termination of this Agreement or Borrower
has furnished Agent and Lenders with an indemnification satisfactory to Agent
and Lenders with respect thereto. Accordingly, Borrower waives any rights which
it may have under Section 9-504(1) of the Uniform Commercial Code to demand the
filing of termination statements with respect to the Collateral, and Agent shall
not be required to send such termination statements to Borrower, or to file them
with any filing office, unless and until this Agreement shall have been
terminated in accordance with its terms and all Obligations paid in full in
immediately available funds. All representations, warranties, covenants, waivers
and agreements contained herein shall survive termination hereof until all
Obligations are paid or performed in full.
XIV. REGARDING AGENT.
---------------
14.1 Appointment. Each Lender hereby designates GMACCC to act as Agent for
-----------
such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably authorizes Agent to take such action on its behalf under the
provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest, fees (except the fees set forth in Section
3.5), charges and collections (without giving effect to any collection days)
received pursuant to this Agreement, for the ratable benefit of Lenders. Agent
may perform any of its duties hereunder by or through its agents or employees.
As to any matters not expressly provided for by this Agreement (including,
without limitation, the collection of any note evidencing any of the
Obligations,) Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding; provided, however,
that Agent shall not be required to take any action which exposes Agent to
liability or which is contrary to this Agreement or the Other Documents or
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applicable law unless Agent is furnished with an indemnification reasonably
satisfactory to Agent with respect thereto.
14.2 Nature of Duties. Agent shall have no duties or responsibilities
-----------------
except those expressly set forth in this Agreement and the Other Documents.
Neither Agent nor any of its officers, directors, employees or agents shall be
(i) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their willful misconduct or gross (not
mere) negligence, or (ii) responsible in any manner for any recitals,
statements, representations or warranties made by Borrower or any officer
thereof contained in this Agreement, or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection with, this Agreement or any of the
Other Documents or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, or any of the Other Documents
or for any failure of Borrower to perform its obligations hereunder. 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 any of the Other Documents, or to inspect the properties,
books or records of Borrower. The duties of Agent as respects the Advances to
Borrower shall be mechanical and administrative in nature; Agent shall not have
by reason of this Agreement a fiduciary relationship in respect of any Lender;
and nothing in this Agreement, expressed or implied, is intended to or shall be
so construed as to impose upon Agent any obligations in respect of this
Agreement except as expressly set forth herein.
14.3 Lack of Reliance on Agent and Resignation. Independently and without
-----------------------------------------
reliance upon Agent or any other Lender, each Lender has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of Borrower in connection with the making and the continuance of the
Advances hereunder and the taking or not taking of any action in connection
herewith, and (ii) its own appraisal of the creditworthiness of Borrower. Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before making of the Advances or at any time
or times thereafter except as shall be provided by Borrower pursuant to the
terms hereof. Agent shall not be responsible to any Lender for any recitals,
statements, information, representations or warranties herein or in any
agreement, document, certificate or a statement delivered in connection with or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency of this Agreement or any Other Document, or of the
financial condition of Borrower, or be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement, the Other Documents or the financial condition of
Borrower, or the existence of any Event of Default or any Default.
Agent may resign on sixty (60) days' written notice to each of Lenders and
Borrower and upon such resignation, the Required Lenders will promptly designate
a successor Agent reasonably satisfactory to Borrower.
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Any such successor Agent shall succeed to the rights, powers and duties of
Agent, and the term "Agent" shall mean such successor agent effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent. After any Agent's resignation as Agent, the provisions of this Article
XIV shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
14.4 Certain Rights of Agent. If Agent shall request instructions from
------------------------
Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from the Required Lenders; and Agent shall not incur
liability to any Person by reason of so refraining. Without limiting the
foregoing, Lenders shall not have any right of action whatsoever against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.
14.5 Reliance. Agent shall be entitled to rely, and shall be fully
--------
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or telecopier message, cablegram, order or other
document or telephone message believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and
its duties hereunder, upon advice of counsel selected by it. Agent may employ
agents and attorneys-in-fact and shall not be liable for the default or
misconduct of any such agents or attorneys-in-fact selected by Agent with
reasonable care.
14.6 Notice of Default. Agent shall not be deemed to have knowledge or
------------------
notice of the occurrence of any Default or Event of Default hereunder or under
the Other Documents, unless Agent has received notice from a Lender or a
Borrower referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that Agent receives such a notice, Agent shall give
notice thereof to Lenders. Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the Required
Lenders; provided, that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of Lenders.
14.7 Indemnification. To the extent Agent is not reimbursed and indemnified
---------------
by Borrower, each Lender will reimburse and indemnify Agent in proportion to its
respective portion of the Advances (or, as to any Defaulting Lender, if no
Advances are outstanding, according to its Commitment Percentage), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in performing its duties hereunder, or in any way relating to or arising out of
this Agreement or any Other Loan Document or any transaction contemplated herein
or therein or referred to herein or therein; provided that,
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Lenders shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's gross negligence (but not mere negligence)
or willful misconduct.
14.8 Agent in its Individual Capacity. With respect to the obligation of
----------------------------------
Agent to lend under this Agreement, the Advances made by it shall have the same
rights and powers hereunder as any other Lender and as if it were not performing
the duties as Agent specified herein; and the term "Lender" or any similar term
shall, unless the context clearly otherwise indicates, include Agent in its
individual capacity as a Lender. Agent may engage in business with Borrower as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
14.9 Delivery of Documents. To the extent Agent receives documents and
----------------------
information from Borrower pursuant to the terms of this Agreement, Agent will
promptly furnish such documents and information to Lenders.
14.10 Borrower's Undertaking to Agent. Without prejudice to its obligations
-------------------------------
to Lenders under the other provisions of this Agreement, Borrower hereby
undertakes with Agent to pay to Agent from time to time on demand all amounts
from time to time due and payable by it for the account of Agent or Lenders or
any of them pursuant to this Agreement to the extent not already paid. Any
payment made pursuant to any such demand shall pro tanto satisfy the Borrower's
obligations to make payments for the account of Lenders pursuant to this
Agreement.
XV. MISCELLANEOUS.
-------------
15.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
--------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLIED TO CONTRACTS TO BE
PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. ANY JUDICIAL PROCEEDING BROUGHT
BY OR AGAINST ANY OF THE PARTIES HERETO WITH RESPECT TO ANY OF THE OBLIGATIONS,
THIS AGREEMENT OR ANY RELATED AGREEMENT MAY BE BROUGHT IN ANY COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, UNITED STATES OF AMERICA, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN
RECEIPT REQUESTED) DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION 15.6
AND SERVICE SO MADE SHALL BE DEEMED COMPLETED FIVE (5) DAYS AFTER THE
65
SAME SHALL HAVE BEEN SO DEPOSITED IN THE MAILS OF THE UNITED STATES OF AMERICA,
OR, AT THE AGENT'S AND/OR ANY LENDER'S OPTION, BY SERVICE UPON BORROWER. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. BORROWER WAIVES ANY OBJECTION
TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREUNDER AND SHALL NOT
ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR BASED UPON FORUM
NON CONVENIENS. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER OR CLAIM IN ANY WAY ARISING OUT
OF, RELATED TO OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, SHALL
BE BROUGHT ONLY IN A FEDERAL OR STATE COURT LOCATED IN THE CITY OF NEW YORK,
STATE OF NEW YORK.
15.2 Entire Understanding.
--------------------
(a) This Agreement and the documents executed concurrently herewith contain
the entire understanding between Borrower, Agent and each Lender and supersedes
all prior agreements and understandings, if any, relating to the subject matter
hereof. Any promises, representations, warranties or guarantees not herein
contained and hereinafter made shall have no force and effect unless in writing,
signed by Borrower's, Agent's and each Lender's respective officers. Neither
this Agreement nor any portion or provisions hereof may be changed, modified,
amended, waived, supplemented, discharged, canceled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged. Borrower acknowledges that it has been
advised by counsel in connection with the execution of this Agreement and Other
Documents and is not relying upon oral representations or statements
inconsistent with the terms and provisions of this Agreement.
(b) The Required Lenders, Agent with the consent in writing of the Required
Lenders, and Borrower may, subject to the provisions of this Section 15.2(b),
from time to time enter into written supplemental agreements to this Agreement
or the Other Documents executed by Borrower, for the purpose of adding or
deleting any provisions or otherwise changing, varying or waiving in any manner
the rights of Lenders, Agent or Borrower thereunder or the conditions,
provisions or terms thereof of waiving any Event of Default thereunder, but only
to the extent specified in such written agreements; provided, however, that no
such supplemental agreement shall, without the consent of all Lenders:
(i) increase the Commitment Percentage of any Lender;
(ii) increase the Maximum Loan Amount;
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(iii) extend the maturity of any instrument evidencing any of the
Obligations or the due date for any amount payable hereunder, or decrease the
rate of interest or reduce any fee payable by Borrower to Lenders pursuant to
this Agreement;
(iv) alter the definition of the term Required Lenders or alter, amend or
modify this Section 15.2(b);
(v) release any Collateral during any calendar year having an aggregate
value in excess of $100,000; or
(vi) change the rights and duties of Agent.
Any such supplemental agreement shall apply equally to each Lender and shall be
binding upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders shall be
restored to their former positions and rights, and any Event of Default waived
shall be deemed to be cured and not continuing, but no waiver of a specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the subsequent Event of Default is the same as the Event of Default which was
waived), or impair any right consequent thereon.
15.3 Successors and Assigns; Participations; New Lenders.
---------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
Borrower, Agent, each Lender, all future holders of the Obligations and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Agent and each Lender.
(b) Borrower acknowledges that in the regular course of commercial banking
business one or more Lenders may at any time and from time to time sell
participating interests in the Advances to other financial institutions (each
such transferee or purchaser of a participating interest, a "Transferee").
Transferee may exercise all rights of payment (including without limitation
rights of set-off) with respect to the portion of such Advances held by it or
other Obligations payable hereunder as fully as if such Transferee were the
direct holder thereof provided that Borrower shall not be required to pay to any
Transferee more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable
hereunder to such Transferee had such Lender retained such interest in the
Advances hereunder or other Obligations payable hereunder and in no event shall
Borrower be required to pay any such amount arising from the same circumstances
and with respect to the same Advances or other Obligations payable hereunder to
both such Lender and such Transferee. Borrower hereby grants to any Transferee a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Transferee as security for the Transferee's
interest in the Advances.
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(c) With the prior written consent of the Agent, which shall not be
unreasonably withheld, any Lender may sell, assign or transfer all or any part
of its rights under this Agreement and the Other Documents to one or more
additional banks or financial institutions and one or more additional banks or
financial institutions may commit to make Advances hereunder (each a "Purchasing
Lender"), in minimum amounts of not less than $5,000,000, pursuant to a
Commitment Transfer Supplement, executed by a Purchasing Lender, the transferor
Lender, and Agent and delivered to Agent for recording. Upon such execution,
delivery, acceptance and recording, from and after the transfer effective date
determined pursuant to such Commitment Transfer Supplement, (i) Purchasing
Lender thereunder shall be a party hereto and, to the extent provided in such
Commitment Transfer Supplement, have the rights and obligations of a Lender
thereunder with a Commitment Percentage as set forth therein, and (ii) the
transferor Lender thereunder shall, to the extent provided in such Commitment
Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such
Commitment Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrower hereby consents to the addition of such Purchasing
Lender and the resulting adjustment of the Commitment Percentages arising from
the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrower shall execute and deliver such further documents and do such
further acts and things in order to effectuate the foregoing.
(d) Agent shall maintain at its address a copy of each Commitment Transfer
Supplement delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Advances owing to each Lender from time to
time. The entries in the Register shall be conclusive, in the absence of
manifest error, and Borrower, Agent and Lenders may treat each Person whose name
is recorded in the Register as the owner of the Advance recorded therein for the
purposes of this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Agent shall receive a fee in the amount of $2,500
payable by the applicable Purchasing Lender upon the effective date of each
transfer or assignment to such Purchasing Lender.
(e) Borrower authorizes each Lender to disclose to any Transferee or
Purchasing Lender and any prospective Transferee or Purchasing Lender any and
all financial information in such Lender's possession concerning Borrower which
has been delivered to such Lender by or on behalf of Borrower pursuant to this
Agreement or in connection with such Lender's credit evaluation of Borrower.
15.4 Application of Payments. Agent shall have the continuing and exclusive
-----------------------
right to apply or reverse and re-apply any payment and any and all proceeds of
Collateral to any portion of the Obligations. To the extent that Borrower makes
a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for Borrower's benefit, which are subsequently invalidated,
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declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver, custodian or any other party under
any bankruptcy law, common law or equitable cause, then, to such extent, the
Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such
Lender.
15.5 Indemnity. Borrower shall indemnify Agent, each Lender and each of
---------
their respective officers, directors, Affiliates, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel) which may be imposed on, incurred by, or asserted
against Agent or any Lender in any litigation, proceeding or investigation
instituted or conducted by any governmental agency or instrumentality or any
other Person with respect to any aspect of, or any transaction contemplated by,
or referred to in, or any matter related to, this Agreement or the Other
Documents, whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing arises out of the willful misconduct or gross
(not mere) negligence of the party being indemnified.
15.6 Notice. Any notice or request hereunder may be given to Borrower or to
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Agent or any Lender at their respective addresses set forth below or at such
other address as may hereafter be specified in a notice designated as a notice
of change of address under this Section. Any notice or request hereunder shall
be given by (a) hand delivery, (b) overnight courier, (c) registered or
certified mail, return receipt requested, (d) telex or telegram, subsequently
confirmed by registered or certified mail, or (e) telecopy to the number set out
below (or such other number as may hereafter be specified in a notice designated
as a notice of change of address) with telephone communication to a duly
authorized officer of the recipient confirming its receipt as subsequently
confirmed by registered or certified mail. Any notice or other communication
required or permitted pursuant to this Agreement shall be deemed given (a) when
personally delivered to any officer of the party to whom it is addressed, (b) on
the earlier of actual receipt thereof or three (3) days following posting
thereof by certified or registered mail, postage prepaid, or (c) upon actual
receipt thereof when sent by a recognized overnight delivery service or (d) upon
actual receipt thereof when sent by telecopier to the number set forth below
with telephone communication confirming receipt and subsequently confirmed by
registered, certified or overnight mail to the address set forth below, in each
case addressed to each party at its address set forth below or at such other
address as has been furnished in writing by a party to the other by like notice:
(A) If to Agent at: GMAC Commercial Credit LLC
1290 Avenue of the Americas
New York, New York 10104
Attention: Corporate Loan Administration
Mr. Frank Imperato
Senior Vice President
Telephone: (212) 408-7026
Telecopier: (212) 408-7162
69
(B) If to a Lender other than Agent, as specified on the signature pages
hereof
(C) If to Borrower: Delta Mills, Inc.
100 Augusta Street
Greenville, South Carolina 29601
Attention: Chief Financial Officer
Telephone: (864) 255-4127
Telecopier: (864) 255-4165
15.7 Survival. The obligations of Borrower under Sections 3.7, 3.8 and 15.5
--------
shall survive termination of this Agreement and the Other Documents and payment
in full of the Obligations.
15.8 Severability. If any part of this Agreement is contrary to, prohibited
------------
by, or deemed invalid under applicable laws or regulations, such provision shall
be inapplicable and deemed omitted to the extent so contrary, prohibited or
invalid, but the remainder hereof shall not be invalidated thereby and shall be
given effect so far as possible.
15.9 Expenses. All costs and expenses including, without limitation,
--------
reasonable attorneys' fees and disbursements incurred by Agent, Agent on behalf
of Lenders and Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and all related agreements,
documents and instruments, or (c) in instituting, maintaining, preserving,
enforcing and foreclosing on Agent's security interest in or Lien on any of the
Collateral, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent's or any Lender's transactions with Borrower, or (e) in connection with
any advice given to Agent or any Lender with respect to its rights and
obligations under this Agreement and all related agreements, may be charged to
Borrower's account and shall be part of the Obligations.
15.10 Injunctive Relief. Borrower recognizes that, in the event Borrower
------------------
fails to perform, observe or discharge any of its obligations or liabilities
under this Agreement, any remedy at law may prove to be inadequate relief to
Lenders; therefore, each Lender, if such Lender so requests, shall be entitled
to temporary and permanent injunctive relief in any such case without the
necessity of proving that actual damages are not an adequate remedy.
15.11 Consequential Damages. Neither Agent, any Lender nor any agent or
----------------------
attorney for any of them shall be liable to Borrower for consequential damages
arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations.
15.12 Captions. The captions at various places in this Agreement are
--------
intended for convenience only and do not constitute and shall not be interpreted
as part of this Agreement.
70
15.13 Counterparts; Telecopied Signatures. This Agreement may be executed
------------------------------------
in any number of and by different parties hereto, on separate counterparts, all
of which when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
15.14 Construction. The parties acknowledge that each party and its counsel
------------
have reviewed this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.
Each of the parties has signed this Agreement as of the day and year first
above written.
DELTA MILLS, INC.
By: /s/ David R. Palmer
------------------------------------
Its: Controller
------------------------------------
GMAC COMMERCIAL CREDIT LLC,
as Lender and as Agent
By: /s/ Joseph A. Grimaldi
------------------------------------
Its: President
1290 Avenue of the Americas
New York, New York 10104
Commitment Percentage: 100%
71
STATE OF SOUTH CAROLINA )
) ss.
COUNTY OF GREENVILLE )
On this 31st day of March, 2000, before me personally came David R. Palmer,
to me known, who, being by me duly sworn, did depose and say that he is the
Controller of DELTA MILLS, INC. the corporation described in and which executed
the foregoing instrument and that he is authorized to execute said instrument on
behalf of said corporation.
/s/ Hope Winkler
--------------------------------
NOTARY PUBLIC
STATE OF NEW YORK )
) ss.
COUNTY OF RICHMOND )
On this 31st day of March, 2000, before me personally came Joseph A.
Grimaldi, to me known, who, being by me duly sworn, did depose and say that he
is the President of GMAC COMMERCIAL CREDIT LLC, the corporation described in and
which executed the foregoing instrument and that he is authorized to execute
said instrument on behalf of said corporation.
/s/ Jane Frangos
-------------------------------
NOTARY PUBLIC
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LIST OF EXHIBITS AND SCHEDULES
Exhibit 2.1(a)
Exhibit 5.5(b)
Exhibit 15.3
Schedule 1.2
Schedule 4.5
Schedule 4.15(c)
Schedule 5.2
Schedule 5.4
Schedule 5.6
Schedule 5.8(b)
Schedule 5.8(d)
Schedule 5.9
Schedule 5.10
Schedule 5.14
Schedule 5.17
Schedule 7.3
Schedule 7.4
Schedule 7.8
73